A.M. Best Affirms Rating of Dao Heng Insurance Company Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A- (Excellent) of Dao Heng Insurance Company Limited (DHI DHI see dairy herd improvement. ) (Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. ). The outlook is stable. The rating reflects DHI's prudent capitalization, short-tail risk exposure and good quality business reflected by its low loss ratio. A.M. Best views positively DHI's remarkable investment return, which made a significant contribution to the net income of the company in the recent fiscal year. The Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , which measures capitalization on a risk-adjusted basis, demonstrated that the company maintained a solid capital position with a low net premium leverage ratio of 0.58 times in fiscal year 2003. The majority of business is derived mainly from the property damage and personal insurance lines, which generally have a short-tail business nature and low risk exposure. In light of difficult operating conditions and intense competition in Hong Kong during recent years, DHI has been able to maintain profitability with a five-year average combined ratio of 78%. In fiscal year 2003, the overall loss ratio stood at 26%, whilst the loss ratio of property damage of 7% was superior to that of the industry. Offsetting factors include a small market share and deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. margin. To remain competitive, DHI is expected to enhance its service offerings and to expand an effective mode of distribution. Given the existing underwriting capacity, along with its limited presence in the fragmented general insurance market in Hong Kong, DHI's growth prospects and ability to strengthen its business portfolio will be challenged. The company is tightening its underwriting controls and investment disciplines to achieve a higher operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . The separation from the Dao Heng Bank Group will continue to have an impact on the company into the near future. DHI continues to focus its efforts on developing its in-house call center and to improve the effectiveness of this channel. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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