Chinese insurers emerge stronger after tougher regulations, improved investment returns
Life insurance companies’ solvency ratios show marked improvement after China Insurance Regulatory Commission implemented stricter rules on short-term products, says Moody’s report
Tighter regulations and solid investment returns helped Chinese life insurers improve their long-term debt repayment abilities last year but general insurers struggled because of lower profitability of their car insurance products, according to a report by Moody’s Investors Service.
The credit rating agency’s report released on Wednesday showed all insurers in the mainland had strong solvency ratios – a key indicator of an insurance company’s ability to repay long term liabilities and debts.
The Moody’s report showed the insurance sector in general had a solvency ratio of more than 200 per cent in 2017, double the regulatory requirement of 100 per cent.
Life insurers’ core solvency ratio stood at 214 per cent at the end of December 2017 compared to 204 per cent in 2016, while for general insurers it declined to 231 per cent from 249 per cent in 2016.
Moody’s said general insurers reported a decline in their solvency ratios because of lower profitability of their car insurance products.
“The average solvency ratios for Chinese life insurers continued to show mild gains in the second half of 2017, while those for property and casualty insurers declined further but stayed well above the regulatory minimums,” said Edwin Liu, a Moody’s associate analyst.