New China Life Insurance Company Ltd. (NCI) has significantly raised its equity exposure, potentially pushing its risky-asset ratio beyond the limits outlined by Fitch Ratings, even as its exposure to non-standard financial assets has decreased.
The insurer has boosted its investments in stocks, equity-related funds, and shares in associates and joint ventures, with these now representing 101% of its equity capital. This marks a sharp increase from 64% in 2023.
Although some of these equity investments are allocated to participating funds that share returns with policyholders, the overall rise in risk exposure is a central concern in Fitch’s evaluation of NCI.
Despite this, NCI’s capital metrics are expected to remain consistent with its current rating category, with only a modest dip projected.
Additionally, NCI’s financial leverage ratio rose to 12% by mid-2024, up from 8% at the end of 2023. This increase follows the issuance of a $1.38 billion (CNY10 billion) supplementary capital bond in June. However, the leverage remains below Fitch’s threshold for life insurers rated at an IFS ‘A’.
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