QHR Life Reinsurance drives strong underwriting: AM Best

The company’s capital and surplus increased by 4.3% to $500m in 2023.

Qianhai Reinsurance Co., Ltd. (QHR) was assessed to have a strong balance sheet, and consistent profitability, and carries a strategic role within the Qianhai Free Trade Zone, AM Best said.

QHR’s risk-adjusted capitalisation, measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level as of year-end 2023 and is expected to remain robust in the near to medium term.

The company’s capital and surplus increased by 4.3% to $500m in 2023 and further grew by 6.2% in the first three quarters of 2024, supported by full retention of net profit.

AM Best anticipates QHR will continue to strengthen its capital structure, aided by financial backing from its state-owned shareholders and potential capital market initiatives.

Profitability is expected to remain steady, driven by QHR’s diversified investment portfolio and solid underwriting results.

The company’s five-year average return-on-equity ratio was 4.3%, with a 77% surge in net profit in 2023, attributed to improved capital market conditions and higher investment income.

The life reinsurance segment is expected to remain a key driver of underwriting results, with a focus on traditional protection products in China.

QHR is also scaling back its financial reinsurance business in response to regulatory changes and market dynamics whilst maintaining a cautious approach to savings products due to asset-liability matching risks.

In the non-life segment, QHR has rebalanced its portfolio by prioritizing China’s non-catastrophe risks and improving the quality of its overseas business.

Whilst the combined ratio for non-life reinsurance rose slightly in 2023 due to higher commission expenses, this was partially offset by a decline in the loss ratio.

Investment income, supported by deposits, bonds, equities, and financial products, is expected to remain a stable contributor to overall performance.

QHR’s strategic importance as a state-backed reinsurer and its profit-focused underwriting strategy reinforce its market presence.

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