China P&I's investment in CMBC dominates asset portfolio

The past five years saw an average return on equity of 5.3%.

AM Best anticipates that China Shipowners Mutual Assurance Association’s (China P&I or the Club) (China) risk-adjusted capitalisation, as measured by the Best’s Capital Adequacy Ratio (BCAR), will stay at the strongest level in the near term, aided by low underwriting leverage and consistent capital growth through earnings retention. 

In 2023, China P&I's capital and surplus grew moderately due to improved operating results and profit retention. 

The Club’s investment in China Minsheng Banking (CMBC) remains a significant portion of its total assets, representing about 70%. This investment concentration poses a risk to the balance sheet, along with the Club’s high allocation to equities and potential exposure to large protection and indemnity (P&I) insurance claims. 

However, these risks are balanced by the Club’s prudent reserving practices and comprehensive reinsurance program.

China P&I’s operating results improved in 2023, with narrower underwriting losses and favourable investment income. Over the past five years, the Club has consistently reported net profits, with an average return on equity of 5.3% from 2019 to 2023. 

The Club’s premium revenue growth and better claims experience have led to a declining loss ratio over the past three years. Investment returns remained strong in 2023, with a net investment yield of 5.3%, primarily driven by dividends and growth in CMBC’s book value.

Established in 1984, China P&I is a leading player in China’s P&I market and a major hull insurance provider. The Club’s underwriting portfolio focuses on the domestic market, particularly ocean-going vessels owned by Chinese shipowners. 

China P&I is also exploring opportunities in overseas markets like Southeast Asia to diversify its member base. The Club leverages long-term partnerships with several International Group of P&I clubs for reinsurance support, loss prevention, and claims services.