AM Best Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LFH’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

LFH’s balance sheet strength continues to be supported by a robust level of risk-adjusted capitalisation. Supported by positive operating results and profit retention, the company’s capital and surplus continued to grow organically in 2019 to MOP 567 million (USD 71 million). LFH’s investment strategy remains stable and conservative with a majority of its investments held in bonds and cash. Going forward, the company plans to invest more in bonds while maintaining a similar level of exposure inequity investments.

LFH has demonstrated a track record of consistently strong operating performance over the past five years, which continues to be supported by positive underwriting and investment results. The company’s net combined ratio slightly improved in 2019, mainly driven by an improvement in the net commission ratio, while its management expense ratio and net loss ratio remained stable. LFH’s investment portfolio continues to generate stable streams of interest and dividend income and supports the company’s overall operating results.

LFH ranked second in the Macau non-life insurance market, with a market share of more than 20% in terms of gross premium written 2019. The company continues to leverage the distribution channel support from its bank shareholders and maintains a competitive edge in acquiring good quality business through the bancassurance channel. LFH’s underwriting portfolio remains moderately diversified with its major lines of business being in residential fire, medical and other accident. The company’s business is concentrated in Macau and the narrow geographic focus remains a major offsetting factor that has constrained its business profile assessment.

LFH is well-positioned for its current ratings. Negative rating actions could occur if the company’s operating performance exhibits a material and deteriorating trend in profitability such that it no longer supports a strong assessment, or if there is a significant weakening in the company’s business profile, for example, a sharp decline in market share due to weaker distribution support from its bank shareholders. Negative rating actions could also occur if LFH’s risk-adjusted capitalisation experiences a significant deterioration.

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

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

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Paul Lam
Financial Analyst
+852 2827 3402
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

James Chan
Associate Director
+852 2827 3418
[email protected]

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]

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