China-based Taishan Property & Casualty Insurance (Taishan P&C) is poised for a boost in its operating results for 2024-2025, driven by enhanced underwriting practices and stable investment returns.
According to Fitch Ratings, Taishan P&C reported a notable decrease in net loss, falling to $6.56 million (CNY 47.6 million) in 2023 from $48.9 million (CNY 355 million) in 2022. This improvement is attributed to a rebound in investment income.
The company’s combined ratio, a measure of underwriting profitability, remained around 110% in 2023. Despite high expense ratios in non-motor insurance sectors, excluding agriculture, the company’s concerted efforts to refine underwriting risk selection are expected to positively impact this ratio.
Taishan P&C’s investment portfolio is predominantly composed of fixed-income assets, such as bonds and fixed-income funds. However, increased allocations to asset management products have marginally reduced liquidity. The company’s exposure to high-risk assets, including equities and hybrid mutual funds, is manageable, with a risky-asset ratio of approximately 59% at the close of 2023.
The insurer holds a credit rating one notch above its standalone credit quality, a reflection of its ownership by Shandong SASAC. This relationship provides a degree of support, though it does not fully align with Fitch’s evaluation of Shandong province’s credit standing.
Shandong SASAC oversees Taishan P&C through Shandong Hi-Speed Group, with ERGO Group AG owning a 24.9% share. Capital support from shareholders is expected to continue as needed.
Taishan P&C demonstrates strong capital adequacy, supporting premium growth and managing earnings volatility. The company’s capital score, according to Fitch Prism Global’s model, shows a comprehensive solvency ratio of 302% as of Q1 2024, significantly exceeding the regulatory minimum of 100%.
Despite representing only 0.2% of China’s non-life insurance market in 2023, Taishan P&C operates 14 branches in northern and eastern China. While motor insurance remains its core business, the company is witnessing steady growth in sectors such as agriculture and cargo transportation.
($1.00 = CNY 7.25)
