Moody’s Investors Service has changed its outlook on the life industry in China to “stable” from “negative”.
Explaining the change, Moody’s senior credit officer Qian Zhu said China is currently experiencing a moderate buildup in leverage, as well as a shift to a more sustainable product mix and a slowdown in investment allocation to high-risk assets that will prevent further deterioration in the creditworthiness of Chinese life insurers during the next 12-18 months.
Moody’s report says that the government’s economic policies will remain focused on containing leverage and improving the quality and strength of growth.
“For life insurers, premium growth will be lower in 2018, but insurance demand will be supported by steady economic growth, low insurance penetration and initiatives to promote long-term products,” said Zhu.
In particular, Moody’s points to several positive indicators, including the fact that renewal premiums are forming a larger proportion of total premiums, universal life policies are in decline, more profitable protection-type products are strengthening underwriting profit and solvency ratios remain solid.
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