AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a+” for China Reinsurance (Group) Corporation and its subsidiaries.
The ratings outlook remains stable, reflecting AM Best's assessment of China Re’s balance sheet strength as very strong, along with adequate operating performance, a favorable business profile, and appropriate enterprise risk management.
The ratings also consider the support provided by China Re’s ultimate parent, China Investment Corporation, the sovereign wealth fund of the Chinese government.
At the close of 2023, China Re’s consolidated risk-adjusted capitalization remained at the strongest level. Under IFRS 17 and IFRS 9 accounting standards, the group’s capital and surplus rose by 4.8% to RMB 102.2 billion (US$14.4 billion), supported by retained earnings.
AM Best anticipates that the company’s capital position will continue to support its underwriting and asset risk growth in the short to medium term.
AM Best also says that the group has demonstrated consistent access to equity and debt capital markets, with financial leverage maintained at a low to moderate level. The investment portfolio remains stable, with sufficient liquidity.
China Re has reported consistent profitability over the past five years, with a return-on-equity ratio of 5.8% in 2023 under IFRS 17. Net profit showed improvement in 2023, attributed to better insurance service results from its non-life direct and reinsurance portfolios, as well as favorable investment outcomes.
The domestic property and casualty reinsurance segment produced stable, though narrow, margins. In contrast, the overseas property and casualty reinsurance segment experienced significant top-line growth and better underwriting margins, despite natural catastrophe losses.
The life reinsurance segment saw declines in premium volume and profitability over the last two years as the group adjusted its portfolio to better align with client needs.
China Re holds a leading position in China’s domestic property and casualty and life reinsurance markets and ranks among the top companies in the primary property and casualty segment.
According to AM Best’s 2023 ranking of the world’s 50 largest reinsurance groups, the company ranked fourth in total reinsurance service revenue among IFRS 17 reporters. The group benefits from its integration with Chaucer, which has been a key driver of revenue and earnings in its overseas property and casualty reinsurance segment.
This integration has bolstered China Re’s global market presence, with overseas property and casualty reinsurance gross written premiums under IFRS 4 showing double-digit growth since 2021, accounting for over one-third of the group’s property and casualty reinsurance business in 2023. Over the past three years, however, China Re has scaled back its overseas life reinsurance business.
The company’s status as China’s only state-owned reinsurance group highlights its strategic importance in developing the country’s insurance and reinsurance industries. Ownership by government entities, including an 11.45% stake held by the Ministry of Finance of the People’s Republic of China and a 71.56% stake owned by Central Huijin Investment Ltd., a subsidiary of China Investment Corporation, increases the likelihood of government support.
AM Best indicated that a significant improvement in China Re’s capital position through sustained operating earnings without adverse underwriting or investment volatility could result in positive rating actions.
On the other hand, negative rating actions could occur if the group’s risk-adjusted capitalization decreases substantially, its leverage ratio rises significantly, or its operating performance deteriorates due to unfavorable macroeconomic or capital market conditions.
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