China shifts insurance metrics to promote long-term strategy

One key adjustment involves how return on equity (ROE) is assessed. 

China’s Ministry of Finance changed the evaluation metrics for state-owned insurance companies amidst efforts to promote long-term sustainability and economic support.

The changes aim to strengthen the role of insurance capital in stabilising financial markets and contributing to broader economic growth. 

One key adjustment involves how return on equity (ROE) is assessed. 

The previous model, which considered only the current year and a rolling three-year cycle, will be replaced by a multi-tiered system. 

The new framework will incorporate ROE performance across the current year, as well as over three-year and five-year periods.

Similarly, the assessment of state capital maintenance and appreciation rates will now follow the same expanded timeframe, shifting away from a single-year evaluation.

The ministry said these changes are designed to encourage state-owned insurers to take a longer-term view in their financial and strategic planning, aligning their operations more closely with national economic objectives.