The ratings reflect DSI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect the parental support from Dah Sing Financial Holdings Limited (DSFH) in terms of capital, brand recognition, business development, product distribution, risk management and operations.
The company’s risk-adjusted capitalisation remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and is supportive of the increased asset and underwriting risks from its business expansion. Following a large capital injection from DSFH in 2017, DSI has significantly expanded its investment portfolio over the past four years. The heightened investment risk is partially mitigated by the various control limits stipulated in DSI’s investment policy and the diversity in its equity portfolio. Other supportive factors to the balance sheet strength include organic capital growth from full profit retention.
DSI has consistently delivered a profitable operating performance over the past five years (2016-2020), mainly driven by its favourable investment results, albeit partially offset by the relatively marginal and volatile underwriting performance.
As a small-to-medium-size player in Hong Kong’s non-life insurance segment, DSI maintained a market share of approximately 1%, with a gross premium written of HKD 551.6 million in 2020. The company’s three major lines of business are motor, employees’ compensation and property inward treaty lines. DSI plans to scale down the proportion of its reinsurance inward treaty business to better control its risk accumulation, while further strengthening and diversifying its multi-channel distribution network through new business initiatives in growing business lines, including property damage, engineering, mortgage, and mid-markets with a focus on small-and-medium enterprises.
