HONG KONG, March 11 (Bernama-BUSINESS WIRE) -- A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Sun Hung Kai Properties Insurance Limited (SHKPI) (Hong Kong). The outlook for both ratings remains stable.
 
The rating affirmations reflect the company’s strong risk-adjusted capitalization, with growth in capital and surplus organically supported by consistently favorable underwriting and investment performance. The company also benefits from the business and investment management support it receives as a wholly-owned subsidiary and sole insurance arm of Sun Hung Kai Properties Limited (SHKP), one of the leading property conglomerates based in Hong Kong.
 
SHKPI generates the majority of its underwriting business from SHKP-related construction projects and operations, most of which is comprised of employees’ compensation (EC) business with low acquisition costs. The company’s investment portfolio is managed under SHKP’s investment arm, which has demonstrated the capability to navigate different investment cycles and delivered positive returns over the past five years.
 
Offsetting rating factors include SHKPI’s heavy investment exposure in China’s property sector with low credit quality and the challenges in maintaining its current underwriting performance under continued soft pricing conditions. A majority of the company’s fixed income portfolio is comprised of bonds that are not rated or rated below-investment grade. The company’s investment performance will be negatively impacted by a potential downturn in China’s property market or a rising credit spread.
 
SHKPI is well-positioned at its current rating level. Negative rating actions could occur if the company experiences material and continual deterioration on its risk-adjusted capitalization due to unfavorable operating performance.
 
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
 
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
 
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
 
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
 
Contacts
A.M. Best
Vivian Cheung
Senior Financial Analyst
+(852) 2827 3421
vivian.cheung@ambest.com
or
Moungmo Lee
Managing Director, Analytics
+(65) 6589 8412, ext. 210
moungmo.lee@ambest.com
or
Christopher Sharkey
Manager, Public Relations
+(1) 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best
 
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http://www.businesswire.com/news/home/20160310005972/en

--BERNAMA