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

The Credit Ratings (ratings) reflect CBIC’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 wide range of support that CBIC receives from its parent, Bank of Communications Co., Ltd. (BOCOM), including distribution channel, corporate governance and brand recognition.

The negative rating outlooks reflect pressure on CBIC’s balance sheet strength assessment, driven by weakening balance sheet strength fundamentals from a concentrated unquoted investment. CBIC’s risk-adjusted capitalisation remained at the strongest level at year-end 2025, as measured by Best’s Capital Adequacy Ratio (BCAR). Nonetheless, BCAR decreased with higher equity securities risk from unquoted investments. The company’s capital and surplus (C&S) remains stable, with a robust regulatory solvency level, as evaluated by the Hong Kong Risk-Based Capital regime. Its financial leverage was 17.5% at the end of 2025, while still maintaining sufficient liquidity. Investment risk remains the major offsetting factor in the company’s balance sheet strength assessment given unquoted investments growth.

AM Best assesses CBIC’s operating performance as adequate. Stable investment income is the cornerstone of the company’s profitable bottom line, including stable interest income from listed debt securities and bank deposits. Thanks to stringent underwriting and prudent risk selection, CBIC maintained a lower-than-market-average loss ratio. However, its underwriting results continue to be impacted by high operating expenses relative to its small premium base, and the net profit is partly tempered by the finance costs from a bank borrowing.

AM Best assesses CBIC’s business profile as limited with a modest presence in Hong Kong’s highly fragmented general insurance market. The company’s underwriting portfolio remains diversified and has a diversified distribution network including inward reinsurance, brokers, bancassurance, agencies and direct channel. As the sole general insurance arm of the BOCOM group, CBIC carries BOCOM’s brand name and receives distribution support from its extensive banking network and subsidiaries.

Negative rating actions could occur if CBIC fails to reduce its risk in high-risk unquoted investments. Negative rating actions could occur if there is a material deterioration in CBIC’s operating performance. Although unlikely in the short to intermediate term, positive rating actions are probable if the company achieves prolonged improvement in its operating performance that is superior to market peers.