AM Best


AM Best Upgrades Issuer Credit Rating of China Reinsurance (Group) Corporation and Its Subsidiaries


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FOR IMMEDIATE RELEASE

HONG KONG - NOVEMBER 18, 2022 09:33 AM (EST)
AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of China Reinsurance (Group) Corporation (China Re) (China) and its subsidiaries. The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR is stable. (See below for a detailed listing of the companies.)

The Credit Ratings (ratings) of China Re reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management (ERM).

The ratings also recognise the strategic role China Re has in supporting the continuous development of China’s insurance and reinsurance industry. There is a high likelihood of government support given its status as the sole state-owned reinsurance group in the country, through the 11.45% stake owned directly by the Ministry of Finance of the People’s Republic of China (PRC) and the 71.56% stake owned by Central Huijin Investment Ltd., a wholly owned subsidiary of the PRC’s sovereign wealth fund, the China Investment Corporation.

The Long-Term ICR upgrade reflects China Re’s strengthened business profile in the global reinsurance market with its successful integration with Chaucer (the collective franchise comprising China Re International Holdings Limited, Chaucer Insurance Company Designated Activity Company and China Re Australia HoldCo Pty Ltd), which has been the growth driver of overseas P/C reinsurance premium income since its acquisition in 2019 and contributed to the improved diversification in the group’s underwriting portfolios and business segments. Moreover, the group continues to maintain the leading position in its domestic P/C and life reinsurance markets, as well as being a top-ranked company in the country’s primary P/C segment. The group places a strategic focus on expanding non-motor products in its domestic P/C segments while adjusting its life reinsurance book to meet client needs. Expansions in protection-type and financial reinsurance contribute to offset significant shrinkage in savings-type products, following the premium shrinkage experienced by domestic primary life insurers.

China Re’s consolidated risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level at year end 2021. AM Best expects the group’s capital strength to remain supportive of the continued growth in underwriting and asset risks over the short to intermediate term. The group has demonstrated good access to funding in the equity and debt capital markets, while its financial leverage remained at the low to moderate level. China Re’s investment portfolio is composed mainly of fixed-income investments and is largely stable with good liquidity and low asset-liability mismatch risk.

The company’s five-year average return-on-equity ratio was 6.3% (2017-2021), mainly attributed to favourable investment returns supported by a growing stream of interest income, which also helped offset capital losses in equity and funds during the first half of 2022. The underwriting margin of the group’s domestic property/casualty (P/C) reinsurance segment remained stable yet thin, while its overseas P/C reinsurance recovered from the negative impacts from COVID-19 in 2020. These underwriting results improved materially in 2021 and the first half of 2022, despite being partially dragged by losses and provisions related to the Russia-Ukraine conflict and natural catastrophes in some overseas markets. Life reinsurance profitability was lower in recent years, in tandem with the significant slowdown in the domestic direct life insurance market.

While further positive rating actions are unlikely over the short to intermediate term, negative rating actions could occur if there is a material decline in the company’s risk-adjusted capitalisation or if its leverage ratio increases significantly. Negative rating actions could also occur if the company exhibits a sustained deteriorating trend in its operating performance, for example, due to adverse macroeconomic or capital market conditions.

The Long-Term ICR has been upgraded to “a+” (Excellent) from “a” (Excellent), with the outlook revised to stable from positive, and the FSR of A (Excellent) has been affirmed, with a stable outlook, for China Reinsurance (Group) Corporation and its following subsidiaries:


  • China Property & Casualty Reinsurance Company Ltd.

  • China Life Reinsurance Company Ltd.

  • China Continent Property & Casualty Insurance Company Ltd.

  • China Reinsurance (Hong Kong) Company Limited

  • Chaucer Insurance Company Designated Activity Company

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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