[ET Net News Agency, 4 February 2020] The outbreak of the novel coronavirus will likely
weigh on Chinese insurers' earnings and revenues in 2020. S&P Global Ratings expects
potential equity market volatility and persistent reinvestment challenges to strain
domestic insurers' bottom lines as business activities slow down from reduced face-to-face
engagements with customers.
"We anticipate that the capital buffers for our rated insurers, though narrowed, will
remain sufficient at existing rating levels," said S&P's credit analyst WenWen Chen.
"Meanwhile, the pressure on capital could be more pronounced on smaller insurers without
strong parent group support in China's large insurance market, which is dominated by key
domestic insurers."
Life insurers' efforts to focus on enhancing traditional tied agency distribution may
come to a standstill given concerns over the human-to-human transmission. The reduced
propensity to meet agents to discuss financial planning and insurance coverage will hinder
the distribution of protection-type policies. Particularly, S&P anticipates that new
business activity will contract during the first half of 2020.
Hubei, the province most affected by the coronavirus, serves as one of the top 10
markets in China, accounting for approximately 4.3% of the sector's gross premiums written
in 2019. (KL)