China Reinsurance (Group) Corporation: H126 preview: Underwriting underpinned earnings growth; upgrade to Buy

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China Reinsurance (Group) Corporation: H126 preview: Underwriting underpinned earnings growth; upgrade to Buy

ChinaChina ReReinsurance(1508.HK)(Group) Corporation UBS Research

UBS Research THESIS MAP Thesisa guideMapto -ourChinathinkingRe (1508.HK)and what´s where in this report

Pivotal Questions Q: Is healthy P&C re. CoR sustainable despite the softening cycle in international markets?

Likely. For the domestic segment, we see CoR largely stable at ~96% in 2026-30E. This underwriting

stability is supported by a sliding-scale commission structure. We view the 3.2ppt YoY CoR

deterioration in 2025 as a one-off, given the tough base created by the reversal of an initial loss

related to historical agriculture business. For the overseas segment (including Chaucer), we project

CoR to rise 4.3ppt YoY to 85.5% in 2026E (as a softening market cycle is partially offset by narrower

NAT CAT losses in H1), then average 87.6% in 2027-30E. Despite the CoR deterioration,

underwriting margin remains decent. Unlike major international peers, China Re benefits from its

domestic China business, which helps mitigate the earnings impact of weaker conditions overseas.

Q: Can the L&H reinsurance service results start to recover?

Yes. We expect the L&H segment's insurance service results to turnaround in 2026 (vs the Rmb2.2bn

loss in 2025). First, the negative insurance services result in 2025 was mainly driven by one-off

actuarial assumption changes. Second, China Re has scaled down its savings-type business, which

carries higher risk of onerous contracts. Third, the early termination of certain financial reinsurance

contracts led to additional CSM releases in H1. Finally, China interest rates are more stable than in

previous years.