AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Bank of China Group Insurance Company Limited (BOCG Insurance) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BOCG Insurance’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

BOCG Insurance’s risk-adjusted capitalisation remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus achieved organic growth in 2023, supported by positive underwriting results and favourable investment income. Additionally, the company maintains a healthy regulatory solvency position, as measured by Hong Kong’s Risk-Based Capital Ratio. Although illiquid investments in associated companies account for approximately half of BOCG Insurance’s investment portfolio, the company’s liquidity remains adequate to fulfill its insurance liabilities. The remainder of the company’s investments primarily consist of liquid assets, including investment grade bonds, and cash and deposits.

AM Best views BOCG Insurance’s operating performance as adequate. In 2023, the company achieved organic growth in insurance services revenue, and net income improved compared to 2022 with a double-digit return-on-equity ratio. The company’s profitable bottom line was largely driven by solid net investment returns, supported by a meaningful share of profits from its interests in associated companies, as well as interest income from its bonds and cash investments. The company has generated underwriting profits for three consecutive years since 2021, partially attributed to improved underwriting results for the motor and general liability lines.

BOCG Insurance’s business profile is assessed as neutral. BOCG Insurance is ranked seventh in terms of non-life gross premiums written (GPW), with a 3.1% market share in 2023, as per data published by the Hong Kong Insurance Authority. The company’s underwriting portfolio remains diversified, with a majority of its GPW derived from four business lines, namely accident and health, property damage, general liability, and motor. In addition to ongoing efforts to improve the profitability of its inward reinsurance business, the company strives to expand its direct local business. AM Best expects BOCG Insurance to continue leveraging the branch network and strong brand name of its banking parent, Bank of China Group, to tap the vast client base and source profitable business. The company also is developing its direct channel through digital platform enhancements.

Negative rating actions could occur if BOCG Insurance experiences a material deterioration in its risk-adjusted capitalisation. Negative rating actions also could arise if there is significant deterioration in the company’s operating profitability; for instance, due to investment returns that are more than offset by sustained and unfavourable underwriting loss experience. Although it is not likely in the short term, positive rating actions could occur if BOCG Insurance demonstrates better-than average and sustained improvement in underwriting and operating profitability.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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