Moody's assigned a first-time rating to China-based CPIC Allianz Health Insurance Co. Ltd.
The rating agency said in a March 26 report that it gave the company an insurance financial strength rating of A3, with a stable outlook.
The rating reflects the insurer's strong business and financial support from its two shareholders, China Pacific Insurance (Group) Co. Ltd. and Germany's Allianz SE. China Pacific Insurance owns a 77.05% stake in the insurer while Allianz holds the remaining 22.95% stake.
Moody's noted the company also enjoys good growth prospects in China's health insurance market because of the central government's policy-driven promotion of private health insurance.
The stable outlook on CPIC Allianz Health reflects the expectation it will continue to boost its business and maintain its solid capitalization. It also reflects the fact the insurer's shareholders will continue to offer support in terms of capital and distribution.
Given the insurer's limited track record, the possibility of a rating upgrade over the next 12 to 18 months is "remote," Moody's said. However, the company's stand-alone credit profile can be raised if it establishes franchise and business scale, materially improves its underwriting performance and shows consistent profitability.
The rating could be lowered if support from both shareholders weakens or if the company fails to establish business scale. A larger-than-expected operating loss and a consistent fall in its solvency margin ratio could also lead to a downgraded rating.