S&P expects modest growth for BOC Insurance amidst market dynamics

The firm is expected to continue to provide high dividends to the BOC Group.

S&P Global forecasts BOC Insurance to maintain strategic importance to the BOC Group and gain strong capital and earnings over the next two years with a 99.95% confidence level.

In the same period, S&P expects the insurer to resume dividend upstream and continue to provide high dividends to the BOC Group.

On the flip side, S&P said that its low capital size of less than $1.35b (US$1.0b) may expose it to greater vulnerability than expected and to single large-event risks.

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In addition, S&P expects BOC Insurance’s investment leverage to remain elevated and a gradual increase in high-risk assets as equities and alternative investments in the next 24 months, which may increase its exposure to investment market volatility.

Meanwhile, S&P noted that the firm’s modest growth appetite should help alleviate underwriting pressure. 

In 2023, the firm reported a 4.4% topline growth and a combined ratio of 99%, 0.3% lower than 2022 which could lead to further underwriting volatility.

S&P also forecasts a robust regulatory solvency position for BOC Insurance in the next two years, following its year-end comprehensive and core solvency ratio of 418% and 391%, respectively, in 2023 which are above the minimum regulatory requirement.