Hong Kong:
Hong Kong based FuSure Reinsurance Company,has received a licence as a general professional reinsurer from the Insurance Authority. Limited, Hong Kong).,has been assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) by the rating agency.AM Best
The outlook assigned to these Credit Ratings (ratings) is stable.
With an initial capitalisation of HKD 1 billion (approximately USD 129 million), the company is 85.01% owned by Tencent Holdings Limited (Tencent), a technology conglomerate listed on the Hong Kong Stock Exchange, and 14.99% owned by Grand Azure Limited, a privately owned investment company.
The ratings reflect FuSure’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 implicit and explicit support from its ultimate parent, Tencent, including capital, business development, investment, risk management and operational support.
AM Best projects FuSure’s risk-adjusted capitalisation to be at the strongest level throughout the initial five-year business plan (2021-2025), as measured by Best’s Capital Adequacy Ratio (BCAR). The result is underpinned by expected capital support from its shareholders, prudent investment strategy and retrocession support. Notwithstanding, the relatively limited size of the initial capital and the projected fast-increasing underwriting leverage are offsetting factors to the company’s balance sheet strength.
As a start-up reinsurer, the company projects moderate net losses at the early stage of operation due to upfront expenses and expects to turn profitable toward the second half of its five-year business plan. Operating performance is exposed to elevated operational risk and execution risk; however, these risks are offset partially by the fact that the company has an experienced management team, as well as strategic and operational support received from its parent.
During the initial development phase, FuSure targets to build its underwriting book with a core focus on short-term health reinsurance in Greater China, while gradually diversifying into other product lines and other regions in the future. Although there is product concentration in the initial phase, the product risk of health insurance is viewed as moderate.
FuSure expects to build its market presence in the initial stage by sourcing most of its premium revenue through its parent group’s established insurance client network.
FuSure receives rating enhancement from implicit and explicit support from its ultimate parent, Tencent.
The company is viewed as a long-term strategic investment of Tencent, which has a sizable balance sheet, strong financial flexibility and favourable credit fundamentals. AM Best expects FuSure to benefit from the parent group in terms of effective use of innovation and technology, leading to competitive advantages in product design and pricing sophistication.