AM Best Affirms China’s Qianhai Reinsurance Credit Ratings

KUALA LUMPUR, Dec 19 (Bernama) -- Global credit rating agency, AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of China’s Qianhai Reinsurance Co Ltd (QHR).

The outlook of these credit ratings (ratings) is stable, reflecting QHR’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

In a statement, AM Best said QHR’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, remained at the strongest level as of year-end 2022.

Going forward, the credit rating agency expects QHR to continue to receive financial support from its major shareholders and explore opportunities in capital markets to bolster its capital structure.

The company has a diversified investment portfolio that focuses on cash and fixed-income securities, albeit with a moderate exposure to debt-type alternative investments.

QHR has remained profitable over the past few years, with a five-year average return-on-equity ratio of 3.0 per cent (2018-2022), although it recorded a 61 per cent year-on-year decline in net profit in 2022 due to negative changes in investment valuations in tandem with capital market volatility.

Its investment performance recovered moderately during the first three quarters of 2023 with the life reinsurance segment remains as the major driver of underwriting results.

A composite reinsurer controlled by three Chinese state-owned enterprises and plays a strategic role in the development of the Qianhai Free Trade Zone, QHR has continued to strengthen its market presence over the past five years.

The company’s non-life underwriting portfolio is diversified by product lines with a focus on Chinese risks as it rebalanced the overseas book to improve business quality.

-- BERNAMA