KUALA LUMPUR, March 30 (Bernama) -- A.M. Best has placed under review with negative implications the financial strength rating of A (excellent) and the long-term issuer credit rating of 'a' of Luen Fung Hang Insurance Company Ltd (LFH) Macau.
The ratings will remain under review until A.M. Best completes its evaluation of the impact from the regulator's final decision, the mitigation plans that LFH's management put in place and the level of financial support the shareholders provide, a statement said.
These credit ratings actions reflect the uncertainty surrounding LFH's liquidity and the risk that the company will not be able to comply with regulations regarding technical reserves.
It could require the company to pledge a material amount of assets by April 2018 to the regulator in order to back part of the ceded reserves arising from Typhoon Hato.
A final decision by the Monetary Authority of Macau on the total amount of technical reserves, and the company's action plan in response to this decision, is expected to be finalised by mid of April.
LFH is the second-largest non-life insurer in Macau, with strong operating performance and a five-year average return on equity of 24.3 per cent from 2012 to 2016.
A.M. Best is the world's oldest and most authoritative insurance rating and information source.
-- BERNAMA
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