AM Best Affirmed People’s Financial Strength Rating of A- (Excellent) and Issuer Long-Term Credit Rating of “a-” (Excellent)
The ratings reflect the strength of PICC HK’s balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate management of business risks. The ratings also reflect the company’s strategic importance to its parent company, The People’s
PICC HK maintains a very strong overall balance sheet strength, supported by industry-leading risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The Company’s investment portfolio is diversified, with the majority of its assets spread among investment grade bonds, equities, cash and cash equivalents and funds.
PICC HK’s operating performance is deemed adequate with a five-year average cost income ratio of 97.2% and a five-year average return on equity of 4.3% (2017-2021), as calculated by AM Best. The company’s positive earnings are mainly driven by its investment income, supplemented by realized capital and foreign exchange gains in 2021. However, the shortage of cash in the Chinese real estate market in 2021 led to a decrease in fair value investments of PICC HK funds. The company’s technical results turned positive in 2021, mainly due to a lower gross commission ratio.
While maintaining its modest presence in the Hong Kong onshore insurance market, PICC HK has actively expanded its in-house reinsurance business in recent years. This strategy helped to diversify the company’s customer base, which was focused on the inter-company inbound reinsurance business of PICC Property and Casualty Company Limited. PICC HK has also set up an insurance broker at
As the only foreign insurance entity of
Negative rating actions could occur if there is a decline in operational performance to a level that no longer supports adequate assessment of operational performance, or if the support that PICC HK receives from its parent company weakens. significantly or if the parent company’s credit fundamentals deteriorate significantly.
Ratings are communicated to rated entities before publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.
This press release relates to credit ratings that have been published on AM Best’s website. For all rating information relating to the publication and relevant disclosures, including office details responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.
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Source: AM Best