AM Best Assigns Credit Ratings to China United Property Insurance Company

HONG KONG--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” (Excellent) to China United Property Insurance Company (CUPI) (China). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect CUPI’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management. The ratings also reflect the expected government support CUPI will receive from its ultimate parent, China Investment Corporation (CIC), the sovereign wealth fund of the Chinese government.

CUPI’s very strong balance sheet strength assessment is underpinned by its very strong level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is projected to remain at a similar while declining level over the short to intermediate term. The company maintains a sizeable capital and surplus of RMB 18.5 billion (USD 2.53 billion) as of year-end 2024 based on AM Best calculation. The company’s comprehensive solvency ratio under C-ROSS Phase II was significantly improved and its financial flexibility was enhanced following the successful issuance of a RMB 6 billion capital supplementary bond in late 2024, while the financial leverage remained at a neutral level. CUPI’s investment portfolio is diversified, primarily consisting of bonds (including bond funds), cash and deposits, as well as listed equities. The company has moderate exposure in the real estate sector and a controlled growth into riskier investment types. Offsetting factors include its relatively high underwriting leverage compared to domestic peers of similar size, its large outstanding premium receivables on its balance sheets predominantly due to policy-driven agriculture insurance business and its exposure to impairments of some legacy investment.

CUPI has remained profitable over the last five years, delivering an annual return on equity in the mid-single-digit range. While the company historically maintains a slightly higher-than-industry growth, which is driven by its non-motor lines of business, CUPI expects its future top-line growth to be largely in line with the industry. The company’s profit was mainly supported by investment income, while its underwriting results were around breakeven. Its investment yield ranged in the low to mid-single-digit range over the last few years, exhibiting some volatility due to capital market conditions. Nonetheless, AM Best expects CUPI to continue delivering positive investment income to support its overall profitability. Overall, CUPI’s operating performance is assessed as adequate.

CUPI’s favorable business profile is supported by its strong government connection, leading position in domestic agriculture insurance, diversified product offering and extensive distributional network. Incorporated in 1986, CUPI is the fifth largest non-life insurer in mainland China, with a market share of around 4% based on 2024 direct premium written. With a long operating history, CUPI has built strong underwriting know-how and customer servicing capabilities. Coupled with its strong ties across government levels, the company continues to maintain a leading position in policy-driven agriculture and short-term health insurance, which accounted for over 30% of its gross premium written in 2024. CUPI maintains a 12% market share in China’s agriculture insurance market, which has become one of the largest agriculture insurance markets globally.

The ratings also recognise the strategic importance of CUPI in providing nationwide inclusive agriculture insurance and support to the country’s national strategies. AM Best believes there is a high likelihood that CIC will provide support to CUPI, if needed. CIC is equipped with sound credit fundamentals and abundant financial resources. AM Best expects CUPI to further benefit from CIC’s implicit support, including operational, risk management, and corporate governance.

Negative rating actions could occur if CUPI’s balance sheet strength were to weaken significantly. A sustained deteriorating trend in underwriting and operating performance also may result in negative rating actions. Although unlikely in the short to intermediate term, positive rating actions could occur if the company demonstrates sustained improvement in balance sheet strength, via non-debt issuance source.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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