Fitch Ratings has affirmed the Insurer Financial Strength (IFS) Rating of Yingda Taihe Property Insurance (YDPI) at ‘A’ (Strong), with a stable outlook .
YDPI is a mid-sized P&C insurer, owned by parent company State Grid Corporation of China — a state-owned electricity utility. It offers a variety of products, including property, liability, short-term accident, health, credit, and bond insurance. As of 2022, it had a 0.8% market share based on direct premiums.
Fitch believes YDPI’s underwriting performance will remain strong in the near future, thanks to moderate business expansion and stable business quality. The credit rating agency added, “its combined ratio could rise slightly in 2023 due to increasing operating activities after the Covid-19 pandemic and more frequent natural disasters, but it will remain well below the guideline for ‘A’ rated non-life insurers.”
In terms of investment, despite the swings in the capital market, the insurance company’s return on equity improved to 17% in 2022, from 14% in 2021, thanks to better underwriting margins.
Fitch also commented on YDPI’s strong capitalisation. The insurer’s Fitch Prism Model score remained ‘Extremely Strong’, with a 266% solvency ratio at the end of H1 2023, as calculated under the China Risk-Oriented Solvency System Phase 2. While the score was impacted by rising investment risks and premium growth, it was supported by an increase in other comprehensive income and retained earnings.
In addition, the company successfully refinanced 1.5 billion yuan (US$193.9m) for its capital supplementary bond in July, which resulted in the financial leverage ratio dropping to 13.3% by end-1H23, from 14.6% by end of 2022. Fitch expects the ratio to stay stable in the near term.
Addressing YDPI’s asset risk, Fitch noted that despite a growing exposure to risky assets by end-1H23 compared to end-2022, its risky-asset ratio slightly decreased to 42% from 43% at end-2022. This is attributed to the expanded capital base. Fitch anticipates the company’s asset risk to remain low in the near term.
