Qianhai Reinsurance Co., Ltd. (QHR) has received a favorable evaluation from AM Best. The company is noted for possessing a strong balance sheet and consistent profitability, while also playing a strategic role within the Qianhai Free Trade Zone. Its risk-adjusted capitalisation, measured by the Best’s Capital Adequacy Ratio (BCAR), has stayed at the strongest level through 2023 and is projected to remain so in the near to medium term.
In 2023, QHR’s capital and surplus saw a 4.3% increase, reaching $500 million, and further expanded by 6.2% in the first three quarters of 2024, bolstered by the full retention of net profit. AM Best anticipates QHR will keep enhancing its capital structure, with support from state-owned shareholders and potential capital market activities. Profitability is likely to stay steady, driven by a diversified investment portfolio and sound underwriting outcomes. The company’s five-year average return-on-equity ratio was 4.3%, and a significant 77% jump in net profit in 2023 was due to improved capital market conditions and higher investment earnings.
The life reinsurance segment is set to continue being a major contributor to underwriting results, with a focus on traditional protection products in China. QHR is making strategic adjustments, scaling back its financial reinsurance business in line with regulatory and market changes and being cautious with savings products because of asset-liability matching risks. In the non-life segment, QHR has reconfigured its portfolio, emphasizing non-catastrophe risks in China and enhancing the quality of its overseas business. Despite a slight rise in the combined ratio for non-life reinsurance in 2023 due to increased commission costs, this was partly offset by a reduction in the loss ratio. Investment income, sourced from deposits, bonds, equities, and financial products, is expected to remain a reliable contributor to overall performance. QHR’s status as a state-backed reinsurer and its profit-oriented underwriting approach solidify its standing in the market.
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