The rating upgrades reflect LFH’s strong risk-adjusted capitalization, track record of favorable operating results and solid market presence in Macau’s non-life insurance market through consistent distribution support from its bank shareholders.

LFH’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is strong and supportive of its historical and projected business growth. During the five years from 2012 to 2016, LFH grew its capital and surplus organically from MOP 170 million to MOP 370 million through the continuous accumulation of positive net operating income, which was underpinned mainly by prudent underwriting with results that outperformed its peers. The company also maintains a competitive edge in business acquisition and retention through its bancassurance channel, which has been supported consistently by its major bank shareholders.

Partially offsetting these positive rating factors are the challenges associated with Macau’s economy and the continued soft conditions in Macau’s non-life insurance market.

Positive rating actions are unlikely in the near term. Negative rating actions could occur if LFH’s risk-adjusted capitalization deteriorates significantly as a result of adverse operating performance, or if there is significant deterioration in the company’s business profile, for example, a sharp market share drop due to weaker distribution support from its bank shareholders.

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 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.