Here comes the long-awaited sequel!

• CBIRC will introduce C-ROSS Phase II in July 2021, to take effect from 2022 onwards
• Higher capital charges will be levied on NAS, credit guarantee business and larger P&C insurers; capital savings for agricultural P&C, pension, and insurtech players
• Contribution of residual margin is capped at 35% of life insurers’ core capital
• The new rule may lower insurers’ solvency ratio but transition period is granted and insurers have sufficient capital buffer to absorb this impact. Zhong An (6060 HK) is likely to benefit.