Investment risk to concern China BOCOM Insurance – AM Best

The insurer’s operating performance is deemed adequate.

China BOCOM Insurance (CBIC) business profile is “limited”, given its modest presence in Hong Kong's fragmented general insurance market, as stated by AM Best.

The company's underwriting portfolio is diverse, with property damage being its primary line of business by net premiums written, followed by accident and health, employees' compensation, and pecuniary loss. 

CBIC's distribution network includes bancassurance, brokers, agencies, and inward facultative. As the sole general insurance arm of BOCOM group, CBIC benefits from extensive distribution support through BOCOM's banking network.

The assessments reflect CBIC's very strong balance sheet strength, with risk-adjusted capitalisation at the highest level according to Best's Capital Adequacy Ratio (BCAR). 

However, investment risk is a concern due to exposure to unlisted investments with lower liquidity and transparency, along with concentration risk in private equity funds. 

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Additionally, CBIC's moderate reinsurance dependency is partially mitigated by prudent reinsurance arrangements and a solid credit profile of its diversified reinsurance panel.

CBIC's operating performance is deemed adequate, said AM Best.

The company achieved double-digit growth in gross premiums written and net premiums earned from 2018 to 2022. A stable investment income contributed to a five-year average operating ratio below 90%. 

While CBIC maintains a lower loss ratio due to careful underwriting, its high operating expense ratio stems from a small net premium base and elevated staff and compliance costs.