AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Dah Sing Insurance Company Limited (DSI) (Hong Kong).

These Credit Ratings (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 DSI receives from Dah Sing Financial Holdings Limited (DSFH) in terms of capital, brand recognition, business development, product distribution, risk management and operations. The conversion of HKD 550 million in redeemable preference shares held by DSFH into paid-in capital in early 2024 demonstrates this parental support to uplift the capital quality of DSI.

The revision of the outlooks to positive from stable reflects sustained improvement in DSI’s business profile, as demonstrated by the portfolio expansion, business diversification and the strengthened market position. The company’s gross written premiums (GPW) recorded a cumulative growth of 66% from 2020 to 2024, driven by strategic expansion in the accident & health, motor, and employees’ compensation lines, while maintaining a conservative stance on catastrophe risk in its inward reinsurance portfolio. Under its business plan, DSI is expected to maintain healthy growth through new initiatives in the medium term, positioning the company competitively in the Hong Kong non-life insurance market. Moreover, DSI has enhanced its actuarial modelling for pricing and performance monitoring. The company’s GPW is produced through diversified distribution channels, with the majority of business sourced from corporate intermediaries, followed by bancassurance supported by the affiliated Dah Sing Bank.

DSI’s risk-adjusted capitalisation remained at the strongest level at year-end 2024, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s reported capital and surplus (C&S) under HKFRS 17 surged 19% to HKD 2.8 billion in 2024, driven by full net profit retention and growth in the valuation of equity investments measured at fair value through other comprehensive income (OCI). DSI maintains a moderately high proportion, yet well-diversified equity investment portfolio. AM Best expects DSI to implement robust investment selection and diversification strategies, as well as appropriate investment controls, to mitigate the high investment risk exposure.

DSI remained profitable in 2024, with an adjusted return on C&S, including gains or losses both through profit or loss and OCI, of 17.5%, mainly supported by favourable investment results in tandem with the buoyant capital market conditions during the year. The company’s underwriting performance also has improved, owing to better underwriting controls and risk selection in key business lines such as property damage and employees’ compensation.

Positive rating actions could occur if DSI demonstrates successful implementation of its business plan, which will enhance its competitive advantage of securing profitable business and market position. Negative rating actions could occur if there is a material deterioration in DSI’s risk-adjusted capitalisation due to large investment losses or a significant increase in risk exposure. Negative rating actions also could arise if there is a sustained unfavourable trend in the company’s operating performance, for example, due to substantial equity investment losses. Negative rating actions are also possible if DSFH’s credit profile deteriorates materially or if the holding company 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.

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