Sompo China secures strong solvency amid dividends

In 2024, it paid $8.6m in dividends, representing 80% of its 2023 earnings.

Despite its small capital and earnings contributions, Sompo China is highly unlikely to be sold and will be consolidated under Sompo International Holdings Ltd., the group's overseas platform.

A continuous portfolio overhaul is expected to help Sompo China sustain profitable underwriting, aligning with the parent group's focus on profitability, told S&P Global Ratings. In 2023, the insurer's gross premium contracted by 22% due to the exit from the inward motor reinsurance business, leading to an improved net combined ratio of 84.5%.

Sompo China is expected to maintain a healthy regulatory solvency position whilst accommodating dividend payments to the parent. 

In 2024, the insurer paid $8.6m (RMB62.3m) in dividends, representing 80% of its 2023 earnings. Its comprehensive and core solvency ratios were 287.9% and 260.5% as of June-end 2024, respectively.

Sompo China's role in extending insurance coverage and services for Japanese clients in China underscores its importance. 

The insurer benefits from substantial parental support, including business referrals, underwriting and actuarial expertise, reinsurance arrangements, management personnel, and risk management governance. Sompo Holdings has demonstrated financial support through a net worth maintenance agreement and capital injections.

($1.00 = RMB0.7.25)