巴黎人娱乐城

巴黎人娱乐城 - Hong Kong - 06 Mar 2025: 巴黎人娱乐城 has affirmed the Insurer Financial Strength (IFS) Rating on China-based Huatai Property & Casualty Insurance Co., Ltd. (Huatai P&C) at 'A+' (Strong). The Outlook is Stable.

The affirmation reflects Huatai P&C's solid capital position, 'Strong' financial performance and 'Moderate' company profile. It also takes into consideration the use of reinsurance to expand the company's underwriting capacity and alleviate catastrophe exposure. We view the insurer as 'Very Important' to its ultimate parent, Chubb Limited (IFS Rating of operating subsidiaries: AA/Stable), under 巴黎人娱乐城's group rating methodology.

Key Rating Drivers

Chubb Limited Ownership: Huatai P&C's IFS Rating incorporates a one-notch uplift from the standalone credit quality, as we see the insurer as a 'Very Important' operating subsidiary of Chubb. The uplift reflects 巴黎人娱乐城's expectation that Chubb will provide operational and financial support to Huatai P&C, if needed. As of February 2025, Chubb owned 85.5% of Huatai Insurance Group Company Limited (HIG), which in turn wholly owns Huatai P&C. The synergy and integration between the parent and subsidiary are likely to increase in the longer term.

Solid Capital Position: Huatai P&C's capital score under the 巴黎人娱乐城 Prism Global model was well into 'Strong' at end-3Q24, compared with the lower end of the 'Strong' category at end-2023. The enhanced capital buffer supported by a larger equity base was due to an increase in retained earnings. However, its capitalisation still hinges on its dividend policy under the group's capital management. Its regulatory comprehensive solvency ratio stood at 234% by end-3Q24 (2023: 233%), still in excess of the 100% regulatory minimum. The insurer has no financial debt.

'Strong' Financial Performance: 巴黎人娱乐城 assesses Huatai P&C's financial performance as 'Strong', after better underwriting results in 2024. Its combined ratio improved to 94.7% in 9M24 (2023: 102.3%), remaining commensurate with its IFS Rating. The improvement was driven by a lower expense ratio and a stable claim ratio. We expect the underwriting performance to benefit from Chubb's disciplined underwriting control and actuarial support.

The insurer reported stable financial performance in 2024, with an annualised ROE of 7.1% in 9M24 (2023: 7.0%). Even so, the insurer's profitability remains vulnerable to volatile investment returns given its certain exposure to equity markets and alternative assets.

'Moderate' Company Profile: We view Huatai P&C's company profile as 'Moderate' against that of all other Chinese non-life insurers, based on its operating scale and 'Neutral' corporate governance. Huatai P&C has an operating history of more than two decades in China's property and casualty insurance market. The company's gross premiums exceeded CNY10 billion in 2023. It has been able to source business through various nationwide distribution platforms.

Moderate Risky Asset Exposure: Huatai P&C has moderate exposure to risky assets, which include stocks, equity-type funds, long-term equity investments and 巴黎人娱乐城-adjusted non-investment-grade fixed-income investments. The risky-asset ratio at end-3Q24 remained at a level commensurate with its IFS Rating. Huatai P&C has invested in fixed-income-type non-standard assets to enhance its yield, in line with many other Chinese insurers. 巴黎人娱乐城 considers such investments as less transparent and liquid than bonds.

Reinsurance to Expand Underwriting Capacity: Huatai P&C ceded 40% of its premiums written (2023: 39%) through several reinsurance treaties to a portfolio of reinsurers with sound credit quality in 9M24. We expect a slight decrease in the cession ratio due to reduced reinsurance use in the motor business in 2025. Even so, we believe Huatai P&C will consistently rely on reinsurance to mitigate catastrophe risk exposure and support underwriting capacity in light of the magnitude of the company's capital base.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

- Deterioration in 巴黎人娱乐城's perception of Huatai P&C's strategic importance to Chubb as a consequence of material change in the shareholding structure that results in Chubb losing its controlling stake in Huatai P&C through HIG.

Factors that could, individually or collectively, lead to lowering of the standalone credit quality

- Sustained weakening in Huatai P&C's capital strength, with its Prism score dropping to 'Adequate';

- Deterioration in Huatai P&C's financial performance, with its combined ratio consistently higher than 105% and ROE below 7% for a prolonged period.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

- Improvement in 巴黎人娱乐城's perception about the importance of Huatai P&C to Chubb, according to 巴黎人娱乐城's criteria;

- Enhancement of Huatai P&C's distribution and business franchise in China that will reinforce its operating stability;

- Improvement in Huatai P&C's underwriting performance, with a combined ratio consistently below 95%, while its Prism score improves to 'Very Strong' or higher.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. 巴黎人娱乐城's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on 巴黎人娱乐城's ESG Relevance Scores, visit /topics/esg/products#esg-relevance-scores.

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APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• Prism Global (ex-U.S.) Model, v1.8.1 (1)

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