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A.M. Best Assigns Credit Ratings to Dah Sing Insurance

DSI received a material capital injection of HKD 1.35 billion (USD 173 million) from DSFH in 2017. The company also has grown its capital base gradually from a full retention of net profits over the past five years.

A.M. Best expects the company’s risk-adjusted capitalization to remain robust over the short to intermediate term, supporting the anticipated increase in asset and underwriting risks driven by business expansion.

The company has delivered profitable operating results over the past five years, mainly attributed to a stream of interest income from the high proportion of fixed income investments, which partially offset the higher volatility in underwriting results.

As a small-sized player with limited market share in Hong Kong’s non-life segment, DSI’s underwriting portfolio remains skewed toward motor and employees’ compensation businesses, although the company has been gradually diversifying its book of business by tightening underwriting of these products while expanding accident and health business via the affiliated Dah Sing Bank network.

Offsetting rating factors include the highly competitive operating environment and additional pressure on the company’s underwriting margin due to increasing acquisition and management expenses relative to its small premium scale.