China Re Group Announced 2016 Interim Results
Overall Business Achieved Steady Growth Key Segments Maintained Leading Positions
On 31st August, China Re Group announced its results for the first half of 2016 (the “Reporting Period”) ended on 30 June. During the Reporting Period, as the leading reinsurer in China, the Group committed to “Promoting Development with Innovation” and achieved solid growth in overall business and with its leading industry position maintained.
According to the interim results, the Group’s business performance kept stable in 1H2016. Firstly, the Group maintained solid industry leading position. In the first half of 2016, the core reinsurance business maintained a stable market position. It continued to have the leading market share in terms of Premiums Ceded in the PRC P&C reinsurance market and life and health reinsurance market. In terms of original premium income, the Group ranked No.6 in the primary P&C insurance market in the PRC, with 3.4% market share in the first half of 2016，representing an increase of 0.3 percentage point from 1H2015.
Secondly, the Group achieved stable growth of premium income. Although the industry's overall ceding ratio of domestic motor insurance decreased due to the implementation of C-ROSS, the gross written premiums of the Group in the first half of 2016 still achieved a growth of 16.9%.
Thirdly, the Group achieved good underwriting performance. The Group’s underwriting performance maintained stable in 1H2016 and achieved good underwriting profit. Its core reinsurance business' underwriting profit remains stable. The combined ratio of the primary P&C insurance segment decreased in 1H2016 although that of the overall industry increased, representing a year-on-year underwriting profit increase.
Fourthly, the Group maintained sufficient solvency adequacy. As at June 30, 2016, both the core solvency adequacy ratio and the comprehensive solvency adequacy ratio of the Group reached 281%, which are significantly higher than the requirement under C-ROSS.
Fifthly, the Group’s investment allocation maintained prudent. The total investment yield in the first half of 2016 was 2.38%. Net investment yield remained largely steady at 2.64%. Overall changes in investment income and asset allocation were generally in line with the industry trends affected by the capital market underperformance.
In addition, China Re Group attaches great importance to long and stable returns for shareholders. According to the dividend policy approved at the Board meeting held on 21 July 2016, the Company shall distribute dividends once a year and the dividends distributed in form of cash shall be no less than 30% of the consolidated net profit attributable to the equity shareholders of the Company realized for the year.
As the only Chinese reinsurer listed in Hong Kong, the Group achieved outstanding performance in its innovative business and steady growth in overseas market.
In terms of reinsurance business, China Re P&C endeavored to develop non-motor business, growth rate of which higher than the industry average. The reinsurance premium income from facultative reinsurance business has seen stable growth. The policy-related businesses continued to develop and achieved breakthrough. China Re P&C actively participated in the design of the first residential building earthquake insurance product, and acted as the lead reinsurer of this product. The company also proactively developed the emerging agricultural reinsurance business benefitting rural areas. Innovative businesses achieved remarkable results. The company made innovations and breakthroughs in construction inherent defect insurance, construction performance bond insurance, unmanned aerial vehicle insurance and cyber insurance etc. Meanwhile, China Re Life actively captured the industry opportunities, maximized the strength of data and client resources, and strengthened cooperation on the product development to proactively expand domestic protection-type business. The company adhered to our strategy of “cost control, stability, and pro-cyclical”, and proactively developed the reinsurance business of cross-border RMB in-force polices and foreign currency new policies such as US-dollar policies to achieve balanced development of domestic and foreign-currency savings-type businesses. Facing the complex technology requirements, it further increased innovation efforts, and developed a new business model for financial reinsurance business under C-ROSS, which further increased the market share and profits of the Company.
In the Primary P&C insurance segment, the subsidiary China Continent Insurance maintained rapid growth while ensuring good profitability. Its branches maintained strong performance. The number of branches which delivered a higher-than-industry-average growth and a lower-than-industry-average combined ratio further increased. The company also smoothly finished the comprehensive conversion of the premium rate reform for commercial motor insurance. Personal loan surety insurance business has developed rapidly. The company continued to comprehensively enhanced customer satisfaction, with lowest number of complaints per a hundred million premium income among the top 10 P&C insurance companies.
In the asset management segment, under soft capital market environment, China Re Asset adhered to stable, prudent and long-term investment philosophy. The company gradually increased the allocation of financial products and long-term equity investments; its medium-and-long term portfolio structures were further optimized. The asset-liability linkage mechanism achieved strong results and contributed to generate mutual benefits with life and health reinsurance businesses.
Looking forward to the period of the “Thirteenth Five-year Plan”, China’s insurance industry will remain in its golden development stage. The social and economic development will provide a large room for the development of insurance business; reform and release policy payouts will greatly support the insurance industry; the industry, however, will encounter serious challenges coming from the change in external environment, financial industry reform and transformation and upgrade of the industry. The development of the insurance industry will fill with both opportunities and challenges.
Facing the future, the Group will take effort to grasp the chance of development in the industry, actively respond to the opportunities and challenges arising from business transformation and development upon the full implementation of C-ROSS, replacement of business tax in lieu of VAT and motor insurance deregulation, and continuously expand the new business development fields with innovating approaches. In the next half of the year, the Group will continue to strengthen its competitive edge in traditional sectors, properly adjust the business risk strategies, upgrade the business structure and operating model, constantly explore new business opportunities and growth points, and endeavor to achieve a stable and outstanding operation result to repay the shareholders for their confidence and support.