AM Best Affirms Credit Ratings of Dah Sing Insurance Company (1976) Limited

HONG KONG–()–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dah Sing Insurance Company (1976) Limited (DSI) (Hong Kong). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect DSI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the parental support from Dah Sing Financial Holdings Limited (DSFH) in terms of capital, brand recognition, business development, product distribution, risk management and operations.

DSI’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at the strongest level. The company’s equity investments exposure is higher than its peers after a large capital injection from DSFH in 2017. The company reported a material decline of HKD 234.5 million (USD 30 million) in capital and surplus in the first half of 2022 mainly due to a plunge in the market value of DSI’s equity portfolio. DSI has reduced its equity exposure as of the end of June 2022 and deployed derivatives to hedge part of its equity risks. DSI’s equity portfolio comprises listed stocks mainly in the United States and Hong Kong, and is well-diversified by sector and issuer. AM Best expects the company to implement robust investment selection and diversification strategies, as well as appropriate investment controls, to mitigate the high investment risk exposure.

The overall operating performance of DSI is driven by its investment performance. The five-year investment gains are supportive of the adequate operating performance assessment, but the nature of equity investments exposes DSI’s year-to-year net profits/losses and even capitalisation to potential volatility.

As a small to medium-sized player in Hong Kong’s non-life insurance segment, DSI maintained a market share of approximately 1%, with a gross premium written (GPW) of HKD 604 million in 2021. The company’s three major lines of business are motor, employees’ compensation and property damage. DSI is rebalancing its underwriting portfolio by expanding construction all risks and mortgage insurance business and reducing its offshore inward reinsurance portfolio. A diversified panel of corporate intermediaries contributed a majority of the company’s GPW, followed by banks and inward reinsurance.

Negative rating actions could occur if there is a material deterioration in the company’s risk-adjusted capitalisation or absolute size of capital and surplus, for example, due to redemption of the preference shares without reissuance coupled with material investment losses or a significant increase in risk exposure. Negative rating actions are also possible if there is a sustained unfavourable trend in operating performance, a material deterioration in DSFH’s credit profile, or if DSFH reduces the level of support it provides to DSI.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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