A.M. Best Assigns a Group Rating to Macau Insurance Company.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--April 12, 2001 A.M. Best Co. has assigned an A (Excellent) financial strength group rating to Macau Insurance Company, based in Macau, and its wholly owned life insurance subsidiary Macau Life Insurance Company. The rating carries a stable outlook. The rating reflects the company's strong capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , conservative 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. position, improved underwriting results since 1998 and successful 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. strategy. Most of the company's non-life liabilities are of a short-tail nature and are not exposed to catastrophic risks. In addition, the company is part of Seguros e Pensoes, a leading Portuguese insurance group. The company maintains a conservative underwriting leverage for its non-life portfolio, as indicated by the net premium written to surplus ratio of 0.47 as of year-end 2000. Likewise, the life portfolio is supported by a 1,066% solvency The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. margin. Since 1998, the company has changed its non-life underwriting philosophy to focus on profitability rather than market share, as new procedures were put into place to reduce losses and improve claims handling. The improvement is substantial, as evidenced by the reduction of loss ratio from 57.1% in 1998 to 30.6% in 2000. The expense ratio for the life business has been reduced from 22.8% in 1998 to 5.1% in 2000, as this business has registered substantial growth since 1997. In addition, Macau Insurance relies on its parent company's bank branch network to develop the bancassurance personal lines business in a market where the brokerage & agent sectors are already saturated saturated /sat·u·rat·ed/ (sach´ah-rat?ed) 1. denoting a chemical compound that has only single bonds and no double or triple bonds between atoms. 2. unable to hold in solution any more of a given substance. . Macau Insurance, the parent of Macau Life Insurance Company, entered the life insurance sector in 1997, after Banco Comercial Portugues (BCP BCP Best Current Practice(s) BCP Business Continuity Planning BCP Business Continuity Plan BCP Book of Common Prayer BCP Banco Comercial Português BCP Bureau of Consumer Protection (US Federal Trade Commission) ) assumed majority control of Macau Insurance. With more than 55,000 banking clients of BCM BCM Baylor College of Medicine BCM Become BCM Business Communications Manager (Nortel) BCM Broadcom Corporation BCM Business Continuity Management BCM Business Contact Manager (Microsoft) -- a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of BCP -- or 12% of Macau's population, and 5% penetration of BCM's customer base, the company has a reasonable growth potential in the untapped bancassurance sector. The maturity of liability, except for employees' compensation, is short-tail in nature. In addition, the lack of catastrophic exposure in Macau offers a substantial cushion for the company's capital base. Offsetting the positive rating factors is a sustained recession in Macau since 1997 and the company's lack of matching asset in the capital market to offset the long-term liability for the life insurance portfolio. Given the population of Macau, the growth potential for the company is limited. In addition, the life portfolio development is still at an early stage and, for the time being, is affecting the bottom-line result negatively on a consolidated basis. 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. |
|
Printer friendly
Cite/link
Email
Feedback
Reader Opinion