AM Best Affirms Credit Ratings of FuSure Reinsurance Company Limited
2024年5月24日 - 9:21PM
ビジネスワイヤ(英語)
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of FuSure Reinsurance Company Limited (FuSure) (Hong
Kong). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect FuSure’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 (ERM). The ratings also reflect the implicit and
explicit support from its ultimate parent, Tencent Holdings Limited
(Tencent), including capital, business development, investment,
risk management and operational support.
In its third year of start-up operation, FuSure received a
capital injection from its shareholders in 2023, which doubled its
paid-up capital to RMB 1.75 billion as of 31 December 2023. AM Best
expects the company’s risk-adjusted capitalisation, as measured by
Best’s Capital Adequacy Ratio (BCAR), will remain at the strongest
level until 2027, according to the company’s provided business
plan. The company has maintained a prudent investment strategy with
its invested assets consisting predominantly of investment-grade
fixed-income securities and cash and cash equivalents. The company
has made an effort in diversifying its retrocessionaire panel in
recent years. Its retrocession arrangements are considered
appropriate with a sound credit rating reinsurance panel. Partially
offsetting factors include modest capital size compared with other
reinsurers in the region and execution risk from clientele
expansion.
AM Best assesses FuSure’s operating performance as adequate. The
company began operation in 2021 and has turned around since 2022.
In its projection period (2024-2027), FuSure targets double-digit
gross premium written growth, while maintaining low single-digit
return on equity. Underwriting volatility is limited due to less
volatile health coverage nature of key treaties the company has
underwritten. Investment yield is forecast to be stable at a low
single-digit, supported by its short-duration fixed-income invested
assets.
With three years of operating history, FuSure focuses on health
and accident lines in the Greater China region at its start-up
phase. Leveraging on Tencent’s support in business development and
distribution, the company is actively establishing its expertise
and market presence in health and accident lines. Despite portfolio
concentration in health lines, product risk is considered moderate,
as its underlying risks consist of personal short-duration health
insurance. While strengthening its core health business with
product innovation, FuSure also plans to diversify its product
offering and geographic reach from open market business in the
medium term. As a start-up reinsurer, FuSure is exposed to elevated
operational risk and business execution risk; these risks are
offset partially by the fact that the company has an experienced
management team, as well as strategic and operational support from
Tencent.
FuSure’s ERM is considered appropriate to its risk profile. It
has defined its risk appetite, established the three lines of
defence governance structure, formulated various risk policies and
performed stress testing. The company performs annual Own Risk and
Solvency Assessment (ORSA) and submits its ORSA report to the local
insurance regulator, the Hong Kong Insurance Authority. AM Best
expects FuSure will enhance its ERM framework further as the
company grows its business profile and risk exposure increases.
FuSure receives rating enhancement from implicit and explicit
support from its ultimate parent, Tencent, which owns 85.01% of
shares of FuSure. Tencent has a sizeable balance sheet and is
listed on the Hong Kong Stock Exchange, with high financial
flexibility and excellent credit fundamentals. The parent has
demonstrated its commitment to FuSure via capital injection in 2023
for supporting its business growth. AM Best expects FuSure will
continue benefiting from the parent group from explicit capital
support, and implicit support in all aspects of operations and
management, as well as particularly effective use of innovation and
technology that could lead to competitive advantages in product
design and pricing sophistication.
Negative rating actions could occur if FuSure materially
deviates from its business plan, including adverse deviation from
its projections, a significant decline in risk-adjusted
capitalisation and liquidity level, or the company’s operating
performance no longer supports its current ratings. Negative rating
actions also could occur if there is a material decline in the
level of support it receives from its ultimate parent, Tencent.
While it is unlikely in the near term, positive rating actions
could occur if the company can demonstrate successful execution of
its business plan and further strengthen its balance sheet.
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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Lucie Huang Senior Financial Analyst +852 2827
3414 lucie.huang@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Christie Lee Senior Director, Analytics +852
2827 3413 christie.lee@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com