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Nov 2019

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Macau: Investment risk looms larger for major insurer

Source: Asia Insurance Review | Oct 2019

Macau Insurance Company (MIC), a major non-life insurer in the territory, is exposed to larger investment risk arising from significantly higher equity investments, notes AM Best. Volatility in the capital markets may generate higher uncertainty for its capital and earnings.
 
The international credit rating agency made these comments as it affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of the company. The outlook of these Credit Ratings (ratings) is stable.
 
AM Best says that the ratings reflect MIC’s very strong balance sheet as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
 
The company’s capital and surplus strengthened significantly over the past two years following the sale of a life insurance subsidiary and a capital injection. 
 
MIC’s loss ratio improved in 2018, mainly from reserve releases from prior year claims due to prudent reserving and underwriting controls. This has offset the upward pressure on the net expense ratio from increases in net acquisition costs and management expenses.
 
AM Best expects that as MIC continues to manage down its unprofitable portfolio, while pursuing profitable growth through its bancassurance and direct channels, the company’s underwriting and operating results will remain positive. A 
 
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