CCTV News: Recently, the State Administration for Financial Regulation issued the "Insurance Company Supervision Rating Measures" (hereinafter referred to as the "Rating Measures"), and the heads of relevant departments and bureaus answered reporters' questions on related questions.

1. What is the background and process of formulating the Rating Measures?

A: The Central Financial Work Conference emphasized that it is necessary to "comprehensively strengthen institutional supervision, behavioral supervision, functional supervision, penetrating supervision, and continuous supervision." "Several Opinions of the State Council on Strengthening Supervision, Preventing Risks and Promoting High-Quality Development of the Insurance Industry" (Guofa [2024] No. 21) requires that "strengthening and classified supervision should be strengthened. Improve the supervision and rating system of insurance institutions and strengthen the application of rating results."

Based on the current new situation of the insurance industry development, the State Administration for Financial Regulation systematically summarized the current regulatory practical experience and studied and drafted the "Rating Measures". From June to August 2024, the "Rating Measures" was formed on the basis of extensive soliciting and adopting opinions from various parties such as regulatory systems and insurance companies.

2. Which types of insurance institutions does the Rating Measures apply to?

A: The Rating Measures clearly state that regulatory authorities conduct regulatory ratings on insurance companies established in my country and opened for more than one full accounting year, including insurance group (holding) companies, property insurance companies, life insurance companies and reinsurance companies, and foreign reinsurance company branches. For newly established insurance companies that were established that year, the regulatory authorities may conduct trial ratings in accordance with the methods; for insurance companies that are in restructuring, being taken over, and implementing market exits, they will be directly rated as S-level and will no longer participate in the regulatory rating process of that year. In addition, after the issuance of the "Rating Measures", if the provisions on supervision ratings in the "Regulations on Supervision Rating of Personal Insurance Companies" are inconsistent with these Measures, this Measures shall prevail.

3. What procedures do regulatory ratings for insurance companies mainly include? How is the schedule of each year?

A: The Rating Measures clarifies the supervision and rating procedures of insurance companies, including: annual rating plan formulation, information collection, initial evaluation, re-evaluation, review, result feedback and analysis, dynamic adjustment, evaluation tracking and improvement, etc. The Rating Measures stipulate that in principle, the regulatory rating work for that year should be completed before the end of March next year. Considering that the regulatory authorities need to establish and improve relevant supporting systems and develop information systems, insurance companies need to make preparations and appropriately postpone the completion time in the early stage of the supervision rating operation, and steadily promote the supervision and rating of insurance companies.

4. What rating elements are included in insurance company regulatory ratings? How to get a comprehensive score for the company?

A: The Rating Measures stipulate that the regulatory rating elements of insurance companies include corporate governance, solvency, liability quality, asset quality (including asset-liability matching), information technology, risk management, operating conditions, consumer rights protection and others. Based on the comprehensive evaluation of each rating factor, the overall risk rating results are obtained to truly reflect their risk level. At the same time, considering the differences in business management and risk characteristics of different types of companies, different rating elements are allowed to be set. For company scores, the comprehensive score will be obtained according to the percentage system and weight method. During the regulatory rating process, the regulatory authorities evaluate the rating indicators of each rating factor based on the scoring standards, obtain the score of individual elements, and then obtain the company's comprehensive score according to the weights occupied by different rating factors.

5. How many categories are the regulatory rating results of the "Rating Measures" divided into? What is the correspondence between comprehensive scores and rating results?

A: The Rating Measures stipulate that the regulatory rating results of different types of companies are level 1-5 and level S, and the larger the number, the greater the risk. The comprehensive score of the regulatory rating ranges from 90 points (inclusive) to 100 points are level 1, 75 points (inclusive) to 90 points are level 2, 60 points (inclusive) to 75 points are level 3, 45 points (inclusive) to 60 points are level 4, and 5 points are below 45 points. Among them, for the second-level companies, they are further divided into three levels A, B, and C according to their scores; the third-level and fourth-level companies are subdivided into two levels A and B. Companies that are in restructuring, being taken over, implementing market exits, etc., will be directly listed as S-level. In combination with rating practice and regulatory actuality, the Rating Measures set up a "one-vote veto" mechanism, that is, the company's individual risks will downgrade the rating results. For example, if an insurance company has serious corporate governance defects, insufficient solvency, and high liquidity risks, the rating result should be level 4 or below.

6. How do regulatory authorities strengthen the use of rating results?

A: In accordance with the principle of high risk and high intensity, the regulatory authorities implement classified supervision of the company based on the rating results, and support the best and limit the worst. They use the rating results as an important basis for taking regulatory measures and market access and on-site inspections in daily supervision. For example, if the rating results are Level 1 and Level 2, the frequency of on-site inspections can be reduced and support it in terms of organization and personnel access, product development, business pilot projects, etc. If the rating result is level 3, measures such as increasing the frequency of off-site supervision analysis and requiring the company to submit risk management improvement plans should be taken to distinguish the situation. If the rating result is level 4, measures such as restricting dividends to shareholders, restricting the establishment of branches, and restricting business scope can be taken. If the rating result is level 5, a risk disposal plan should be formulated and reorganized, takeover or market exit should be arranged according to the law, depending on the circumstances. If the rating result is S level, restructuring, market exit and other work should be accelerated in accordance with the law.

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State Administration of Financial Supervision and Administration issued the "Insurance Company Supervision Rating Measures"