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AM Best Affirms Credit Ratings of Dah Sing Insurance Company (1976) Limited

The 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 from Dah Sing Financial Holdings Limited (DSFH) in terms of capital, brand recognition, business development, product distribution, risk management and operations.

The company’s risk-adjusted capitalisation remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supportive of the increased asset and underwriting risks from its business expansion. Following a large capital injection from DSFH in 2017, DSI has significantly expanded its investment portfolio over the past four years. The heightened investment risk is partially mitigated by the various control limits stipulated in DSI’s investment policy and the diversity in its equity portfolio. Other supportive factors to the balance sheet strength include organic capital growth from full profit retention.

DSI has consistently delivered a profitable operating performance over the past five years (2016-2020), mainly driven by its favourable investment results, albeit partially offset by the relatively marginal and volatile underwriting performance.

As a small-to-medium-size player in Hong Kong’s non-life insurance segment, DSI maintained a market share of approximately 1%, with a gross premium written of HKD 551.6 million in 2020. The company’s three major lines of business are motor, employees’ compensation and property inward treaty lines. DSI plans to scale down the proportion of its reinsurance inward treaty business to better control its risk accumulation, while further strengthening and diversifying its multi-channel distribution network through new business initiatives in growing business lines, including property damage, engineering, mortgage, and mid-markets with a focus on small-and-medium enterprises.


Fitch Rates Dah Sing Bank's Subordinated Notes 'BBB-(EXP)'

Fitch Ratings has assigned Hong Kong-based Dah Sing Bank, Limited's (DSB; BBB+/Stable/bbb+) proposed Basel III-compliant Tier 2 subordinated notes an expected rating of 'BBB-(EXP)'.

The notes will be issued under DSB's USD2 billion euro medium-term note programme. The notes will mature in 10 years and will be callable by DSB after five years and semi-annually thereafter. They will qualify as Tier 2 capital as their terms include a point of non-viability that the authorities may trigger at their discretion. In addition, the Hong Kong resolution authorities can, through their statutory powers, override the notes' contractual terms if they consider it necessary to restore the bank's viability.

The bank will use the proceeds from the new issuance to replace existing obligations that will become callable in November 2021.


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