FuSure Reinsurance’s risk-adjusted capital to stay solid until 2027

From 2024 to 2027, it targets double-digit growth in gross written premiums.

FuSure Reinsurance’s risk-adjusted capitalisation, as measured by AM Best’s Capital Adequacy Ratio (BCAR), to remain at the strongest level through 2027.

AM Best also perceives the reinsurance company to keep a stable outlook.

These ratings reflect FuSure's very strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management (ERM). 

It also accounts for both implicit and explicit support from its parent company, Tencent Holdings Limited (Tencent), which includes capital, business development, investment, risk management, and operational support.

In 2023, FuSure received a capital injection from shareholders, doubling its paid-up capital to RMB1.75b as of 31 December 2023.

The company follows a prudent investment strategy with assets primarily in investment-grade fixed-income securities and cash equivalents. Efforts to diversify its retrocessionaire panel have resulted in appropriate retrocession arrangements with a sound credit rating reinsurance panel. 

However, FuSure’s modest capital size compared to regional reinsurers and the execution risk from clientele expansion are noted as offsetting factors. Having started operations in 2021, the company turned profitable in 2022. 

From 2024 to 2027, it targets double-digit growth in gross written premiums whilst maintaining a low single-digit return on equity. Its underwriting volatility is low due to the stable nature of the health coverage it underwrites, AM Best assessed.

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Investment yields are expected to remain stable at low single-digit levels due to short-duration fixed-income assets.

Initially focusing on health and accident lines in Greater China, FuSure leverages Tencent's support in business development and distribution to build its expertise and market presence. Despite a concentration in health lines, product risk is moderate due to the short-duration nature of underlying health insurance risks. 

FuSure plans to diversify its product offerings and geographic reach in the medium term. The company’s operational and business execution risks are partially mitigated by its experienced management team and Tencent’s strategic support.

FuSure’s ERM is appropriate for its risk profile, with a defined risk appetite, three lines of defence governance structure, and various risk policies.

It performs annual Own Risk and Solvency Assessments (ORSA) and reports to the Hong Kong Insurance Authority. As FuSure's business profile and risk exposure grow, its ERM framework is expected to enhance further.

Tencent’s ownership of 85.01% of FuSure’s shares provides significant support. Tencent, with a robust balance sheet and high financial flexibility, has demonstrated its commitment through capital injections and support in operations and management. 

This backing, combined with the effective use of innovation and technology, gives FuSure competitive advantages in product design and pricing.