A.M. Best Assigns Ratings to Dah Sing Insurance Company Limited

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit rating of "a-" to Dah Sing Insurance Company Limited (DSI) (Bermuda). The outlook for both ratings is stable.

The ratings reflect DSI's supportive level of risk-adjusted capitalization, improved operating earnings in 2008 and conservative investment allocation. A.M. Best also recognizes DSI management's initiative in strengthening the company's distribution network and operational support from the publicly held parent, Dah Sing Financial Holdings Limited (DSFH).

DSI's underwriting, asset and reinsurance risks are adequately supported by its overall level of capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). Net premium leverage stood at 0.43 times for 2008 and is expected to remain at a conservative level through 2011. Given management's commitment to high retention of operating earnings, A.M. Best believes that the company's capital level will be able to support its anticipated business growth over the next three years.

The general liability (including employees' compensation) portfolio accounted for 42% of DSI's gross premiums written (GPW) for 2008. Other major lines of business include property damage (26%) and motor (24%). The company has maintained diversity of its premium source through agency, bancassurance and direct sales over the past two years. While DSI, as a wholly owned subsidiary of DSFH, has strengthened its agency network, it continues to grow its book by penetrating into the customer base of Dah Sing Banking Group.

DSI maintains strong liquidity relative to risks underwritten. As at year-end 2008, the investment portfolio was comprised of cash and deposits (87%) and equities (13%). The company expects that this conservative investment strategy is likely to remain unchanged in the near term, somewhat minimizing its operating earnings volatility, especially during current volatile financial markets.

These positive rating factors are offset by uncertainty associated with the quality of DSI's insurance book as the portfolio expands. DSI's underwriting performance improved in 2008 from 2007, with a combined ratio of 79.4% for 2008 (122.2% for 2007), averaging 93.5% during 2004-2008. In anticipation of DSI's planned business growth, the limited track record in underwriting and the company's relatively small operating scale could potentially challenge its overall operating stability. In view of the prevailing competitive insurance environment and current challenging economic conditions, A.M. Best remains cautious about DSI's ability to achieve its targeted profitability over the mid term.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts

Stella Ng, +852-2827-3420

stella.ng@ambest.com

or

Terrence Wong, +852-2827-3403

terrence.wong@ambest.com

or

Public Relations

Jim Peavy, +(1) 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, +(1) 908-439-2200, ext. 5378

rachelle.morrow@ambest.com

Source: A.M. Best Co.