A.M. Best Publishes New Special Report Examining China's Non-Life and Life Insurance Markets

LONDON--(BUSINESS WIRE)--

China's insurance market is continuing to stand out although Chinese companies need to continue to evolve, a new special report from A.M. Best finds.

The report “Harnessing Momentum in China's Evolving Insurance Market” states China's insurance market is enjoying continued top line growth, although insurers must build capital to keep up with the current pace of expansion as growth. It states growth can add particular strain to the balance sheet strength of companies at a time when there is greater attention to their solvency margins.

Vivian Cheung, financial analyst, said: “while more mature insurance markets are stagnating, total gross premiums written (GPW) are continuing to increase in China. The non-life market in particular has continued to grow in 2011, despite a slowdown in motor sales.”

“China's insurance market has maintained its phenomenal growth trend and demand for insurance has continued in recent months,” she said. “Companies are attempting to fund further growth by raising capital, for example through planned initial public offerings and the issuing of subordinated debt.”

The report, which also examines topics including challenges to profitability and how the life market has responded to recent bancassurance rules, says the China Insurance Regulatory Commission (CIRC) has made significant changes to the regulatory regime in recent years. A.M. Best expects further legislation will impact insurers, especially rules for companies underwriting cross-border, Yuan-denominated reinsurance.

Yvette Essen, report author and director of industry research – Europe & emerging markets, said: “In addition to keeping abreast of regulatory developments, insurers face other challenges, including operating in a competitive motor market and navigating volatile investment markets.”

The report touches upon the role of international insurers in China and notes there is ongoing interest in China from overseas companies, with some acquiring stakes in domestic insurers to gain a quick entry into a competitive market. However, it also states that some foreign companies are exiting China or reducing their stakes in Chinese insurers.

To access this special report, please visit www.ambest.com/press/110102ChinaMarketReviewSpecialReport.pdf

The report will soon be available in Chinese on the A.M. Best web site. Please look for a separate press release announcing availability.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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