AM Best Affirms Credit Ratings of Taiping Reinsurance Company Limited and Its Subsidiary

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) of Taiping Reinsurance Company Limited (TPRe) (Hong Kong) and its wholly owned subsidiary, Taiping Reinsurance (China) Company Ltd. (TPRe China) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings of TPRe reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also acknowledge the continued implicit and explicit support given by TPRe’s parent company, China Taiping Insurance Holdings Company Limited (CTIH), in terms of capital, investment, risk oversight and shared operational resources.

TPRe’s risk-adjusted capitalisation remained at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR), and is expected to maintain at the current level over the short to intermediate term. The company has demonstrated strong financial flexibility in tapping both traditional and alternative capital sources. On 31^st December 2024, TPRe sponsored the issuance of Asia’s first dual-peril, dual-trigger catastrophe bond, enhancing its catastrophe risk management capabilities. The reinsurer has been increasing its asset allocation to investment-grade bonds, while lowering its exposure to alternative assets.

TPRe reported a net profit of HKD 957.4 million in 2024, with a return-on-equity ratio of 8.3% under HKFRS 17. The non-life insurance service results have moderately improved with a combined ratio of 92.7%, as calculated by AM Best. The earnings contribution of life insurance service results has remained limited. TPRe’s overall investment performance has remained stable, underpinned by interest income from fixed-income investments. The company’s net impairment losses of financial assets materially narrowed in 2024, but continues to weigh down on the investment results.

Leveraging CTIH’s strong brand recognition, TPRe has established a solid presence across the Greater China region and maintains a leading position in the non-life reinsurance market in both Hong Kong and Macau. The company continues to strategically diversify its business profile in mature markets while enhancing its underwriting capabilities in specialty lines. AM Best expects the parent company to provide timely financial support to TPRe, when needed.

Negative rating actions could occur if there is a sustained deteriorating trend in TPRe’s operating performance such that it no longer supports the current adequate assessment. Negative rating actions also could arise if there is a material deterioration in CTIH’s credit profile or if CTIH reduces the level of support it provides to TPRe. While deemed unlikely over the short to intermediate term, positive rating actions could occur if there is a material improvement in the reinsurer’s balance sheet strength fundamentals, which could result from a significant increase in its risk-adjusted capitalisation.

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 pertinent 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 web page. 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 specialising 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 www.ambest.com.

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