Reading Time: 2 minutes

HONG KONG–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Tugu Insurance Company Limited (TIC) (Hong Kong). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect TIC’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.

On a going-concern basis, the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained supportive of the balance sheet strength. Over the past five years, net underwriting leverage has trended downward and remained low while capital and surplus has exhibited volatility, driven by investment property revaluation gains in 2017 and fluctuations in operating earnings. The balance sheet strength is offset partially by the high asset concentration in a small number of investment properties and a high degree of uncertainty and sensitivity to actuarial assumptions in net reserves, partially attributed to the small net retained book of business.

The negative outlooks reflect the strategic uncertainty over TIC’s capitalization over the short to intermediate term, following the public disclosure of its parent, PT Asuransi Tugu Pratama Indonesia Tbk, of its intention to sell its shares in TIC.

In regard to operating performance, TIC’s underwriting results have been volatile over the past five years, mainly due to significant reserve movements and volatile claims experience in its commercial lines-focused portfolio. Fixed costs remained high due to the small-sized and shrinking net underwriting portfolio. Investment results continued to benefit from the income stream from rental properties, and bond and equity investments.

TIC is a small insurer in Hong Kong’s highly competitive and fragmented non-life market. The company applies basic tools in risk management, such as investment and underwriting guidelines.

Positive rating actions are unlikely in the near term. Negative rating actions could occur if there is a material decline in the company’s risk-adjusted capitalization or liquidity, for example, due to adverse reserve movements or a significant decrease in its capital position.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


James Chan
Senior Financial Analyst
+852 2827 3418
[email protected]

Christie Lee
Senior Director
+852 2827 3413
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]