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Diversification of Chinese Life & P&C insurers is benefiting reinsurers: Moody’s

13th June 2019 - Author: Luke Gallin

Reinsurers in China have experienced strong business growth in recent times as a result of increased risk diversification among both life and property and casualty (P&C) insurers, notes Moody’s Investors Service.

China flagAnalysts at global financial services ratings agency, Moody’s have said that life and P&C insurance companies in China have continued to shift their business mix, which in turn has driven strong cessions growth for reinsurance firms.

Despite the benefits of sizeable business expansion, Moody’s warns that reinsurers have also experienced a rise in reserve liabilities and risk charges, as well as declining solvency ratios.

Solvency ratios in all three sectors remain above the 200% mark, which Moody’s notes is well above the regulatory minimum. In 2018, Chinese life insurers and reinsurers saw their solvency ratios decline, while P&C insurers experienced an increase.

Moody’s Senior Vice President (SVP) and Senior Analyst, Frank Yuen, commented: “The average solvency ratios of Chinese life insurers were affected by volatile capital markets and higher capital requirements amid rising market risk, while premium growth has been slowing from the shift to longer-term protection-type products.

“P&C insurers meanwhile benefited from capital injections that pushed up their solvency ratios, but their ongoing shift towards non-motor products – driven by motor pricing deregulation – will limit any further improvement.”

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