Fitch Rates AXA General Insurance Hong Kong IFS 'AA-'; Outlook Stable
KEY RATING DRIVERS
The 'AA-' IFS rating reflects Fitch's view of AXA GI HK's 'Core' status within the AXA group, notably supported by its 100% ownership and intra-group reinsurance agreements. AXA GI HK is one of the group's largest non-life operations in Asia and its strategy is fully aligned with group ambitions. Fitch expects the AXA group to provide additional financial support to the company, in case of need.
AXA GI HK is the market leader in non-life insurance in Hong Kong with a market share of 8.3% in 2014. Gross written premiums reached HKD3,651m (EUR423m). Following the acquisition of the non-life insurance business from HSBC in 2012, AXA GI HK's bottom line profitability has been negatively impacted by integration costs and write-downs of intangibles. However, underlying profitability has remained strong with combined ratios of 95.7% and 94.1% in 2014 and 2013, respectively. The company is well capitalised with the local regulatory solvency ratio exceeding 250%. AXA GI HKs investment policy is conservative, mostly concentrated in highly rated fixed income instruments and cash. In addition, AXA GI HK has no financial debt on its balance sheet.
Factors that could lead to a downgrade of AXA GI HK include a downgrade of AXA group's rating or a change in Fitch's view of AXA GI HK's strategic position within the AXA group.
An upgrade of AXA group's rating could lead to an upgrade of AXA GI HK.