China’s regulator identifies solvency data shortfalls at four insurers

Written by Adam Cadle

16/01/2023

The Financial and Accounting Department of the China Banking and Insurance Regulatory Commission (CBIRC) has issued a ‘Notice on the Inauthentic Issue of Solvency Data of Four Insurance Companies.

Solvency data issues were found at Zheshan Property & Casualty Insurance, Ancheng Property & Casualty Insurance, PICC Life Insurance, and AIA.

In Zheshang Property & Casualty Insurance’s case, in the company’s solvency report for Q1 2022, when calculating the minimum capital for the counterparty default risk of deposits, the basic factor selection was wrong, and the minimum capital was underappreciated by 8,076m yuan. Furthermore, when calculating the liquidity coverage ratio indicator, the cash inflow and cash outflow forecasts under the basic scenario and the stress scenario did not include the cash flow that may be generated by stock asset transactions. Other issues included inaccurate reporting of comprehensive risk rating data and incomplete solvency statements.

In the case of Ancheng Property & Casualty Insurance, some stock basic factors were used incorrectly, resulting in the under-accrual of minimum capital of RMB 1,566m and RMB 3,544m. There was also false reporting of comprehensive risk rating data.

PICC Life Insurance’s minimum capital of interest rate risk was measured in violation of regulations.

For AIA, the firm’s reinsurance system failed to amortise reinsurance claims of 18,272 yuan in time, and the reinsurance accounts receivable in the current balance sheer were understated by 18,272 yuan.

The CBIRC said it will deal with the above-mentioned behaviours in accordance with laws and regulations; continue to strengthen on-side inspections of the authenticity of solvency data and urge insurance companies to strengthen the authenticity management of solvency data.

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