Sunshine Life's bancassurance channel fuels profitability

Fitch anticipates the group will continue to prioritise equity investments.

China-headquartered Sunshine Life Insurance (SLI) is seen to have a stable outlook, thanks to strong solvency ratios, resilient financial performance, and a favourable company profile, according to Fitch Ratings.

Despite these pressures, Sunshine Insurance Group’s (SIG) organic capital growth and SLI’s issuance of a capital supplementary bond in late 2023 supported overall capital levels.  

SLI’s solvency ratio rose to 204% by the end of the third quarter of 2024, up from 183% at the end of 2023, bolstered by a capital injection in early 2024. 

Fitch expects SIG's financial leverage ratio to increase from 29% at the end of the first half of 2024, as the group retains capacity to issue an additional CNY5b in bonds.  

SLI showed robust profitability, with new business value growing by 40% year-on-year in the first half of 2024, primarily driven by regulatory reforms reducing commission costs and the growth of its bancassurance channel. 

Meanwhile, Sunshine Property and Casualty Insurance faced profitability pressures, as its combined ratio rose to 99.2% in the first half of 2024 from 98.3% a year earlier, reflecting higher claims linked to natural disasters.

Fitch anticipates SIG will continue to prioritise equity investments to enhance yields in a low-interest-rate environment, but this strategy exposes the group to potential equity market volatility. 

SLI's risky assets increased to 169% of total equity by the end of 2023, up from 161% the previous year, whilst SPCI reduced its exposure, shifting toward government bonds.  

Fitch expects the group to maintain its competitive edge through a more productive agency network and sustained operating scale across its life and non-life subsidiaries.