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China Re’s overseas P&C reinsurance segment boosted by Chaucer in 2019

6th April 2020 - Author: Luke Gallin

China Reinsurance Corporation (China Re) has reported premium growth and a rise in net profit for 2019, driven in part by the strong performance of its P&C Reinsurance segment and the inclusion of Chaucer business.

China ReAt RMB144,973 million, China Re’s gross written premiums (GWP) increased by 18.6% year-on-year. At the same time, the company’s net profit totalled RMB6,049 million, which represents growth of more than 62% when compared with 2018.

Premium growth was evident across all business lines within both P&C reinsurance and life and health (L&H) reinsurance. GWP for the Group’s P&C reinsurance business grew by over 47% to RMB42,679 million in 2019, while net profit here amounted to RMB1,317 million.

China Re notes some breakthroughs in emerging markets throughout the year, including catastrophe insurance, construction inherent defects insurance (IDI), and short-term health insurance. Overall, reinsurance premium income from domestic P&C reinsurance operations totalled RMB28,723 million, which represents growth of 15% against 2018.

The most dramatic GWP growth witnessed in the year for China Re was in its overseas P&C reinsurance and Chaucer business, which amounted to RMB14,467 million, representing year-on-year growth of a huge 248.7%.

China Re attributes the huge growth to the inclusion of Chaucer, which significantly increased its overseas business scale following its acquisition of the holding company of Chaucer in late 2018.

Despite the premium growth driven by Chaucer, the overseas reinsurance segment recorded a combined ratio of 102.3%, which includes an expense ratio of 37.3% and a loss ratio of 64.02%.

“On one hand, the Group captured market development opportunities to achieve rapid business growth; on the other hand, the Group continued to be profit orientated and adjusted its business mix by removing certain underperformed businesses,” states China Re.

Turning to L&H reinsurance, and the reinsurer notes that China’s economy maintained an overall stable and upward trend in 2019, adding that the development of the life insurance sector also remained stable.

Reinsurance premium income from China Re’s L&H reinsurance division totalled RMB55,526 million in 2019, up 5.9% on the prior year and accounting for 37.8% of GWP of the group. Net profit hit RMB2,425 million within the segment in 2019, with reinsurance premium income from China Re Life expanding year-on-year by 5.9%.

“The Group has a stable position in the domestic market and the cross-border savings-type reinsurance market in Hong Kong, with around 80% of all of its reinsurance contracts being entered into as a leading reinsurer,” says China Re.

Towards the end of last year, China Re announced plans to launch a fully-owned subsidiary in Hong Kong, and more recently, the reinsurer has revealed plans for expansion in the U.S.

Of course, the outlook for 2020 remains uncertain in light of the impacts of the COVID-19 pandemic and it will be interesting to see how China Re responds to the challenges. While the virus continues to spread across Europe and other parts of the world, in China, the worst is thought to be over and parts of the country are starting to return to some level of normality.

Within its 2019 results announcement, China Re comments on the global coronavirus pandemic and suggests that it could accelerate the development of the re/insurance industry by further motivating demand for health insurance.

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