AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of China Taiping Insurance (Macau) Company Limited (CTIM) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CTIM’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

CTIM’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained stable and was at the strongest level as of year-end 2022. Based on the unaudited financial statements, the company’s capital level remained robust and further improved to MOP 870 million (USD 110 million) at year-end 2023. The company’s investment strategy remains conservative and stable, with the majority of its investment assets in cash and investment grade bonds. CTIM’s reinsurance programme remains comprehensive with reinsurer panels of good credit quality; notwithstanding, the reinsurance dependency of the company is moderate.

CTIM delivered a five-year average return-on-equity ratio of 19.0% from 2018 to 2022, and the company continued to generate profit in 2023, supported by positive underwriting and investment results. The company’s net combined ratio improved to 70.5% in 2022, due to its lower loss ratio during the pandemic period. The company’s combined ratio remained stable during 2023, though there was some uptick in the loss ratio, which was partially offset by an improvement in the commission ratio. CTIM’s investment results turned positive in 2023, a rebound from the negative returns caused by capital market volatility during 2022. The company’s investment performance is expected to continue to support its overall operating performance through stable streams of interest, dividend and rental income in the future.

CTIM maintains a long track record as the leader in Macau’s non-life insurance segment and has a market share of approximately 34% as of the third quarter of 2023, based on gross premiums written. CTIM’s underwriting portfolio and distribution channels are stable and diversified, while the company continues to develop its online channel and explore cross-selling opportunities in its affiliated life insurance company, China Taiping Life Insurance (Macau) Company Limited, in Macau.

CTIM is well-positioned at its current rating level. Negative rating actions could occur if there is a material decline in the company’s risk-adjusted capitalisation or a significant and sustained trend of deterioration in its operating performance. A weakening credit profile of the parent company, China Taiping Insurance Holdings Company Limited, also may have a negative impact on CTIM’s ratings. Although unlikely in the near term, positive rating actions could occur if there is a material and sustained improvement in CTIM’s risk-adjusted capitalisation, while the company maintains its strong operating performance.

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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