AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Luen Fung Hang Insurance Company Limited (LFH) (Macau). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect LFH’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

LFH’s risk-adjusted capitalisation remained at the strongest level at year-end 2025, as measured by Best’s Capital Adequacy Ratio (BCAR). The company has maintained organic growth in capital and surplus over the past few years through partial profit retention. The company increased the dividend payout ratio over the past years, considering its robust solvency position. LFH’s investment strategy remains prudent, with a majority of its investment portfolio composed of fixed income securities and cash and cash equivalents. Other supporting factors include LFH’s low underwriting leverage, strong liquidity and appropriate reinsurance arrangements.

LFH’s operating performance remained strong in 2025, attributable to its strong underwriting profitability and stable investment income. With the uneven local economic recovery and a limited growth non-life insurance market in Macau, the company’s gross premiums written (GPW) were largely flat in recent years. On the other hand, its underwriting results stayed highly profitable, with a lower-than-industry-average loss ratio and moderate expense ratio. LFH’s average combined ratio was 60.2% over the past five years (2021 to 2025). Additionally, its prudent investment strategy has generated a stable stream of interest and dividend income.

AM Best assesses LFH’s business profile as neutral. LFH has maintained its market position as the second-largest non-life insurer in Macau over the past decade, with a market share of over 20% based on domestic GPW in 2025. With its bank shareholders’ support, the company remains competitive in securing high-quality bancassurance business. LFH’s underwriting portfolio remains moderately diversified, with premiums mainly concentrated in fire and medical lines. An offsetting factor is the company’s geographic concentration in Macau.

LFH is well-positioned for its current ratings. Negative rating actions could occur if the company’s risk-adjusted capitalisation experiences significant deterioration, for example, due to unexpected large underwriting or investment losses, or if its operating performance exhibits a material and deteriorating trend in profitability such that it no longer supports a strong assessment. Although unlikely in the intermediate term, positive rating actions could occur if LFH achieves sustained improvement in its operating performance while maintaining a robust level of risk-adjusted capitalisation.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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