AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” (Excellent) of China Reinsurance (Group) Corporation (China Re) (China) and its subsidiaries. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies.)

The 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. The ratings also reflect the support China Re receives from its ultimate parent, China Investment Corporation, the sovereign wealth fund of the Chinese government.

China Re’s consolidated risk-adjusted capitalisation remained at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR). Underwriting IFRS 17 and IFRS 9 accounting standards, the consolidated capital and surplus increased by 4.8% to RMB 102.2 billion (USD 14.4 billion), supported by retained earnings in 2023. Going forward, AM Best expects China Re’s capital position to remain supportive of its 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 remains at the low to moderate level. The investment portfolio mix was largely stable with good liquidity.

The group has been consistently profitable over the past five years. The return-on-equity ratio was 5.8% in 2023 under IFRS 17 basis. Net profit improved significantly in 2023 due to better insurance service results from the non-life direct and reinsurance portfolios, as well as favourable investment results. The domestic property/casualty (P/C) reinsurance segment continued to deliver a stable yet thin margin. Conversely, the overseas P/C reinsurance segment reported sustained robust top line growth and improvement in underwriting margin despite some natural catastrophe losses. Life reinsurance top line and profitability were lower in recent two years, as the group continued to adjust its book of business to meet clients’ needs.

China Re maintains 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. According to AM Best’s world’s 50 largest reinsurance groups ranking in 2023, the group ranked fourth in terms of total reinsurance service revenue among IFRS 17 reporters. The group benefits from the successful integration with Chaucer, which continues to be the major driver of overseas P/C reinsurance revenue and earnings and helps strengthen the group’s business footprint in the global reinsurance market. Under IFRS 4, overseas P/C reinsurance gross written premium has been growing at increasing double-digit rates since 2021 and accounted for over one-third of total P/C reinsurance business in 2023. Notwithstanding, the group has been scaling down its overseas life reinsurance business over the past three years.

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 China Re’s 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.

Positive rating actions could occur if China Re demonstrates a major improvement in its balance sheet strength by sustainably strengthening its capital position through operating earnings without adverse underwriting results or investment volatility. Negative rating actions could occur if the company’s consolidated risk-adjusted capitalisation decreases significantly, or its leverage ratio increases substantially. Negative rating actions also could occur if the group exhibits a sustained deteriorating trend in its operating performance, for example, due to adverse macroeconomic or capital market conditions.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed, with stable outlooks, for the following subsidiaries of China Reinsurance (Group) Corporation:

• 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. For more information, visit www.ambest.com.

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