A.M. Best Affirms Ratings of Luen Fung Hang Insurance Company Limited

HONG KONG--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating “a-” of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook for both ratings is stable.

The ratings reflect LFH’s excellent business profile, good underwriting results and adequate risk-adjusted capitalization.

LFH enjoys an excellent business profile in Macau as a general insurance company co-owned by several banks and insurance companies with a Macau, Hong Kong or China background. The shareholders provide support to LFH in different areas, such as business distribution.

Benefiting from the good quality of business written through its bancassurance and direct channel, LFH has been able to deliver a consistent track record of underwriting profits over the past five years. The company invests predominately in cash and a diversified portfolio of highly rated bonds. The conservative investment strategy has yielded stable interest income for the company over the years.

Partially offsetting these positive rating factors is the company’s moderate counterparty risk exposure to a non-rated reinsurer, which carries more stringent capital requirements in Best’s Capital Adequacy Ratio (BCAR). The potential increase and concentration in reinsurance counterparty exposure from a non-rated reinsurer could adversely impact the company’s balance sheet strength under a catastrophe stress condition.

Positive rating actions could occur as a result of LFH’s continued surplus accumulation and an improved quality and diversity of its reinsurance panel.

Negative rating actions may occur if LFH’s risk-based capitalization deteriorates significantly as a result of underwriting losses, there is a deviation from the capital management plan communicated to A.M. Best or there is a significant deterioration in LFH’s business profile.

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.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150910006483/en/

A.M. Best
Ken Chow, +852-2827-3426
Senior Financial Analyst
[email protected]
or
Jeff Yeung, +852-2827-3413
Associate Director, Analytics
[email protected]
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +1-908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

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