A.M. Best Affirms Rating of HSBC Medical Insurance Limited.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of HSBC HSBC Hongkong and Shanghai Banking Corporation HSBC Humane Society of Broward County (Florida) HSBC Humane Society of Bay County (Bay County, Michigan) Medical Insurance Limited (HSBC Medical) (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 rating outlook is stable. The rating reflects the company's strong market presence in the group medical segment, consistent 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. profitability, high liquidity and prudent reserving practices. The rating also recognizes the strategic benefits the company derives from brand recognition and cross-marketing with the affiliated HSBC Group. HSBC Medical has maintained its leading position as the second-largest medical and health insurer in Hong Kong with approximately 9.4% of total share in the accident and health market as of fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2004. HSBC Medical's competitive advantage over other medical and health insurers stems from its operational synergies with fellow subsidiaries in the HSBC Group. Despite having an above-average loss ratio, the company has tightly managed its expense level to remain competitive. In fiscal year 2004, the expense ratio stood at 10.28%, which was its lowest over the past five years, resulting in the combined ratio comparing favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with that of the industry. As of year-end 2004, 86% of the asset portfolio was comprised of either fixed interest securities or cash and cash equivalents. These investments were usually highly liquid call deposits or term deposits maturing within three months. Quick liquidity stood at 162.3% in 2004, and operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. have been maintained at a stable level. Offsetting factors include the company's modest capitalization on a stand-alone basis, high underwriting leverage and heavy dividend obligations. 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, indicates that the company's relative capitalization is weaker than its peers. Net premium leverage after the adjustment of non-risk premiums stood at 2.24 times at the end of 2004. The ability to generate internal growth in capital and surplus is limited by the parent's dividend requirements. The dividend payment for 2004 represented 114% of share capital. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , 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. |
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