China's insurers remain flush with money

Average comprehensive solvency ratios of life and P&C insurers remained above 200% as of end 2017.

China’s insurance sector remains flush with abundant liquidity to take measured risks, according to a report from Moody’s.

The average comprehensive solvency ratio of life and property and casualty (P&C) insurers remained above 200% as of end-2017 which is beyond the regulatory minimum of 100%.

The improvement in solvency ratios reflects the industry shift towards more profitable protection-type products as well as higher available capital and stronger stream of investment income.

"The average solvency ratios for Chinese life insurers continued to show mild gains in the second half of 2017, whilst those for P&C insurers declined further but stayed well above the regulatory minimums," said Edwin Liu, a Moody's Associate Analyst.

Lower profits from the motor segment hit P&C insurers in 2017, the report noted as the business remained vulnerable to further liberalisation of the sector. The premiums of Hong Kong-listed Chinese property and casualty (P&C) insurance companies slowed 16% YoY in 2017 from 19% in 2016. 

For reinsurers, the slowdown in savings-type business was a result of the regulatory crackdown on savings-type product in the primary life insurance markets. Nevertheless, the credit rating agency expects reinsurers to maintain solvency ratios above 200% under the current capital regime to attract cedants.