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FOR IMMEDIATE RELEASE
HONG KONG - JUNE 11, 2015 08:49 AM (EDT)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of The People's Insurance Company of China (Hong Kong), Limited (PICC HK) (Hong Kong). The outlook for both ratings is stable.
The ratings reflect PICC HK's favorable risk-adjusted capitalization level, consistently profitable operating results, and the business and capital support it receives from its parent, The People's Insurance Company (Group) of China Limited (PICC Group). The company is 75% owned by PICC Group.
PICC HK has significantly strengthened its capital and surplus in the past five years, largely due to the capital injection of HKD 160 million in 2013 and its continuous operating profits. PICC HK's risk-adjusted capitalization level, as measured by Best's Capital Adequacy Ratio (BCAR), continues to be supportive of its current ratings by a comfortable margin. Operating profits also exhibited an increasing trend in the past five years, which is partly contributed by the inward treaty reinsurance business from its affiliated company, PICC Property and Casualty Company Limited.
Offsetting factors include PICC HK's small presence in the Hong Kong general insurance market and the increasing amount of non-investment grade bonds in its investment portfolio.
Positive rating actions could occur if PICC HK can achieve substantial improvement in its risk-adjusted capitalization and market profile, while maintaining the favorable trend in operating performance. Conversely, negative rating actions could occur if PICC HK's operating results decline significantly, resulting in material decline in risk-adjusted capitalization. A reduced level of support from PICC Group, or if the credit profile or PICC Group deteriorates, would also exert negative rating pressure.
The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
Ratings are communicated to rated entities prior to publication, and 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 visit A.M. Best's Ratings & Criteria Center.
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