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INSURANCE | Staff Reporter, China

China's CNPC Captive insurance can survive headwinds: Moody's

Underwriting profits are improving due to better loss experience in commercial lines.

China’s CNPC Captive Insurance is robustly capitalised to withstand large claims and uphold premium growth, owing to its large registered capital and retained earnings, according to a Moody’s Investors Service report.

Profitability is propped up by smooth-sailing investment income, with underwriting profits improving due to better loss experience at its commercial property and liability lines. Its comprehensive solvency ratio was at 360% as of end-September 2020, above the 100% regulatory minimum.

On the other hand, its underwriting profitability could be subject to volatility as it is exposed to high-severity loss from its parent company’s oil and gas related risks whilst its use of external reinsurance is limited.

In addition, it has significantly increased its investments in debt plans and trust plans in order to enhance yield, which has weakened its liquidity and raised credit risk.

Moody’s expects that the insurer will receive support from its parent firm as well as maintain its capital position and refine underwriting profitability.

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