Liberty China may outgrow market despite thin margins: S&P

Small and medium-sized enterprise products are set to lead expansion.

Liberty China is expected to grow faster than China’s non-life insurance market over the next two years as it expands its commercial and non-motor business, although profitability is likely to remain under pressure from thin underwriting margins and rising competition.

S&P Global Ratings expects Liberty China’s gross written premiums to grow 7% to 10% annually between 2026 and 2028, compared with its estimate of average growth of 2% to 5% for China’s property and casualty insurance sector, which continues to be affected by the country’s slowing economy.

The ratings agency said the insurer’s integration under Liberty Mutual Group’s One Liberty initiative should help support this growth. 

Since 1 January 2026, Liberty China has operated on a single underwriting platform that combines its retail, commercial and speciality businesses, giving it greater access to the group’s pricing expertise, business referrals and regional reinsurance programmes.

S&P said the insurer’s expansion into non-motor insurance, particularly products for small and medium-sized enterprises, is expected to be its main growth driver over the next few years.

The agency also expects Liberty China to remain profitable on its underwriting business over the next two years as it tightens underwriting standards, controls costs and focuses on improving insurance margins. 

These measures helped reduce its net combined ratio to 98.6% in 2025 from a five-year average of 102.1%. A combined ratio below 100% indicates an underwriting profit.

However, S&P said underwriting margins are likely to remain thin and could become more volatile as the insurer increases its exposure to non-motor and commercial insurance. 

It also warned that the growing share of new energy vehicle policies could weigh on underwriting performance because these policies generally have higher loss ratios. 

New energy vehicle business accounted for less than 10% of Liberty China’s motor portfolio in 2025, but its share is increasing.