Business Kept Growing Rapidly; Market Position Remained Solid
China Reinsurance (Group) Corporation (“Chine Re Group” or “the Company”, together with its subsidiaries, the “Group”, Stock Code: 01508.HK) announced the audited consolidation results of the Group for the year ended 31 December 2019 (the “Reporting Period”).
Results Highlights:
* Gross written premiums recorded RMB144,973 million, representing a YoY growth of 18.6%.
* YoY growth of domestic non-motor P&C reinsurance business was 25.3%, while domestic P&C reinsurance facultative business recorded a YoY growth of 31.9% and overseas P&C reinsurance and Chaucer business recorded a YoY growth of 248.7%; domestic protection-type life and health reinsurance business recorded a YoY growth of 37.4%, while non-motor P&C primary insurance business recorded a YoY growth of 34.8%.
* The net profit attributable to equity shareholders of the parent company of the Group recorded RMB6,049 million, representing a YoY increase of 62.2%. Net assets per share attributable to equity shareholders of the parent company recorded RMB2.05, representing a YoY increase of 11.3%.
* Market position remained solid and the Group was the seventh largest reinsurance company in the world in terms of the gross written premiums of reinsurance business.
* Maintained Financial Strength Rating of “A (Excellent)” by A.M. Best and was rated “A” by S&P Global Ratings.
In 2019, the Group adhered to the guidance of the “One-Three-Five” Strategy by focusing on three strategies, namely platform operation, technology advancIn 2019, the Group adhered to the guidance of the “One-Three-Five” Strategy by focusing on three strategies, namely platform operation, technology advancement and globalization. The implementation of the “One-Three-Five” Strategy produced fruitful results, with significant improvements in its operating performance, and brilliant achievements in high-quality development and transformation. During the Reporting Period, gross written premiums recorded RMB144,973 million, representing a YoY growth of 18.6%. YoY growth of domestic non-motor P&C reinsurance business was 25.3%, while domestic P&C reinsurance facultative business recorded a YoY growth of 31.9% and overseas P&C reinsurance and Chaucer business recorded a YoY growth of 248.7%; domestic protection-type life and health reinsurance business recorded a YoY growth of 37.4%, while non-motor P&C primary insurance business recorded a YoY growth of 34.8%. The net profit attributable to equity shareholders of the parent company of the Group recorded RMB6,049 million, representing a YoY increase of 62.2%. Net assets per share attributable to equity shareholders of the parent company recorded RMB2.05, representing a YoY increase of 11.3%.
P&C Reinsurance: Rapid Growth in Premium Income, Overseas Business Diversified
In 2019, gross written premiums from the Group’s P&C reinsurance segment amounted to RMB42,679 million, representing a YoY increase of 47.4%, accounting for 29.0% of gross written premiums of the Group (before inter-segment eliminations). Net profit amounted to RMB1,317 million, and weighted average return on equity reached 5.83%.
In 2019, The Group achieved breakthroughs in emerging business sectors such as the first piece (set)/new material comprehensive insurance, construction inherent defects insurance (IDI), short-term health insurance, Chinese interest abroad projects, catastrophe insurance, construction surety bond insurance and customs bond insurance. Reinsurance premium income from its domestic P&C reinsurance business amounted to RMB28,723 million, representing a YoY increase of 15.0%.
In terms of overseas business, in 2019, gross written premiums from its overseas P&C reinsurance and Chaucer business amounted to RMB14,467 million (before intra-segment eliminations), representing a YoY increase of 248.7%, mainly due to the inclusion of Chaucer business, which significantly increased the total overseas business scale. The combined ratio was 101.32%, representing a YoY decrease of 0.96 percentage points. Of such combined ratio, the loss ratio and expense ratio were 64.02% and 37.30% respectively, representing a YoY decrease of 3.38 percentage points and a YoY increase of 2.42 percentage points respectively. Gross written premiums from its overseas P&C reinsurance business amounted to RMB4,853 million (before intra-segment eliminations), representing a YoY increase of 17.0%, gross written premiums from Chaucer business amounted to RMB9,614 million. On one hand, the Group captured market development opportunities to achieve rapid business growth; on the other hand, the Group continued to be profit orientated and adjusted its business mix by removing certain underperformed businesses.
Life and Health Reinsurance: Continuous Optimization of Business Structure, Obvious Improvement in Underwriting Profits
In 2019, China’s economy continued to maintain an overall stable and upward trend. The development of the life insurance industry overall was stable, accompanied by accelerating pace of transformation. Reinsurance premium income from the Group’s life and health reinsurance segment amounted to RMB55,526 million, representing a YoY increase of 5.9%, accounting for 37.8% of gross written premiums of the Group (before inter-segment eliminations). Net profit amounted to RMB2,425 million, and weighted average return on equity reached 10.71%. In particular, reinsurance premium income from China Re Life amounted to RMB55,436 million, representing a YoY increase of 5.9%; total written premiums (“TWPs”) amounted to RMB63,498 million (including TWPs of RMB8,062 million from savings-type non-insurance business), representing a YoY increase of 11.2%. The Group has a stable position in the domestic market and the cross-border savings-type reinsurance market in Hong Kong, with around 80% of all of its reinsurance contracts being entered into as a leading reinsurer.
In terms of business lines, the protection-type reinsurance business developed rapidly, the savings-type reinsurance business remained stable with a moderate growth, and the financial reinsurance business remained stable. In 2019, the reinsurance premium income from its domestic life and health reinsurance business amounted to RMB50,821 million, representing a YoY increase of 6.7%; and the TWPs amounted to RMB58,763 million (including TWPs from savings-type non-insurance business of RMB7,942 million), representing a YoY increase of 13.8%.
