A.M. Best Affirms Ratings of BOC Group Life Assurance Company Limited
HONG KONG -- July 31, 2014
A.M. Best has affirmed the financial strength rating of A (Excellent) and the
issuer credit rating of “a” of BOC Group Life Assurance Company Limited
(BOCGL) (Hong Kong). The outlook for both ratings is stable.
The ratings of BOCGL reflect its supportive risk-adjusted capitalization and
local solvency, strong business profile in the Hong Kong life insurance
market, in particular Renminbi (RMB)-denominated life products, as well as the
continued support from its banking parent, BOC Hong Kong (Holdings) Limited
(BOCHK) in terms of distribution and capital support.
BOCGL’s capital and surplus strengthened in 2013, mainly driven by
consistently favorable investment earnings and full profit retention. The
company is considered a pioneer in the RMB life insurance market in Hong Kong,
with an established leading market position. In addition, BOCGL benefits from
low acquisition costs while maintaining its market share as a result of the
extensive bancassurance network of BOCHK and adequate reinsurance support.
Offsetting these positive rating factors is continued investment risk
exposure, in particular the yield-spread widening of corporate debt
investments that may create volatility in the company’s net profits and
capital and surplus. Moreover, growing reinsurance recoverables in tandem with
the forecast strong growth in RMB products may create pressure to BOCGL’s
risk-adjusted capitalization should the counterparty risk of the major
reinsurer deteriorate. BOCGL has appropriate measures in place to mitigate
such counterparty risk.
Positive rating actions may occur if BOCGL can achieve sustainable improvement
in its risk-adjusted capitalization and local solvency while continuing to
maintain its strong business profile during its planned gradual shift of
product mix. Downward rating pressure could arise if there is a significant
deterioration in the company’s risk-adjusted capitalization in the event of
adverse financial market movement and heightened counterparty risk.
The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
Ratings are communicated to rated entities prior to publication, and unless
stated otherwise, the ratings were not amended subsequent to that
This rating announcement has been issued by A.M. Best Asia-Pacific Limited,
which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's
oldest and most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Company
James Chan, +852-2827-3424
Associate Financial Analyst
Vivian Cheung, +852-2827-3411
Senior Financial Analyst
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
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