Zking P&C reduces high-risk insurance exposure

The insurer sees ROE to rise 5% end-2024.

Zking Property & Casualty Insurance Co., Ltd.'s (ZKI) risk-based capital remains strong, Fitch Ratings said. 

Its regulatory comprehensive solvency ratio rose to 361%, up from 348% at the end of 2023. 

The improved metrics reflect stronger available capital to offset market and credit risks, alongside reduced exposure to credit and guarantee insurance, which carries higher solvency capital charges. 

Financial leverage increased to 21% following the issuance of a $340m (CNY2.5b) capital supplementary bond in December 2023.

The insurer’s combined ratio improved to 100% in the third quarter of 2024, compared to 105% in 2023, driven by reduced expense ratios and a scaled-back focus on riskier guarantee insurance lines. 

ZKI expects return on equity (ROE) to rise to approximately 5% by the end of 2024, up from 2.6% for the first nine months of the year.

ZKI’s exposure to risky assets, including equities and non-investment-grade bonds, increased to 73% of shareholders’ capital by September 2024, compared to 54% at the end of 2022. 

The insurer has made new long-term equity investments to enhance stable returns, though this raises its sensitivity to market volatility.

ZKI’s ownership link with the Jiangsu provincial government provides operational and financial support. 

Government-affiliated entities collectively own 42.08% of ZKI, with Jiangsu Guoxin Investment Group Limited holding the largest stake at 21.5%.