The 14th working meeting of the Solvency Supervision Committee held by the China Banking and Insurance Regulatory Commission revealed that at the end of the fourth quarter of 2021, the average comprehensive solvency adequacy ratio of the 179 insurance companies included in the meeting was 232.1%, and the average core solvency adequacy ratio was 219.7%. %. The overall operation of the insurance industry was stable, the solvency adequacy ratio remained within a reasonable range, and risks were generally controllable.
Among them, the average comprehensive solvency adequacy ratios of property insurance companies, life insurance companies and reinsurance companies were 283.7%, 222.5% and 311.2% respectively. The comprehensive risk rating of 91 insurance companies was rated as Class A, 75 insurance companies were rated as Class B, 8 insurance companies were rated as Class C, and 4 insurance companies were rated as Class D.
From June to November 2021, the China Banking and Insurance Regulatory Commission conducted a solvency risk management capability regulatory assessment (hereinafter referred to as the SARMRA assessment) on 43 insurance companies. SARMRA assessment is an important part of the second pillar of China’s risk-oriented solvency system, and it is also an essential element of the first pillar to calculate the solvency adequacy ratio.
The 2021 SARMRA assessment results show that the risk management awareness of insurance companies has been continuously enhanced, the risk management structure and institutional system have been gradually improved, and risk management capabilities have been effectively improved. The evaluation results show that there are 5 companies with a score of 80 or above, and 29 companies with a score of 70 to 80, accounting for nearly 80% of the total. In terms of the impact on the solvency adequacy ratio, 5 companies with a score of 80 or above can reduce the minimum capital by 1.85 billion yuan, which can improve the solvency adequacy ratio; 38 companies with a score below 80 need to increase the minimum capital by 3.82 billion yuan. Reduce the solvency adequacy ratio.
At the end of 2021, the China Banking and Insurance Regulatory Commission issued the “Regulations on Solvency of Insurance Companies (II)” (hereinafter referred to as “Rule II”), and the insurance industry will prepare and submit solvency reports based on Rule II from the first quarter of 2022. Industry insiders said that by the end of April this year, insurance companies will hand over their first solvency reports under Rule II.
It is understood that since Rule II puts forward higher requirements in terms of risk factors and capital quality, it is expected that the overall comprehensive solvency adequacy ratio of the insurance industry under Rule II will decrease slightly, and the changes in different companies will vary. At present, insurance companies are actively adjusting and actively adapting to the changes in rules, and the actual decline in the future may be smaller than expected.
The relevant person in charge of the Finance and Accounting Department (Solvency Department) of the China Banking and Insurance Regulatory Commission previously revealed that in order to ensure the smooth implementation of Rule II, if the solvency index drops sharply due to the implementation of Rule II, or falls below the critical point (such as 150%, 120%) that has regulatory action significance , 100%) insurance companies, the regulatory authorities will implement classified guidance for them, and give them a transition period policy of up to 3 years, allowing them to be put in place step by step to achieve a smooth transition between the old and new rules.
The solvency index of insurance companies has declined, which is in line with the current overall judgment on industry risks. The above-mentioned person in charge said that in recent years, with the gradual exposure of insurance risks, the market risk (except interest rate risk) and credit risk on the asset side have increased. However, the asset-liability matching of life insurance companies continued to improve, and the minimum capital for interest rate risk was greatly reduced. In general, the decline in the comprehensive solvency adequacy ratio of life insurance companies was relatively smaller than that of property insurance companies.
At the same time, under Rule II, the core solvency adequacy ratio dropped significantly. “Mainly because under the current rules, the distinction between core and comprehensive solvency adequacy ratios is not high. Rule II has raised the standard of core capital, and the distinction between core capital and subsidiary capital has been improved. Therefore, the core solvency adequacy ratio will have a relatively large decline. But it is still much higher than the 50% standard.” said the person in charge.
Specifically, under Rule II, the solvency of insurance companies with aggressive operations and major problems in asset-liability matching will generally decline, while the solvency of insurance companies with stable operations and strong risk management capabilities will generally improve. The above-mentioned person in charge said that, in general, if a three-year transitional period is given, in addition to insurance companies that have already failed to meet the standards, there will be no new companies that fail to meet the solvency standards.Return to Sohu, see more
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