AM Best has received a Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” (Excellent) for Hong Kong-based FuSure Reinsurance Company Limited (FuSure). The outlook for both ratings is stable.

The strong ratings reflect FuSure’s very strong balance sheet, favorable operating performance, limited business profile, and adequate enterprise risk management (ERM). The ratings are also supported by Tencent Holdings Limited (Tencent), FuSure’s parent company.

In 2023, FuSure received a significant capital injection from shareholders, doubling its paid-up capital to RMB1.75 billion by the end of the year. AM Best expects the company’s risk-adjusted capitalization, measured by Best’s capital adequacy ratio (BCAR), to remain at the strongest level through 2027, according to FuSure’s business plan.

Get the latest reinsurance news straight to your inbox twice a week. Register here

The company follows a conservative investment strategy, focusing on investment-grade fixed income securities and cash equivalents. In addition, FuSure has successfully diversified its reinsurance panel, which includes a sound credit rating reinsurance panel. However, its relatively modest capital size and the risks of expanding its client base were noted as challenges.

FuSure’s operational performance is adequate. Since commencing operations in 2021, the company has shown improvement, with double-digit growth in gross written premiums expected from 2024 to 2027. The company maintains a low-single-digit return on equity, with stable investment returns from short-term fixed income investments. . Underwriting volatility is limited due to the stable nature of the major health coverage treaties.

By focusing on health and casualty insurance in the Greater China region, FuSure is leveraging Tencent’s business development and distribution support to build its market presence. Although its portfolio is concentrated in health insurance, the product risk is moderate, as the core policies are short-term personal health insurance. FuSure plans to diversify its product and geographic reach in the medium term. While you face higher operational and business execution risks as a startup, they are mitigated by Tencent’s experienced management team and strategic support.

FuSure’s ERM framework was deemed appropriate for its risk profile, with defined risk appetite, three lines of defense management structure, differentiated risk policies, and stress testing. The Company performs annual Own Risk and Solvency Assessments (ORSA) submitted to the Hong Kong Insurance Authority. As FuSure grows, AM Best expects to make further improvements to its ERM framework.

FuSure also benefits from strong support from Tencent, which owns 85.01% of the company. Tencent’s significant financial resources and commitment to FuSure, demonstrated by a capital injection in 2023, are important factors. This support includes capital, operational assistance and technology innovation, giving FuSure a competitive advantage in product design and pricing.

Get the latest reinsurance news straight to your inbox twice a week. Register here