AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of Taiping Reinsurance Company Limited (TPRe) (Hong Kong) and its wholly owned subsidiary, Taiping Reinsurance (China) Company Ltd. (TPRe China) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings of TPRe reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also acknowledge the continued implicit and explicit support given by TPRe’s parent company, China Taiping Insurance Holdings Company Limited (CTIH), in terms of capital, investment, risk oversight and shared operational resources.

TPRe’s risk-adjusted capitalisation remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). Over the short to intermediate term, AM Best expects TPRe’s risk-adjusted capitalisation to remain at the strongest level, supported by a good level of financial flexibility and continued improvement in the credit profile of its investment portfolio. Offsetting factors to the reinsurer’s balance sheet strength assessment include its exposure to potential catastrophe losses and deterioration in asset quality stemming from legacy investments amid volatile capital market conditions.

TPRe reported a net profit of HKD 333.0 million in 2023, with a return-on-equity (ROE) ratio of 3.0% under HKFRS 17. The non-life insurance service results have remained stable owing to the performance of property lines, with a combined ratio of 95.9% (as calculated by AM Best). TPRe’s life insurance service results experienced some volatility, as the company actively trimmed down its saving-type reinsurance portfolio and expanded its protection-type business. The reinsurer’s overall investment performance has remained stable, underpinned by interest income from fixed-income investments, but partially offset by impairment losses on financial assets.

Leveraging its status as a subsidiary of CTIH, TPRe has established a strong foothold in the Greater China region and maintains a leading position in the non-life reinsurance markets in Hong Kong and Macau. The company also continues its expansion across different markets, with a strategic focus on emerging markets such as Southeast Asia. TPRe has partnered with its strategic investor, Ageas, on product development and reinsurance arrangements. AM Best expects CTIH (as the controlling shareholder) will continue to provide strong financial support to TPRe in a timely manner. when necessary, evident by its track record of capital injections to TPRe over the years.

Negative rating actions could occur if there is a material deterioration in CTIH’s credit profile or if CTIH reduces the level of support it provides to TPRe. Negative rating actions could also occur if there is a sustained deteriorating trend in TPRe’s operating performance such that it no longer supports the current adequate assessment.

Although the likelihood is low, positive rating actions could occur if there is a material improvement in CTIH’s credit profile, for example, a material improvement in its balance sheet strength from lowering financial leverage or a major enhancement in capital position.

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 Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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