HONG KONG--(BUSINESS WIRE)--
A.M. Besthas assigned the financial strength rating of A-
(Excellent) and issuer credit rating of “a-” to Starr Property &
Casualty Insurance (China) Company, Limited (Starr China) (China),
formerly known as Dazhong Insurance Company Limited. The name change is
pending completion of the local process. The outlook assigned to both
ratings is stable.
The ratings reflect Starr China’s adequate level of risk-adjusted
capitalization and a prudently managed investment portfolio. The ratings
also benefit from the business and operational support of Starr
International Company, Inc. (SICO) and its insurance subsidiaries,
and the capital commitment from Starr Insurance & Reinsurance Limited
(SIRL), one of the affiliated companies withinSICO, which is a
20% shareholder of Starr China.
Since SIRL took over management control in 2011, Starr China has
actively reduced its equity exposure and restructured its investment
portfolio with a stronger emphasis on deposits and quality fixed income
investments. In 2014, Starr Indemnity & Liability Company,
another affiliated company within SICO, has been progressively acquiring
shares in Starr China, which when completed will increase SICO’s
aggregate holdings through its subsidiary companies to 92.42% from 20.0%
in 2011. A new management team was appointed to Starr China in 2014 to
revamp its commercial product mix and distribution strategy with the
support of SICO and its insurance company subsidiaries. The new
management will centralize the decision-making function at Starr China’s
headquarters to streamline the company’s managerial and operational
structures. Additionally, claims services and distribution network will
be restructured to improve cost efficiency. These measures are expected
to deepen the degree of managerial integration with SICO and its
insurance company subsidiaries in the long run. SIRL has also provided
various reinsurance supports, including a stop-loss arrangement, to help
stabilize the company’s profitability metrics going forward.
Partially offsetting these factors include Starr China’s historical
volatile and unfavorable underwriting performance, and the challenges
the company faces in executing its business plan. The acceptance of the
company’s new commercial lines products and the effectiveness of the new
distribution model remain to be tested in China’s increasingly
competitive non-life market.
Positive rating movement could occur if Starr China can demonstrate a
sustainable improvement in underwriting performance and the quality of
business, coupled with an enhanced market position and capitalization.
Negative rating movement could result from a material adverse deviation
from the company’s business plan, a significant decline in the
risk-adjusted capitalization or a reduced level of support provided by
SIRL or SICO.
The methodology used in determining these interactive ratings is Best’s
Credit Rating Methodology, which provides a
comprehensive explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s Credit
Rating Methodology can be found at www.ambest.com/ratings/methodology.
Ratings are communicated to rated entities prior to publication, and
unless stated otherwise, the ratings were not amended subsequent to that
This rating announcement has been issued by A.M. Best Asia-Pacific
Limited, which is a subsidiary of A.M. Best Company. A.M. Best
Company is the world's oldest and most authoritative insurance rating
and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Company, Inc.
General Manager, Analytics
Manager, Public Relations
+(1) 908 439
2200, ext. 5159
Assistant Vice President, Public Relations
908 439 2200, ext. 5644
Source: A.M. Best Company, Inc.