Insurance sector risk deemed low 
2019-06-04
China’s insurance sector remains well-capitalized, with life insurers, property and casualty insurance companies as well as reinsurers all recording high solvency ratios, Moody’s Investors Service said yesterday.
All three sub-sectors reported average comprehensive solvency ratios of more than 200 percent, well above the regulatory minimum of 100 percent.
Solvency ratio of an insurance company is the size of its capital relative to premiums written. It is a key metric used to measure the risk an insurer faces of claims that it cannot absorb.
The ratio was down among life insurers and reinsurers in 2018 but was up for P&C players, the rating agency said.
Chinese life insurers’ capitalization eased in 2018. Their core solvency ratios dropped to 203 percent at the year-end from 212 percent a year before and comprehensive solvency ratios fell by 10 percentage points to stay at 214 percent over the same period. These two ratios, nevertheless, are well above their respective regulatory minimums of 50 percent and 100 percent, the report noted.
The decline was mainly caused by lower available capital due to equity losses amid volatile capital markets and higher minimum required capital from market risk, Moody’s said.
The rating agency expects the industry’s solvency metric to stabilize in 2019, because of slow premium growth and continued equity market recovery.
