AM Best, a leading credit rating agency, has reaffirmed the A- (Excellent) Financial Strength Rating and the “a-” (Excellent) Long-Term Issuer Credit Rating for FuSure Reinsurance Company Limited, based in Hong Kong. The outlook for both ratings remains stable.
The robust ratings reflect FuSure’s strong balance sheet, satisfactory operating performance, limited business profile, and effective enterprise risk management (ERM) practices. These ratings are further bolstered by the support of Tencent Holdings Limited (Tencent), FuSure’s parent company.
In 2023, FuSure experienced a significant capital injection from its shareholders, resulting in a doubling of its paid-up capital to RMB 1.75 billion by year-end. AM Best anticipates that the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), will remain at the highest level through 2027, in line with FuSure’s outlined business plan.
The company adheres to a conservative investment strategy, primarily focusing on investment-grade fixed-income securities and cash equivalents. FuSure has also successfully diversified its retrocessionaire panel, which includes reinsurance with sound credit ratings. However, challenges remain due to its relatively modest capital size and the risks associated with expanding its client base.
FuSure’s operating performance is deemed adequate, with notable improvement since its inception in 2021. The company projects double-digit growth in gross premiums written from 2024 to 2027, maintaining a low single-digit return on equity. Stable investment yields from short-duration fixed-income investments contribute to its stability, while underwriting volatility is limited due to the stable nature of its key health coverage treaties.
Specializing in health and accident insurance in the Greater China region, FuSure leverages Tencent’s business development and distribution support to enhance its market presence. While its portfolio is concentrated in health insurance, the moderate product risk is mitigated by the short-duration nature of the underlying policies. FuSure aims to diversify its product offerings and geographical reach in the medium term, supported by an experienced management team and strategic guidance from Tencent.
FuSure’s ERM framework is deemed appropriate for its risk profile, with a defined risk appetite, robust governance structure, various risk policies, and regular stress testing. The company conducts annual Own Risk and Solvency Assessments (ORSA), which are submitted to the Hong Kong Insurance Authority. As FuSure continues to grow, AM Best expects further enhancements to its ERM framework.
The strong support from Tencent, which owns 85.01% of the company, is a significant factor in FuSure’s success. Tencent’s substantial financial resources, demonstrated commitment through a 2023 capital injection, and ongoing operational and technological support provide FuSure with a competitive advantage in product design and pricing.