In respect of the protection-type reinsurance business, reinsurance premium income of the Group amounted to RMB17,049 million in 2019, representing a YoY increase of 37.4%. In particular, reinsurance premium income from the yearly renewable term reinsurance business (i.e., “YRT” reinsurance business, which is a kind of reinsurance arrangement entered into by ceding companies based on certain proportion of net amount at risk at an annual rate) amounted to RMB9,979 million, representing a YoY increase of 34.2%, accounting for 58.5% of reinsurance premium income from the protection-type reinsurance business. On the one hand, the Group continued to consolidate development advantages in the health insurance, among which the reinsurance premium income from the mid-end medical care insurance business amounted to RMB3,813 million, representing a YoY increase of 75.3%. On the other hand, the Group made significant achievements of improved business quality with the strategy of “Data + Risk Prevention and Control”. The combined ratio after retrocession of domestic protection-type reinsurance business was 97.47%, representing a YoY decrease of 0.90 percentage points, with an underwriting profit of RMB302 million.
Primary P&C Insurance: Rapid Growth in Non-Motor Business, Core Business System “Somersault Cloud” Operates Efficiently
In 2019, gross written premiums from its primary P&C insurance segment amounted to RMB48,730 million, representing a YoY increase of 14.3% and accounting for 33.2% of gross written premiums of the Group (before inter-segment eliminations), of which the primary premium income was RMB48,418 million, representing a YoY increase of 14.2%. The Company’s net profit amounted to RMB1,681 million, and weighted average return on equity reached 6.41%. The combined ratio was 99.89%, representing a YoY decrease of 0.40 percentage point. The YoY decrease in the combined ratio was mainly attributable to the constant optimization of its business structure and continuous increase in business quality, focus on value growth, steady increase in the proportion of non-motor insurance business, continuous optimization of the structure of motor insurance business and significant increase in the proportion of quality businesses with steady implementations of the strategic layout.
In 2019, the Group actively dealt with the market-oriented reform of commercial motor insurance rates and enhanced quality of motor insurance business. The Group strived to develop non-motor insurance businesses such as personal loan surety insurance, accident and short-term health insurance, liability insurance and cargo insurance, and maintained rapid growth in gross written premiums. Its core business system “Somersault Cloud” provided strong support for its businesses. Time required for launching new product scheme was shortened from 15 days to 0.5 day, while the time required for connecting to a third-party cooperation platform was shortened from 60 days to 7 days. The Group applied AI technologies in return visits, outbound calls, customer service and other aspects, which greatly saved manpower costs. The application of OCR intelligent identification technology increased the efficiency of order entry by 50%, and significantly reduced the operational risk of commercial vehicles through the Internet of Vehicles.
Asset Management: Steady Growth in Size of Total Investment Assets, Adhered to the Sound and Prudent Asset Allocation Strategy
In 2019, the Group’s total investment income was RMB12,999 million, representing a YoY increase of 52.4%, and the net investment income was RMB12,316 million, a YoY increase of 18.4%. The increase in its investment income is attributable to two aspects: the first is the relatively rapid growth in its total investment asset scale, which mainly came from premium cash inflows, the accumulation of investment income, and the integration of Chaucer’s investment assets; second is the improved investment income performance from public market investments due to the recovery of the capital market. The total investment yield was 5.30%, representing a YoY increase of 1.10 percentage points, and the net investment yield was 5.02%.
In terms of investment management, for fixed income, the Group proactively captured the allocation opportunities in the bond market, increased the allocation of high-grade assets, such as local government bonds, policy bank bonds and high grade financial products. For equity investment, the Group moderately increased the proportion of secondary market equity, and lowered the volatility of equity investment portfolio. The Group adhered to sound and prudent philosophy for alternative investments and exerted its project developing capabilities, significantly synergized primary and secondary markets, and effectively integrated investment and insurance segments. In terms of risk management, the Group continued to enhance asset and liability risk management, improving asset and liability matches.
In the future, China Re Group will adhere to the three major strategies of “platform operation, technology advancement and globalization”, and continue to focus on profitable development, market benchmarking, hold the bottom line of risk management and compliance operation and push forward digital transformation. It will also implement the operational strategy of “stabilizing growth, adjusting structure, preventing risks and increasing profitability”, and endeavor to achieve the primary objectives of the “13th Five-Year” Plan, thereby fully propelling the high-quality development of the Group to a new level.
About China Reinsurance (Group) Corporation
China Reinsurance (Group) Corporation (hereinafter referred to as “China Re”, “Chine Re Group” or the “Company”) is the only state-owned reinsurance group established by the Ministry of Finance of the People’s Republic of China and Central Huijin Investment Co., Ltd. China Re ranked first in Asia in terms of reinsurance premium. On 26 October 2015, China Re was listed on the main board of the Stock Exchange of Hong Kong Limited. Its stock code is 1508.HK.
China Re mainly engages in four business segments: property and casualty reinsurance, life and health reinsurance, primary property and casualty insurance and asset management. It has three international business platforms, i.e. China Re’s Beijing headquarters, China Re Syndicate 2088 at Lloyd’s of London and China Re Singapore Branch. China Re maintains a leading position in China’s reinsurance market, and has a vast client base with long-term business relationships with most domestic insurers. It has been assigned “A (Excellent)” rating by A. M. Best for ten consecutive years since 2010, and has been assigned “A” and above ratings by Standard & Poor’s for six consecutive years since 2014. In addition, China Re is the chairman member of China Nuclear Insurance Pool, the management office of China Agricultural Reinsurance Pool, a council member and a leading reinsurer of China Residential Earthquake Insurance Pool.