Domestic Chinese insurer PICC Property & Casualty Co., Ltd. (PCC Property & Casualty) has entered into a reinsurance agreement with its sister companies PICC Re and PICC Hong Kong, both under its ultimate parent company PICC Group.
PICC Property and Casualty signed one-year agreements with the two entities, which are valid from January 1 to December 31, 2026.
The framework regulates outward reinsurance (ceding premiums) and inward reinsurance (assuming premiums).
The agreement with PICC Re focuses on maintaining operational stability and managing the company’s overall risk profile.
The company estimates that the annual cap for premiums ceded to PICC Reinsurance is RMB 6.5 billion, and the cap for commissions returned to the company is RMB 2.925 billion.
PICC Property and Casualty and PICC Hong Kong focus on expanding business cooperation and supporting the “Belt and Road” initiative and Chinese enterprises going global.
According to the agreement, the annual cap of premiums borne by PICC Hong Kong is set at RMB 3.5 billion in 2026. This increase is mainly due to the expected 15% growth of the “China Overseas Interest” business.
In addition, PICC Property & Casualty plans to use PICC Hong Kong’s location advantages and its own risk protection capabilities to provide solutions for Chinese enterprises’ overseas investments.
Across the two transactions, carve-out ratios ranged from 0.1% to 80%, with commission rates capped at 45%, all determined through actuarial modeling and arm’s-length market negotiations and benchmarked against terms provided by at least three independent third parties.
According to the regulations of PICC, the ceded reinsurance transaction complies with the requirements of the Hong Kong Listing Rules as continuing connected transactions and requires reporting, annual review and announcement.
However, these transactions are not subject to independent shareholder approval. In contrast, inflow reinsurance transactions are fully exempt due to their limited size.
The company attaches great importance to internal control and compliance work, which is achieved through detailed related-party transaction policies, annual upper limit warning mechanisms, annual internal audits, etc.
Oversight is provided by independent directors and external auditors. In addition, all transaction terms are disclosed through its reinsurance trading platform. This comprehensive approach demonstrates a commitment to leveraging collaboration while protecting minority shareholders and complying with regulatory requirements.