Fitch Reaffirms SINOSURE's 'A+' IFS Rating with a Stable Outlook
by Axton Global
Fitch Ratings has recently confirmed that SINOSURE (China Export & Credit Insurance Corporation) maintains a robust financial position with a rating of 'A+' (Strong), and things are looking steady ahead. This recognition highlights SINOSURE's crucial role in supporting China's exports and its close ties to government bodies like the Ministry of Finance and Central Huijin Investment Ltd. Fitch has examined SINOSURE's finances thoroughly to reach this conclusion.
Key Rating Factors
Government Ownership: SINOSURE's strong rating is closely linked to China's sovereign rating (A+/Stable) due to its distinct policy-driven function and ownership ties. The insurer's ownership by the Ministry of Finance and Central Huijin Investment Ltd. underscores its strategic importance in facilitating China's foreign economic engagements and trade collaborations.
Dominant Market Presence: SINOSURE is a major player in providing insurance for export credits in China. This strong position is fortified by its extensive operational scale and nationwide sales and service networks.
Financial Stability: SINOSURE maintains a robust solvency buffer to sustain its underwriting operations, with its comprehensive solvency ratio surpassing regulatory thresholds as of end-3Q23. Notably, its net leverage saw an improvement to 2.0x by end-2022, reflecting sound fiscal management. Additionally, the insurer can rely on capital infusion from the government if the need arises.
Mission-Oriented Approach: Given its role as the primary insurer supporting China's trade activities, SINOSURE prioritizes its mission over profit maximization. Although increased claim payouts may have impacted its underwriting margin in 2023, the company's focus remains on ensuring operational stability, with returns from invested assets serving as a consistent revenue stream.
Smart Investment Strategy: SINOSURE exercises prudence in managing its investment portfolio, with a cautious stance towards risky assets. At end-2022, risky assets, predominantly comprising equity and equity-related funds, represented only about 28% of the company's capital. Furthermore, the insurer reduced its exposure to such assets in 9M23.
Liquidity Resilience: The insurer maintains a robust liquidity position, with cash and bank deposits constituting approximately 49% of its total invested assets as of end-2022. Notably, these deposits, primarily denominated in US dollars, serve as a cushion against potential cash outflows from US dollar claim liabilities. With a liquid assets-to-net claim reserves ratio of about 4.6x as of end-2022, SINOSURE demonstrates resilience in meeting its financial obligations.
In conclusion, Fitch's affirmation of SINOSURE's 'A+' IFS Rating with a Stable Outlook shows that it's a reliable player in China's export game, backed by its prudent financial management and government support.
Dominant Market Presence: SINOSURE is a major player in providing insurance for export credits in China. This strong position is fortified by its extensive operational scale and nationwide sales and service networks.
Financial Stability: SINOSURE maintains a robust solvency buffer to sustain its underwriting operations, with its comprehensive solvency ratio surpassing regulatory thresholds as of end-3Q23. Notably, its net leverage saw an improvement to 2.0x by end-2022, reflecting sound fiscal management. Additionally, the insurer can rely on capital infusion from the government if the need arises.
Mission-Oriented Approach: Given its role as the primary insurer supporting China's trade activities, SINOSURE prioritizes its mission over profit maximization. Although increased claim payouts may have impacted its underwriting margin in 2023, the company's focus remains on ensuring operational stability, with returns from invested assets serving as a consistent revenue stream.
Smart Investment Strategy: SINOSURE exercises prudence in managing its investment portfolio, with a cautious stance towards risky assets. At end-2022, risky assets, predominantly comprising equity and equity-related funds, represented only about 28% of the company's capital. Furthermore, the insurer reduced its exposure to such assets in 9M23.
Liquidity Resilience: The insurer maintains a robust liquidity position, with cash and bank deposits constituting approximately 49% of its total invested assets as of end-2022. Notably, these deposits, primarily denominated in US dollars, serve as a cushion against potential cash outflows from US dollar claim liabilities. With a liquid assets-to-net claim reserves ratio of about 4.6x as of end-2022, SINOSURE demonstrates resilience in meeting its financial obligations.
In conclusion, Fitch's affirmation of SINOSURE's 'A+' IFS Rating with a Stable Outlook shows that it's a reliable player in China's export game, backed by its prudent financial management and government support.
Source: Fitch Ratings
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Axton Global is an international consulting company helping importers worldwide secure trade credit terms with Chinese suppliers.
We serve customers from 82 countries across 5 continents.
info@axtongl.com
We serve customers from 82 countries across 5 continents.
info@axtongl.com