A.M. Best Affirms ‘A’ (Excellent) Rating of Macau Insurance Co. Ltd.

June 18, 2002

A.M. Best Co. announced that it has affirmed the A (Excellent) financial strength rating of Macau Insurance Company Limited, a general insurer headquartered in the former Portugese enclave of Macau, which is now part of China.

“The rating reflects the company’s strong capitalization, continuing improvement in market profile and excellent operating performance in its core non-life operations,” said Best’s bulletin.

“While the life subsidiary has not contributed to bottom line results, its bancassurance strategy will generate further growth opportunities in the near future. The rating also considers the parental support from Banco Commercial de Portugues (BCP), a leading Portuguese insurance and banking group,” it added.

Best’s announcement cited Macau’s excellent operating performance during fiscal years 1997-2001, noting that the “gross and net loss ratios for the non-life business have ranged from 26% to 32% for the last two years, respectively.” It further stated that Macau has “well-designed reinsurance arrangements, which have “led to stable underwriting profitability, while conservative investments have provided another stable income stream. Most investments–other than those intended to match the life products’ liabilities–are either in cash or bonds, giving the company sufficient liquidity.”

Best concluded, however, that “Due to market saturation, the growth potential of the non-life portfolio has been limited. In contrast, the life portfolio will likely experience robust growth. Going forward, these developments will continue to have a significant impact on results.”

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