HONG KONG, Oct 11 (Bernama-BUSINESS WIRE) — Declining interest rates in China have led to narrowing spreads and increased reinvestment risk for domestic insurance companies, according to a new AM Best report, placing a greater onus on insurers’ asset-liability management.
The Best’s Special Report, “Chinese Insurers’ Investment Trends Remain Conservative,” states that with yields of 10-year government bonds remaining below 3% over the past two years, they no longer meet the assumed rate-of-return requirements for some long-term protection products. Furthermore, the proportion of participating policies by gross premium revenue declined in recent years, shrinking insurers’ buffer to absorb investment risk in the current in-force portfolios.