Chinese domestic insurer PICC Property and Casualty Company Limited (PICC P&C) has entered into reinsurance agreements with PICC Reinsurance and PICC HK, its sister entities under the ultimate parent PICC Group.
PICC P&C entered into separate one-year agreements with both entities, effective from 1 January to 31 December 2026.
This framework regulates both outward reinsurance (ceding premiums) and inward reinsurance (assuming premiums).
The agreement with PICC Reinsurance focused on maintaining operational stability and managing the company’s overall risk profile.
The company estimated the annual caps for premiums ceded to PICC Reinsurance at RMB 6,500 million, with commissions paid back to the company capped at RMB 2,925 million.
With PICC HK, PICC P&C focused on a significant expansion of cooperation with the business, in order to support the “Belt and Road” initiative and Chinese enterprises going global.
According to the agreement, the annual cap for premiums assumed from PICC HK was set at RMB 3,500 million for 2026, an increase driven by an expected 15% growth in “China-overseas interest” business.
Moreover, PICC P&C intends to leverage PICC HK’s geographical advantages alongside its own risk protection capabilities to provide solutions for Chinese enterprise investing overseas.
In both deals, cession ratios range from 0.1% to 80% and commission rates were capped at 45%, all determined via actuarial models and arm’s-length market-based negotiations and benchmarked against terms offered by at least three independent third parties.
According to PICC P&C, outward reinsurance transactions qualify as continuing connected transactions under the Hong Kong Listing Rules, necessitating reporting, an annual review, and an announcement.
However, these transactions are exempt from the requirement for independent shareholders’ approval. Conversely, inward reinsurance transactions are fully exempt due to their limited size.
The company placed a strong emphasis on internal control and compliance, which aims to achieve through detailed policies for related-party transactions, early-warning mechanisms for annual caps, and yearly internal audits.
Oversight is provided by both independent directors and external auditors. Furthermore, all transaction terms are disclosed via its reinsurance trading platform. This comprehensive approach demonstrates a commitment to leveraging collaboration while simultaneously protecting minority shareholders and adhering to regulatory requirements.
