How has China's insurance industry fared amidst strict lockdowns?

Life players spirals whilst P&C insurers gain ground.

Chinese life insurers continue to have muted growth in April of this year, a trend that continued in the month before according to a Jefferies report.

China’s major insurers saw drops in life premium growth with just a few showing a slight increase.

The report said that the weakness in April was widely anticipated given the developments in COVID-19 infections and the strict lockdown protocols in Shanghai. However, the fact that growth in April did not deteriorate further from its results in March showed efforts by life insurers in channel diversification started to pay off.

“The Shanghai lockdown will ease starting from this week, although zero-Covid remains the authorities' primary pandemic control strategy. Lifers are pushing savings/annuity products as well as whole life insurance. We expect premium/Value of New Business growth to improve year-on-year in H2 thanks to a lower base and government stimulus on the macro economy,” Jefferies said.

Meanwhile, property and casualty (P&C) insurers have maintained solid growth, with Jefferies anticipating strong underwriting profit in Q2 because of reduced car traffic amidst lockdowns.

Inflexion point

Jefferies pointed out that the major reason for Chinese insurers’ sluggish Q1 results was mainly because of weakness in investment performance as the Chinese insurance industry remains massively underweighted by investors.

“China insurance remains massively underweighted by investors. Most investors we spoke to agree valuations are attractive but would like to wait for better clarity on Covid/market directions,” Jefferies said.

The report predicts that P&C will likely see lower auto losses in Q2, whilst life insurance players will have to deal with the impact of COVID-19 and a volatile investment market.