AM Best Affirms Credit Ratings of Luen Fung Hang Insurance Company Limited

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LFH’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

LFH’s balance sheet strength is supported by risk-adjusted capitalisation that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus continues to grow organically through partial profit retention in the past few years, supported by a track record of positive operating results. The company’s investment strategy remained prudent in 2022, with a majority of its investment portfolio composed of bonds, fixed deposits, as well as cash and cash equivalents.

LFH again ranked second in Macau’s non-life insurance industry in 2022, based on its 22.4% market share of gross premiums written (GPW). The company continues to leverage distribution support from its bank shareholders and maintains a competitive edge in acquiring good quality business through the bancassurance channel. The company’s underwriting portfolio remains moderately diversified, with the bulk of its business in fire and medical lines. In 2022, the company’s business was negatively affected by the COVID-19 situation in Macau, and its GPW decreased by 7.2% year-on-year, which was largely consistent with the overall market performance. Nevertheless, both net combined ratio and return-on-equity remained strong at 58% and 17%, respectively, demonstrating a consistently strong and better-than-average operating performance.

LFH is well-positioned for its current ratings. Negative rating actions could occur if LFH’s operating performance exhibits a material and deteriorating trend in profitability such that it no longer supports a strong assessment, or if LFH’s risk-adjusted capitalisation experiences a significant deterioration, for example, due to unexpected large underwriting or investment losses. Positive rating actions could occur if LFH achieves sustained improvement in its operating performance while maintaining a robust level of risk-adjusted capitalisation.

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

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