China BOCOM Insurance Company (CBIC) Hong Kong has received a financial strength rating of A- (excellent) and long-term issuer credit rating of a- from AM Best, in addition to a stable credit rating.
The Hong Kong-based general insurer’s ratings reflect a very strong balance sheet, in addition to its adequate operating performance, limited business profile, and appropriate enterprise risk management. CBIC also benefits from a wide range of support available from the Bank of Communications (BOCOM) including capital support, brand recognition, distribution, investment, operational and risk management.
According to a news release, the robustness of CBIC's balance sheet stems from its strong risk-adjusted capitalization, as indicated by the credit agency’s Best's Capital Adequacy Ratio (BCAR). However, AM Best also noted that that investment risk remains a significant element affecting the required capital within the BCAR framework. This risk is attributed to CBIC's exposure to certain unlisted investments, which generally come with reduced liquidity and transparency.
Additionally, there is a concentration risk related to an investment in a private equity fund. To balance these concerns, AM Best noted that CBIC benefits from prudent reinsurance agreements and a diverse reinsurance panel with a solid credit profile, which partially mitigates its moderately high level of reinsurance dependence.
Conversely, AM Best has recently revised its outlook on the Philippines non-life insurance sector from stable to negative, a downgrade caused by negative pressure on the market’s balance sheet strength and operating performance of domestic insurers amid challenges in the reinsurance market.
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