AM Best Reaffirms Credit Ratings of China BOCOM Insurance Company Limited
AM Best has reaffirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) for China BOCOM Insurance Company Limited (CBIC) (Hong Kong). The outlook for these ratings remains stable.
These ratings reflect CBIC’s robust balance sheet, 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 acknowledge the broad support from its parent company, Bank of Communications Co., Ltd. (BOCOM), including capital assistance, brand recognition, distribution channels, investment, operational, and risk management support.
CBIC’s very strong balance sheet is supported by its risk-adjusted capitalization, which remained at the highest level at year-end 2023, according to Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus showed steady growth in 2023, driven by full profit retention. CBIC also maintains a healthy regulatory solvency position, as indicated by Hong Kong’s Risk-Based Capital ratio. However, investment risk is a counterbalance to this strength, due to the company’s high-risk appetite for unlisted investments and concentration in a private equity fund. Additionally, the company’s moderately high reliance on reinsurance is offset by prudent reinsurance practices and a diversified reinsurance panel.
AM Best views CBIC’s operating performance as adequate, with the company showing moderate growth in insurance services revenue in 2023, along with improved bottom-line results. Investment income continues to be the main contributor to net profits, while underwriting performance remains impacted by high operating expenses relative to its smaller premium base.
CBIC’s business profile is assessed as limited, with the company maintaining a modest presence in Hong Kong’s fragmented general insurance market. Its underwriting portfolio is diversified, supported by a broad distribution network, including bancassurance, brokers, agencies, and inward facultative business. As BOCOM’s sole general insurance subsidiary, CBIC benefits from access to BOCOM’s extensive banking network and subsidiaries for distribution support.
Although CBIC’s ratings are stable, negative rating actions could arise if the company experiences a significant decline in operating performance or balance sheet strength, such as from deteriorating combined ratios or increased exposure to high-risk investments. Conversely, positive rating actions could occur if CBIC achieves sustained improvements in its operating performance that outpace its market peers.
The ratings were communicated to the company prior to publication. This press release pertains to ratings published on AM Best’s website. For more details, including disclosures and regional office information, please visit AM Best’s Recent Rating Activity page. For further guidance on the use of AM Best’s ratings, refer to the Guide to Best’s Credit Ratings.
AM Best is a global credit rating agency and data analytics provider specializing in the insurance industry, operating in over 100 countries. For more information, visit www.ambest.com.
