Zking Property & Casualty Insurance Co (ZKI) reported a combined ratio of 103% in 2023, from 98% in 2022, with an average ratio of 100% over 2021-2023, notes Fitch Ratings.
A higher loss ratio for the motor class after China’s lifted movement restrictions to contain the COVID-19 pandemic, and a significant rise in the loss ratio for the loan-financing credit and guarantee businesses, drove the combined ratio higher.
On the plus side, the insurer has been reducing its credit and guarantee business, and targeting quality growth in agriculture and short-term health insurance.
However, the volatile investment environment and continued low domestic interest rates may add uncertainty to net income in 2024, says Fitch. Return on equity was 2.5%, down from 6% in 2022.
ZKI sees rating uplift on ownership
ZKI is rated one notch above its standalone credit quality, as a result of ownership linkage with the Jiangsu provincial government, says Fitch.
The global credit rating agency expects the Jiangsu provincial government to provide continuous operational and financial support to ZKI, when the need arises.
Jiangsu State-owned Assets Supervision and Administration Commission (SASAC) and the province's Department of Finance have strong control over the entities that collectively own 41.75% of ZKI, including its largest shareholder, Jiangsu Guoxin Investment Group, which has a 21.5% stake.