A.M. Best Affirms Ratings of Hang Seng Life Limited; Assigns Ratings to Hang Seng Insurance Company Limited.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) (FSR) and the issuer credit rating (ICR) of "aa-" of Hang Seng Life Limited (HSL) (Hong Kong). The outlook for both ratings is stable.

Subsequently, A.M. Best has withdrawn both ratings and assigned a category NR-3 (Rating Procedure Inapplicable) to HSL in response to the sale of 100% of its shareholdings, as well as the transfer of its entire life insurance portfolio to Hang Seng Insurance Company Limited (Hang Seng Insurance) (Hong Kong) effective November 19, 2007.

Concurrently, A.M. Best has assigned an FSR of A+ (Superior) and an ICR of "aa-" to Hang Seng Insurance. The outlook for these ratings is stable.

The ratings are based on an analysis of the long-term business of Hang Seng Insurance. The assigned ratings reflect the company's improved market presence, adequate level of risk-adjusted capitalization and historically profitable operating performance. The ratings also recognize the company's secured distribution capabilities gained from its immediate parent, Hang Seng Bank.

Hang Seng Insurance has strengthened its position in its designated market, despite increased market competition in the local life insurance industry. The company captured a 6.2% share of the direct in-force individual life market in 2007, compared to 5.8% in 2006.

Being a wholly owned subsidiary of Hang Seng Bank, the company is capable of accessing the mass market through the banking branches of its parent. Hang Seng Insurance recorded a robust new business growth of 29% in its non-linked regular contribution products in 2007. Ongoing distribution support of the parent is expected to enable the company to sustain its business growth going forward.

Overall operating performance has improved over the past five years. In addition to a relatively stable lapse and favorable mortality experiences, strong investment earnings have contributed favorably to Hang Seng Insurance's overall operating profitability during the same period. Operating efficiency has improved through achieving greater economies of scale due to the growth of its insurance book. Embedded value grew by 20.6% in 2007 from the prior year. A.M. Best expects that the company's premium growth momentum and consistent investment earnings will further enhance its embedded value.

These strengths are partly offset by the increased pressure on risk-adjusted capitalization. Sustained business growth led to a considerable increase in asset size, in particular equities investment for 2007, which placed considerable stress on Hang Seng Insurance's risk-adjusted capitalization, although it remains at a level commensurate with its ratings. Further strengthening of the company's capitalization on a risk-adjusted basis is essential for its future business growth.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.