Rating agency AM Best has kept agricultural insurer, Zhongyuan Agricultural Insurance’s (ZYIC) Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+”, following the heavy rains that have flooded the province of Henan, China since July 19th.
This extreme weather disaster, which has affected the central and northern part of the province most severely, has broken meteorological records that stood for the past few decades.
AM Best believes it to be too premature to measure the full extent of the damages and losses derived from the event as rescue work is still underway and claims reporting will take time.
However, it expressed its concerns over the uncertainty of the total incurred claims which may develop, especially relating to its agricultural, motor and property lines of business, given the company’s concentrated net exposure to natural catastrophe risk in Henan.
“AM Best will continue to monitor the development of the event and hold discussions with ZYIC’s management to assess the subsequent implications for its balance sheet strength and operating performance,” says the ratings agency.
Fitch Ratings previously announced that the insurance losses from severe floods in Henan province are expected to further suppress the underwriting margin of Chinese non-life insurers in 2021.
It believes that it will add to most motor insurers’ deterioration in claims after the implementation of comprehensive motor insurance pricing reform in September 2020.