HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of China Reinsurance (Group) Corporation (China Re) and its subsidiaries, China Property & Casualty Reinsurance Company Ltd. (China Re P&C), China Life Reinsurance Company Ltd. (China Re Life) and China Continent Property & Casualty Insurance Company Ltd. (China Continent Insurance). The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in China.
The ratings of China Re are based on its very strong consolidated risk-adjusted capitalization, adequate operating performance and leading position in China’s reinsurance market. The ratings also recognize China Re’s unique status as the sole state-owned reinsurance group in China, through the 12.72% stake owned directly by the Ministry of Finance of the People’s Republic of China (PRC) and the 71.56% stake owned by Central Huijin Investment Ltd., which is a wholly owned subsidiary of the PRC’s sovereign wealth fund, the China Investment Corporation.
These positive rating factors are offset partially by China Re’s weakened consolidated regulatory solvency position as measured by the China Risk-Oriented Solvency System (C-ROSS), which resulted mainly from the fast growth in the company’s life reinsurance segment. Another offsetting rating factor is the marginal underwriting profitability of China Re’s non-life insurance and reinsurance segments, which has been less favorable than the performance of its like domestic and global peers over the past five years. The group’s overall operating performance relies highly on investment performance and thus is subject to capital market volatility.
Positive rating actions could occur if China Re demonstrates sustained improvement in its underwriting profitability, as well as a better solvency position under C-ROSS, while maintaining its very strong consolidated risk-adjusted capitalization.
Negative rating actions could occur if China Re’s consolidated risk-adjusted capitalization or its regulatory solvency position declines materially, or if there is significant deterioration in its operating performance.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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