China Re's profitability consistent over five years: AM Best

Under IFRS 17 and IFRS 9, consolidated capital and surplus rose by 4.8% to $14.4b.

AM Best expects China Reinsurance (Group) Corporation’s (China Re) (China) capital position to support growth in underwriting and asset risks over the near to medium term, aided by its demonstrated access to equity and debt markets and low-to-moderate financial leverage. The investment portfolio remained stable, with strong liquidity.

The group’s robust balance sheet, adequate operating performance, favourable business profile, and sound enterprise risk management, are supported by its role to China Investment Corporation (ultimate parent), a sovereign wealth fund of the Chinese government, AM Best said.

China Re’s risk-adjusted capitalisation remained at the strongest level as of year-end 2023, measured by AM Best’s Capital Adequacy Ratio (BCAR). 

Under IFRS 17 and IFRS 9 standards, consolidated capital and surplus rose by 4.8% to $14.4b, primarily from retained earnings. 

Profitability has been consistent over the past five years, with a 5.8% return on equity in 2023 under IFRS 17. 

Net profit improved in 2023, driven by better results from non-life direct and reinsurance portfolios, along with favourable investment performance. 

The domestic property and casualty (P&C) reinsurance segment delivered stable but narrow margins, whilst overseas P&C reinsurance experienced robust growth and improved underwriting margins despite natural catastrophe losses. 

However, the life reinsurance segment has seen lower top-line growth and profitability recently, as the group adjusted its portfolio to align with client needs.

The integration of Chaucer has significantly contributed to its overseas P&C reinsurance growth and global market footprint.

Overseas P&C reinsurance gross written premiums have grown at double-digit rates since 2021, accounting for over one-third of the total P&C reinsurance portfolio in 2023. 

Conversely, the group has scaled down its overseas life reinsurance business over the past three years.