Shareholder support, markets seen to boost Qianhai Re’s capital structure: AM Best

Despite earnings decline in 2022 due to negative changes in investment valuations amid capital market volatility, QHR has remained profitable over the past few years. 

Qianhai Reinsurance (QHR) is expected to continue receiving financial support from major shareholders and explore opportunities in capital markets to enhance its capital structure. QHR has a diversified investment portfolio with a focus on cash and fixed-income securities, along with moderate exposure to debt-type alternative investments.

AM Best has affirmed its financials and long-term issuer credit rating as ‘excellent’

The ratings reflect QHR’s very strong balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management. QHR's risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remains at the strongest level as of the end of 2022, with capital and surplus increasing by 2.1% year-on-year (YoY)  to RMB3.4b in the same year. 

Despite a 61% YoY decline in net profit in 2022 due to negative changes in investment valuations amid capital market volatility, QHR has remained profitable over the past few years. 

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The life reinsurance segment has been a major driver of underwriting results. The company is committed to strengthening business relationships with Chinese insurers and distribution partners to tap the growth potential in traditional protection products and financial reinsurance solutions.

QHR has played a strategic role in the development of the Qianhai Free Trade Zone and has strengthened its market presence over the past five years. 

The company's non-life underwriting portfolio is diversified by product lines, focusing on Chinese risks while rebalancing its overseas book to improve business quality.

Negative rating actions could occur if QHR's risk-adjusted capitalisation significantly declines due to adverse deviations from its business and capital plan or if there is a sustained deteriorating trend in its operating performance. Positive rating actions could occur if QHR demonstrates sustained and favourable operating results in its domestic and overseas underwriting portfolios while maintaining very strong balance sheet strength.