Macau Insurance Company (MIC) MIC forecasts that its GPW for 2024 to grow on strong contributions from casino developments, while the recovery in the gaming and tourism industry gradually spills over to other parts of the economy, says AM Best.
Going forward, MIC aims to capture growth opportunities in both commercial and personal lines, for example, motor vehicles going into mainland China from Macau and the Greater Bay Area. The company also embraces digitalisation to enhance its service level, data accuracy, and process efficiency to support future business expansion.
MIC’s underwriting and investment income results have been consistently positive over the past years. Its combined ratio improved to 88.8% in 2023, with favourable investment gains mainly due to the changes in the fair value of equity investments. AM Best expects MIC to maintain underwriting profitability by expanding its more profitable business with higher premium retention.
The company attained a market share of 9.0% (MOP255m) in terms of gross premiums written (GPW) in 2023.
However, MIC, which was ranked third in Macau’s non-life insurance market for over a decade, fell to the fourth spot in 2023. The gradual decline in its market share over the past few years was driven partially by external factors, including COVID-19 impacting the gaming and tourism industry and contraction of casino investments, from which a meaningful proportion of MIC’s business is derived.
Ratings affirmed
AM Best has affirmed MMIC’s Financial Strength Rating of ‘A- ‘(Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent). The outlook of these credit ratings is ‘Stable’.
The ratings reflect MIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile, and appropriate enterprise risk management.
MIC’s risk-adjusted capitalisation remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). The company’s capital and surplus increased by 3.5% to MOP998m in 2023, mainly reflecting capital gains from equity investments. Although MIC’s strategic asset allocation reflects its appetite for equity investments, market risks are mitigated partially by the company’s surplus capital, diversified equity portfolio, and hedging strategy.
MIC paid MOP309m in special dividend to the ultimate parent, Dah Sing Financial Holdings, according to its capital plan. The dividend repatriation was executed in two stages – June 2023 and June 2024. Since the majority of the special dividend was settled by the transfer of equity investments, which lowered the equity securities risk, as measured by Best’s Capital Adequacy Ratio (BCAR), AM Best does not see a significant weakening in risk-adjusted capitalisation.
MIC has applied a 25% dividend payout ratio based on profit after tax starting from 2023 and is expected to maintain this dividend payout policy in the near future.
Based on MIC’s business plan, AM Best expects the company’s risk-adjusted capitalisation will remain solid to manage its underwriting and investment risks.