Fitch: Chinese Life Insurers Continue to Improve Product Mix

Thu May 29, 2014 9:01pm EDT

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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: China Life Insurance Market Dashboard 1H14 here HONG KONG, May 29 (Fitch) Fitch Ratings says in a new report that more stringent regulation of insurance policy sales in China has resulted in a greater emphasis on risk protection and profit margins in Chinese life insurers' product mix. However, their premium growth has also slowed. This trend is likely to continue following the introduction of new rules that require 20% of bancassurance sales to be in either protection type or long duration products from April 2014, and a crackdown on "high cash value" products that usually have negative margins for insurers. External funding remains essential in supporting Chinese life insurers' solvency margins even though pressure on their capitalisation has reduced due to slowing premium growth. The China Insurance Regulatory Commission has introduced the concept of core and supplementary capital in a recently proposed new solvency model for Chinese non-life insurers. Fitch expects the more granular capital regime to motivate insurers to issue more equity-like hybrid securities (such as perpetual preferred shares) to support their capitalisation. "China Life Insurance Market Dashboard 1H14" is available at or by clicking on the link above. Contacts: Primary Analyst Joyce Huang, CFA Director +852 2263 9595 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Terrence Wong Director +852 2263 9920 Jeffrey Liew Senior Director +852 2263 9939 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available at ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.