Market Overview

A.M. Best Affirms Credit Ratings of Blue Cross (Asia-Pacific) Insurance Limited


A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of "a" of Blue
Cross (Asia-Pacific) Insurance Limited
(Blue Cross) (Hong Kong). The
outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Blue Cross' balance sheet strength, which A.M. Best
categorizes as very strong, as well as its strong operating performance,
neutral business profile and appropriate enterprise risk management.

Blue Cross' risk-adjusted capitalization remains solid, partially
attributed to its diversified investment portfolio with strong
liquidity, and the gradual release of risk capital in tandem with the
runoff of the life business, despite organic capital growth from
earnings that is offset by the high dividend payout ratio.

The company continues to focus on underwriting risk selection to
strengthen its non-life portfolio, which has demonstrated a consistently
profitable and improving trend in underwriting results, partially
attributed to the stable and lower-than-peers expense ratio. The
favorable trend in return on equity also is supported by a track record
of stable interest income and the buoyant capital market condition in

Blue Cross remains as a mid-sized insurer in Hong Kong's highly
competitive non-life market. Approximately 90% of its gross premiums
written was sourced from the accident and health line through a
diversified distribution network.

Offsetting rating factors include the challenging operating environment,
in particular for group medical insurance, due to market competition and
medical inflation. In addition, Blue Cross' capital and surplus is
subject to some volatility arising from movements in fair value reserves
on available-for-sale assets.

Positive rating actions for Blue Cross are unlikely in the near term.
Negative rating actions could occur if there is a deteriorating trend in
the company's operating profitability or a significant decline in the
company's risk-adjusted capitalization.

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

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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