CONTACTS:
FOR IMMEDIATE RELEASE
HONG KONG - MAY 10, 2016 12:21 PM (EDT)
A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to BEA Life Limited (BEA Life) (Hong Kong). The outlook assigned to each rating is stable. BEA Life is a wholly owned subsidiary of The Bank of East Asia, Limited (BEA).
The ratings reflect BEA Life’s adequate balance sheet strength, good operating performance and the benefits it receives from BEA’s strong franchise in Hong Kong. The company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of the assigned ratings. BEA Life has demonstrated adequate asset-liability management practices, appropriate reinsurance and a good level of liquidity in its investment portfolio. In addition, A.M. Best expects BEA Life to maintain good control over the distribution channel owned by the BEA parent group, which has a solid local presence and brand name in Hong Kong. Established nearly a century ago, BEA has built a solid reputation in Hong Kong’s retail and corporate banking industries, which has enabled BEA Life to grow its customer base and business scale at a steady pace in the market in Hong Kong over the past five years.
A partially offsetting factor is BEA Life’s relatively high concentration of business written composed of savings-type life insurance policies that guarantee policyholder returns. This exposes the company to the adverse effect of a possible prolonged low interest rate environment, which may put pressure on the interest rate spread or constrain growth prospects.
Positive rating actions are unlikely in the short term. Negative rating movement may occur if BEA Life’s risk-adjusted capitalization weakens significantly below A.M. Best’s expectation; for example, due to deterioration in investment asset values, or if the company’s operating performance shows a worsening trend or increased volatility.
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 rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.