HONG KONG--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dah Sing Insurance Company Limited (DSI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect DSI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the parental support DSI receives from Dah Sing Financial Holdings Limited (DSFH) in terms of capital, brand recognition, business development, product distribution, risk management and operations.
DSI’s risk-adjusted capitalisation remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s reported capital and surplus under HKFRS 17 increased by 18% to HKD 2,373 million in 2023, driven by net profit retention and a recovery in the valuation of equity investments measured at fair value through other comprehensive income. The company maintains a moderately high proportion, yet well-diversified equity investment portfolio. AM Best expects DSI to implement robust investment selection and diversification strategies, as well as appropriate investment controls, to mitigate the high investment risk exposure. In addition, AM Best views the quality of DSI’s capital structure has strengthened as it converted redeemable preference shares of HKD 550 million into permanent capital on 18 January 2024, which is also clear evidence of support from DSFH.
DSI reported a net profit of HKD 108 million in 2023, mainly supported by favourable investment results in tandem with the recovery of capital market conditions during the year. The company’s underwriting performance also has improved, owing to better underwriting control and risk selection in key business lines such as property damage and motor.
Based on the statistics from Hong Kong Insurance Authority, as a small to medium-sized insurer in Hong Kong’s non-life segment, DSI maintained a market share of approximately 1.2%, and total gross premiums written (GPW) reached HKD 844 million in 2023. The company’s five major lines of business are motor, employees’ compensation, pecuniary loss, accident and health and property damage. DSI is re-balancing its underwriting portfolio by expanding property damage business, while reducing catastrophe risk exposure of its offshore inward reinsurance portfolio. A diversified panel of corporate intermediaries contributed a majority of the company’s GPW, followed by bancassurance supported by Dah Sing Bank.
Positive rating actions could occur if DSI demonstrates successful implementation of its business plan, which will enhance its competitive advantage of securing profitable business and market position. Negative rating actions could occur if there is a material deterioration in DSI’s risk-adjusted capitalisation due to material investment losses or a significant increase in risk exposure. Negative rating actions also could arise if there is a sustained unfavourable trend in the company’s operating performance, for example, due to large equity investment losses. Negative rating actions are also possible if DSFH’s credit profile deteriorates materially or if the holding company reduces the level of support it provides to DSI.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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