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AM Best Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited

AM Best Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LFH’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

LFH’s balance sheet strength continues to be supported by a robust level of risk-adjusted capitalisation. Supported by positive operating results and profit retention, the company’s capital and surplus continued to grow organically in 2019 to MOP 567 million (USD 71 million). LFH’s investment strategy remains stable and conservative with a majority of its investments held in bonds and cash. Going forward, the company plans to invest more in bonds while maintaining a similar level of exposure inequity investments.

LFH has demonstrated a track record of consistently strong operating performance over the past five years, which continues to be supported by positive underwriting and investment results. The company’s net combined ratio slightly improved in 2019, mainly driven by an improvement in the net commission ratio, while its management expense ratio and net loss ratio remained stable. LFH’s investment portfolio continues to generate stable streams of interest and dividend income and supports the company’s overall operating results.

LFH ranked second in the Macau non-life insurance market, with a market share of more than 20% in terms of gross premium written 2019. The company continues to leverage the distribution channel support from its bank shareholders and maintains a competitive edge in acquiring good quality business through the bancassurance channel. LFH’s underwriting portfolio remains moderately diversified with its major lines of business being in residential fire, medical and other accident. The company’s business is concentrated in Macau and

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