AM Best Affirms Credit Ratings of China Merchants Insurance Company Limited

HONG KONG, July 22, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of China Merchants Insurance Company Limited (CMI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CMI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the parental support from China Merchants Group Limited (CMG), including capital support, brand recognition, investment management and risk oversight.

CMI’s very strong balance sheet strength assessment is underpinned by its strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continued to grow organically in 2021 through full retention of operating profits. The company maintained a conservative investment strategy, with a majority of its assets allocated to cash, bank deposits and short-duration bonds. Premium cession increased as the proportion of commercial business enlarged. The reinsurance program remains comprehensive with reinsurers of good credit quality.

CMI’s operating performance was positive in 2021, with a profit after tax of HKD 29 million (USD 3.7 million), supported by positive underwriting and investment results. The company has been profitable over the past five years with an average return on equity of 4.2% (2017-2021). Underwriting results showed a favorable improvement in 2021, with a net combined ratio of 84.9%, mainly supported by better claims experience during the year. Increased reinsurance commission income also helped to offset the upward pressure in the management expense ratio. A growing stream of interest income over the past five years also contributed to the company’s positive and stable investment results, although yields remain low.

CMI maintained a stable-yet-small market presence in Hong Kong’s non-life insurance market. The company’s underwriting portfolio remains diversified. Premium revenue grew by 11.8% in 2021, mainly driven by the marine, property and liability lines of business, while the performance of the accident line continued to be dampened by travel restrictions under the COVID-19 pandemic situation.

Although CMI is well-positioned at its current rating level, negative rating actions could occur if the company experiences a material deterioration in the company’s risk-adjusted capitalization or its operating profitability due to sustained adverse experience in underwriting or investment results. A deterioration in the credit profile of the ultimate parent company, CMG, also may impose a negative impact on CMI’s ratings.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and permanent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity webpages. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Ken Lau
Senior Financial Analyst
+852 2827 3426
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

James Chan
Associate Director
+852 2827 3418
[email protected]

Jeff Mango
Managing Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
[email protected]

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