KUALA LUMPUR: Global credit rating agency AM Best expects the revised quantitative and qualitative requirements under the China Risk-Oriented Solvency System (C-ROSS) phase two, to have a significant impact on the various insurance market segments.

       The recent revision to China’s solvency regime should allow for greater transparency in risks and capital quality, it said.

       Most insurance companies are likely to observe various degrees of decline immediately in solvency ratios depending on their product mix, capital structure, and aggressiveness in their investment strategies.

       Under the updated solvency regime, capital recognition has been tightened and the industry is expected to see a drop in admitted capital in solvency calculations.

       Insurers will face higher capital requirements arising from long-term equity investments, particularly in non-insurance subsidiaries that give the insurer controllership, which will be 100% risk charged. — Bernama