[Best's Insurance News] China Re Reports 40.2% Rise in 2015 Net Profit
BEIJING (BestWire) - China Reinsurance (Group) Corp. reported a 40.2% rise in profit attributable on a consolidated basis for the year ended Dec. 31, 2015 according to the state-owned reinsurer's financial statement.
The group's total equity increased 29.9% to 70.96 billion yuan after its initial public offering on the Hong Kong Stock Exchange on October 2015. The IPO raised about HK$15.6 billion (US$2 billion), with the aims to raise funds to strengthen the group's capitalization for business development (Best's News Service, Oct. 27, 2015).
Investment income jumped 53.2% to 11.7 billion yuan in 2015, according to China Re. The group's total investment yield rose to 8.48% from 6.54%. Total assets increased 73.5% to 329 billion yuan in 2015. Looking ahead, China Re said capital market fluctuations still pose certain challenges for insurance asset management.
Total gross written premiums increased 9.1% to 80.4 billion yuan in 2015. Property/casualty reinsurance contributed 39.1% of the group's total premiums, down from 44% in 2013. Life and health reinsurance represented 28.2% of total premiums, with the remaining 32.7% for primary nonlife business, according to China Re.
Its major nonlife reinsurance unit, China P&C Reinsurance Co. Ltd., reported a 43.8% rise in net profit to 3.1 billion yuan in 2015. Its combined ratio increased to 98.9% in 2015 from 98% a year ago, according to China Re. Motor insurance was the biggest line, accounting for 61.3% to total business. China Re said the company was still "able to maintain positive momentum of development and record stable operating results" despite of the impact of the Tianjin port explosion in Aug. 2015.
International nonlife reinsurance business reported a 18.2% growth in premium income to 1.6 billion yuan 2015, representing 5% of total nonlife reinsurance premium. International nonlife reinsurance focuses on treaty reinsurance, and the company has planned to develop more facultative business, said China Re.
With the implementation of the China Risk Oriented Solvency System, nonlife reinsurance market will enter a critical stage of transition while its premium growth faces pressure, said China Re. Business structure now shifts to non-motor lines with agricultural, catastrophe and liability reinsurance expected to see faster growth.
Its life and health reinsurance unit, China Life Reinsurance Co. Ltd., reported 78.9% rise in net profit to 2.5 billion yuan in 2015. Total reinsurance premium rose 9.1% to 22.9 billion yuan. Financial reinsurance accounted for the majority 78% of total premium.
Life reinsurance market remains stable for ceding demand on traditional underwriting risks. China Re said non-traditional business has also experienced high demand, with growth potential in joint product development, new risk reinsurance and foreign currency savings-type reinsurance.
Recently, the China Insurance and Regulatory Commission gave approval for the establishment of the country's fourth reinsurance company, Qianhai Re, in the southern city of Shenzhen (Best's News Service, March 29, 2016). Also the CIRC granted approval to the country's largest nonlife insurance group People's Insurance Co. (Group) of China Ltd. to establish a reinsurance company, PICC Re. In February, Taiping Reinsurance (China) Co. Ltd. commenced business in China as the second local reinsurer in the country
China Oceanwide Holdings Group is also planning to set up Asia Pacific Reinsurance as part of the group's establishment of its insurance operation. Asia Pacific Reinsurance will be registered in Shanghai with capital of 10 billion yuan, according to a statement from China Oceanwide.
China Reinsurance (Group) Corp. currently has a Best's Financial Strength Rating of A (Excellent).