A.M. Best Affirms Rating of Wing Lung Insurance Company Limited; Assigns Issuer Credit Rating.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and assigned an issuer credit rating of "a-" to Wing Lung Insurance Company Limited (WLI WLI Weblogic Integration (Bea Systems) WLI Weekly Leading Index WLI Whole Life Insurance WLI Buoy Tender, Inland (USCGC) WLI Work Load Indicator WLI World Learning Incorporated WLI Where Lines Intersect ) (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 for both ratings is stable. The rating reflects WLI's prudent risk-adjusted capitalization, consistently positive operating results, improved net premium leverage ratio and the conservative investment strategy. WLI's underwriting profitability remained stable in 2004 despite continued softening in premium rates in the local non-life market. The company's consistent positive operating result for the past five years has fueled its surplus growth. The risk-adjusted capitalization, as measured by 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. , remained adequate and supportive of WLI's current rating. Additionally, the company's net premium leverage ratio improved from 1.29 in 2002 to 0.95 in 2004, falling within a comfortable margin to offset any short-term pressure on underpricing Underpricing Issuing securities at less than their market value. underpricing The pricing of a new security issue at less than the prevailing price of the same security in the secondary market. Underpricing helps ensure a successful sale. or increase in losses. Although WLI increased its investment in fixed income instruments Fixed income instruments Assets that pay a fixed dollar amount, such as bonds and preferred stock. , the liquidity of its investment portfolio remained strong. Cash and fixed income instruments represented about 48% and 29%, respectively, of the company's assets as at June 2005. The prudent investment strategy and portfolio have allowed for a stable investment return with a fair degree of financial flexibility. These positive rating factors are partially offset by the continued decline in premium rates of WLI's major lines of business and the concentration on liability business in its portfolio. WLI has a narrow spread of risk due to the heavy concentration on general liability business, which represented about 67% of its total business in 2004. The deteriorating premium rates and intense market competition could lead to a higher degree of premium volatility and undermine the stability of the company's operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before going forward. 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 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 www.ambest.com. |
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