A.M. Best Affirms Ratings of Hong Leong Insurance (Asia) Limited

A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Hong Leong Insurance (Asia) Limited (HLIA) (Hong Kong). The outlook for both ratings is stable.

The rating affirmations recognize HLIA's strong risk-adjusted capitalization, track record of favorable underwriting performance and sound liquidity. Conservative underwriting leverage, short-tailed risk exposures and stable reserve development contribute to the strong risk-adjusted capitalization. Moreover, favorable underwriting risk selection over the past three years has strengthened the underwriting performance.

Partially offsetting factors include HLIA's exposure to investment risk and its currently higher-than average, albeit improving, expense ratio. The company has undertaken initiatives to improve the cost efficiency of its business platform with various technological solutions. Further benefits of economies of scale remain to be proven over the medium term.

Positive rating actions could occur if HLIA can demonstrate continued improvement in its expense controls and stronger investment risk management. Negative rating pressure could occur if the volatility in the investment results were to significantly impact the company's risk-adjusted capitalization.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

A.M. Best Asia-Pacific Limited is a subsidiary of A.M. Best Company. 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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Company
James Chan, [phone]
Associate Financial Analyst
[e-mail]
or
Vivian Cheung, [phone]
Financial Analyst
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or
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
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or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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