Macau Insurance enhances combined ratio to 88.8% with investment gains

It has applied a 25% dividend payout ratio since 2023.

Macau Insurance’s balance sheet was assessed as strong, along with adequate operating performance, a neutral business profile, and appropriate risk management, AM Best said. 

At the end of 2023, MIC’s risk-adjusted capitalisation remained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). 

The company’s capital and surplus increased by 3.5% to MOP998m, driven mainly by capital gains from equity investments. Whilst the company has a significant allocation to equity investments, its market risks are mitigated by surplus capital, a diversified portfolio, and a hedging strategy.

MIC paid a special dividend of MOP309m to its parent company, Dah Sing Financial Holdings Limited, in line with its capital plan. 

The dividend, repatriated in two stages, in June 2023 and June 2024, did not significantly weaken the company’s risk-adjusted capitalisation due to a reduction in equity securities risk. MIC has applied a 25% dividend payout ratio since 2023 and is expected to maintain this policy.

The company's combined ratio improved to 88.8% in 2023, supported by positive investment gains. 

AM Best expects MIC to continue its underwriting profitability by expanding more profitable business lines. In 2023, MIC ranked fourth in Macau’s non-life insurance market, holding a 9.0% market share with MOP 255 million in gross premiums written. MIC’s market share has declined in recent years, partly due to the impact of COVID on the gaming and tourism sectors.

Looking ahead, MIC expects organic growth in gross premiums in 2024, with contributions from casino developments and recovery in the gaming and tourism industries. 

The company plans to explore growth opportunities in both commercial and personal lines, including motor vehicles moving between Macau and mainland China, whilst also focusing on digitalisation to enhance service and operational efficiency.