AM Best


A.M. Best Assigns Credit Ratings to Qianhai Reinsurance Co., Ltd.


CONTACTS:

Vivian Cheung
Senior Financial Analyst
+852 2827 3421
vivian.cheung@ambest.com

Christie Lee
Director, Analytics
+862 2827 3413
christie.lee@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

HONG KONG - DECEMBER 09, 2016 12:45 PM (EST)
A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Qianhai Reinsurance Co., Ltd. (QHR) (China). The outlook assigned to these Credit Ratings (ratings) is stable.

QHR is licensed as a composite reinsurer and headquartered in the Qianhai Free Trade Zone, Shenzhen, China with a focus on its domestic market. With an initial capitalization of RMB 3,000 million (approximately USD 460 million), the company is jointly controlled by three state-owned enterprises (SOE) in China that each own 20%: Qianhai Financial Holdings Co, Ltd; China Post Group; and Shenzhen Capital Co., Ltd. The remaining 40% of shares are held by four private sector companies: Aishida Electric Co. Ltd (14.5%), Septwolves Industrial Co. Ltd (10.5%), Tempus International Business Services Co. Ltd (10%) and Qi Tina Holdings Co., Ltd. (5%).

The ratings of QHR reflect its sound risk-adjusted capitalization, realistic business plan, the business support and the financial flexibility from the long-term joint capital support of the SOE shareholders. The company’s business plan is based on the targeted underwriting portfolio composition and the respective underwriting profitability assumptions, which will be composed of traditional non-life and life reinsurance business, as well as short-term life financial reinsurance business. Underwriting profitability assumptions outlined in the business plan are in line with the performance of QHR’s domestic peers. A.M. Best expects the company to retain underwriting risk at a conservative level relative to its capitalization through the prudent utilization of quota share and excess of loss retrocession programs over the medium term.

Partially offsetting these positive rating factors are QHR’s start-up nature, the challenges it faces in executing its business plan under China’s increasingly competitive market environment amid the increase in new reinsurance capacity, as well as the anticipated rapid increase in equities and alternative assets under the company’s investment strategy over the next few years. As QHR is based in China, which is a catastrophe-prone region, the company also could be exposed to a series of catastrophe events that will expose the company’s capital strength to greater volatility during its early years of operations.

Positive rating actions are unlikely in the near term. Negative rating actions may occur if the company materially deviates from its business plan, including adverse deviation from its projections, liquidity level and A.M. Best’s expectation for the company’s risk-adjusted capitalization. A reduced level of commitment from the three strategic shareholders also would impact the ratings negatively.

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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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AMB# Company Name
095077 Qianhai Reinsurance Co., Ltd.