Market Overview

A.M. Best Affirms Credit Ratings of Macau Insurance Company Limited


A.M. Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of "a-" of Macau
Insurance Company Limited (MIC) (Macau). The outlook of these Credit
Ratings (ratings) is stable.

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

MIC's balance sheet strength is supported by its risk-adjusted
capitalization being at the strongest level, as measured by Best's
Capital Adequacy Ratio (BCAR). In addition, following the sale of a life
insurance subsidiary and a capital infusion from Dah Sing Financial
Holdings Limited, the company's capital base has strengthened
significantly, resulting in a level of underwriting capacity that is
generally higher than its peers.

Despite a reduced revenue base in 2016 and 2017, which resulted in some
pressure on the expense ratio, the company's pre-tax operating return on
equity has remained stable and positive. MIC's loss ratios were
generally higher than its peers, but underwriting profits have been
consistent, and its interim results for 2018 also have shown a
significant improvement after the company implemented various measures
to remediate the performance of its in-force business. Over the short to
medium term, A.M. Best believes that as MIC continues to manage down its
exposure to unprofitable business, while pursuing profitable growth
through its bancassurance and direct channels, the company's
underwriting and operating results will remain positive and gradually
improve over time.

MIC is a major insurer in Macau that underwrites non-life personal and
commercial insurance products. Given its status as a local insurer
within a small market, MIC's risk profile shows high business
concentration risk. Nevertheless, A.M. Best considers the company's risk
management capabilities to be aligned appropriately with its risk
profile. This is supported by the company's conservative underwriting
and investment approach, as well as by various strategic initiatives to
increase business volumes and broaden its policyholder base.

The stable outlooks reflect A.M. Best's expectation that MIC will
maintain positive underwriting and operating results, supported by
steady revenue growth, stable claims ratios and an expense ratio that
will decline gradually over time.

Positive rating actions could occur if MIC demonstrates consistent and
sustained improvement in its business profile and underwriting
performance, coupled with a strong level of risk-adjusted
capitalization. Negative rating actions could occur if MIC's operating
performance deteriorates, leading to a decline in its risk-adjusted
capitalization level.

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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