The solvency ratios of Chinese life insurers and reinsurers declined in 2018 but increased for property and casualty (P&C) insurers, Moody's Investors Service says in a new report released on Monday.

All three sectors remained well capitalised, with reported average comprehensive solvency ratios in excess of 200%, well above the regulatory minimum of 100%.

“The average solvency ratios of Chinese life insurers were affected by volatile capital markets and higher capital requirements amid rising market risk, while premium growth has been slowing from the shift to longer-term protection-type products,” said Mr Frank Yuen, a Moody's vice president and senior analyst.

“P&C insurers meanwhile benefited from capital injections that pushed up their solvency ratios, but their ongoing shift towards non-motor products – driven by motor pricing deregulation – will limit any further improvement,” added Mr Yuen.

The increased risk diversification among both life and P&C insurers in turn has resulted in strong cession growth for reinsurers. While reinsurers have thus seen sizeable business growth, this has been accompanied by an increase in reserve liabilities and risk charges, and declining solvency ratios.