A.M. Best Affirms Rating of HSBC Insurance -Asia- Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of HSBC Insurance (Asia) Limited (HSBC Insurance) (Hong Kong). The rating outlook is stable. The rating reflects HSBC HSBC Hongkong and Shanghai Banking Corporation HSBC Humane Society of Broward County (Florida) HSBC Humane Society of Bay County (Bay County, Michigan) Insurance's prudent capitalization, strong distribution capabilities, superior operating performance and well-structured reserving and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. arrangements. The rating also considers the operational synergies for HSBC Insurance as a core subsidiary of the Hong Kong & Shanghai Banking Corporation, the largest licensed bank in Hong Kong. HSBC Insurance has a very strong capital position. 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, demonstrates an adequate solvency margin. HSBC Insurance benefits from bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. , as well as the extensive distribution network of the HSBC group. Both underwriting and investment activities have contributed favorably to the bottom line results of the company. In fiscal year 2004, the loss ratio continued its downward trend to the lowest level since 1998, dropping to 28.6% (compared with 34% in the previous year). The average annual combined ratio for the past five years was 77.3%. Solid underwriting performance and stable investment income resulted in a net income after tax growth of 16.4% in 2004. Net income was HKD HKD In currencies, this is the abbreviation for the Hong Kong Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 193 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 24.7 million) in fiscal year 2004, compared to HKD 166.3 million (USD 21.3 million) in fiscal year 2003. These positive factors are partially offset by heavy dividend repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. and the transformation of ownership of its moderately capitalized subsidiary, HSBC Life (International) Ltd. HSBC Insurance's high dividend payout policy has limited the growth of capital and surplus. In 2004, approximately 90% of net income was paid out as dividend. A.M. Best is also concerned that the modest capitalization level of HSBC Life (International) Ltd. may result in financial strain of HSBC Insurance (Asia) Limited. For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. 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 http://www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion