Luen Fung Hang Insurance Co (LFH) has again ranked second in Macau’s non-life insurance industry in 2022, based on its 22.4% market share of gross premiums written (GPW), says AM Best.
The company continues to leverage distribution support from its bank shareholders and maintains a competitive edge in acquiring good quality business through the bancassurance channel.
The company’s underwriting portfolio remains moderately diversified, with the bulk of its business in fire and medical lines.
In 2022, LFH’s business was negatively affected by the COVID-19 situation in Macau, and its GPW decreased by 7.2% year-on-year, which was largely consistent with the overall market performance. Nevertheless, both net combined ratio and return-on-equity remained strong at 58% and 17%, respectively, demonstrating a consistently strong and better-than-average operating performance.
Ratings affirmed
AM Best has affirmed LFH’s Financial Strength Rating of ‘A’ (Excellent) and Long-Term Issuer Credit Rating of ‘a’ (Excellent). The outlook of these credit ratings is ‘Stable’.
The ratings reflect LFH’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Balance sheet strength
LFH’s balance sheet strength is supported by risk-adjusted capitalisation that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continue to grow organically through partial profit retention in the past few years, supported by a track record of positive operating results.
The company’s investment strategy remained prudent in 2022, with a majority of its investment portfolio composed of bonds, fixed deposits, as well as cash and cash equivalents.
