CNPC Captive Insurance Company Establishment Case Study

The Pioneer of China's Captive Insurance Industry

October 24, 2026

Core Question: Why was China's first professional captive insurance company established in Karamay, Xinjiang? How does this "pioneer of domestic captives" manage the immense domestic and overseas asset risks of CNPC Group?

Entity and path: CNPC Captive Insurance Co., Ltd. was established on December 26, 2013, with registered capital of RMB 6 billion, registered in Karamay, Xinjiang, incorporated by CNPC Group and its affiliates.

Industry position: The first professional captive insurance company in China, opening the era of state-owned-enterprise captives; China Railway Insurance, COSCO SHIPPING Captive, and Guangdong Energy Captive all followed its model.

Governance structure: CNPC Group holds 11%, PetroChina holds 49%, and CNPC Capital holds 40%; the actual controller is SASAC of the State Council.

Operating scale: In 2025, insurance premium income reached RMB 1.808 billion, ranking first among the four domestic captive insurers; however net profit was RMB 61 million, down sharply by 74% YoY, and investment and compliance risks became the core challenges for the new management team.

1. Case Overview: The "Sample Zero" of China's Captive Insurance Industry

CNPC Captive Insurance Co., Ltd. (hereinafter "CNPC Captive Insurance") is the first professional captive insurance company in China. In September 2012 it received approval for establishment preparation from the former CIRC (Baosai/Jianfa [2012] No. 1153), officially commenced operations on December 26, 2013, was registered at No. 7 Shiji Avenue, Karamay City, Xinjiang, with registered capital of RMB 6 billion and operating insurance license No. 000180.

Before CNPC Captive Insurance, there was no professional captive insurance institution in China. Its establishment was not only a step in CNPC Group's risk management system reform, but also an institutional experiment for China's insurance industry to introduce captive insurance, an internationally accepted risk management tool. Its "60% self-insurance + 40% commercial tender" tiered structure, the choice of Karamay as the registration location, and the arrangement of CNPC Capital holding 40% as a financial holding platform all became reference templates for subsequent cases such as China Railway Insurance (2015), COSCO SHIPPING Captive (2017), and Guangdong Energy Captive.

2. Background: Why the Oil Giant Needed a Captive

The oil and gas industry is a typical capital-intensive, ultra-long-chain, high-risk industry. Once explosions, blowouts, oil spills, or war attacks occur in upstream exploration and development, long-distance pipelines, refining and chemical units, or overseas oil and gas projects, a single loss can reach billions of yuan. Before CNPC Captive Insurance was established, the Group mainly relied on commercial insurance procurement plus an internal production safety guarantee fund to manage risks, but both mechanisms had obvious shortcomings. Combined with the mature captive model commonly used by international oil giants, this ultimately drove the Group to apply for and establish China's first domestically licensed captive insurer.

2.1 Structural Shortcomings on the Commercial Insurance Supply Side

Insufficient supply of high-risk coverage and limited underwriting capacity: Catastrophic risks such as blowout pollution, war and violence, overseas expropriation, and deep-water business interruption belong to the "difficult-to-insure risks" in the commercial insurance market. Constrained by capital and reinsurance limits, commercial insurers either refuse to underwrite or impose extremely high deductibles and harsh exclusions, making it hard to match the risk profile of oil and gas assets. After the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, the global energy insurance market contracted underwriting capacity and pushed rates sharply higher, further increasing pressure on domestic oil companies. CNPC's announcement clearly stated that ordinary commercial insurance could not cover all business segments of the Group.

Severe cyclicality of insurance pricing and uncontrollable premium costs: Energy insurance is strongly cyclical — after catastrophic events the market raises rates and tightens underwriting; during calm periods there is low-price competition and shrinking coverage. The Group's annual decentralized procurement and multi-vendor bidding led to volatile premium expenditure, unfavorable to investment budgeting and cost stability of long-cycle projects (typically 20–30 years). Meanwhile, the brokerage and co-insurance chain generated high channel commissions and management expenses, and a large share of premiums was not converted into claims, resulting in outflow of funds.

Inconsistent policy and claims standards, frequent overseas project disputes: The Group's domestic and overseas assets span dozens of countries, and each project may be insured with different insurers with different policy terms, loss-adjustment rules, and claims criteria. In Sino-foreign joint-venture oilfield projects, the foreign partners' insurance standards are difficult to align with the domestic HSE system; after a loss, cross-border loss adjustment and subrogation are difficult, and claims timeliness and outcomes are uncontrollable.

2.2 Inherent Limitations of the Existing Safety Guarantee Fund

The Group's original production safety guarantee fund (safety guarantee fund) was an administrative, closed self-retention mechanism and an early prototype of domestic captive insurance, but it had inherent institutional ceilings:

No insurance legal-person license: it could not lawfully arrange outward reinsurance, so all catastrophe risk remained within the Group with no channel for risk dispersion; a major accident would directly hit the Group's income statement.

Funding extraction and use were subject to fiscal document constraints, with limited room for capital utilization and limited means of value preservation and appreciation.

Lacking legal effect as an insurance policy, it had insufficient recognition in overseas territorial regulation, joint-venture projects, and financing/mortgage scenarios, and could not replace compliant policies.

Weak specialized capability in risk mitigation, survey, and claims handling; it tended toward post-event compensation and could hardly be deeply embedded in the Group's HSE risk management system.

2.3 Practical Needs of Group Operations and Globalization

Coordinating massive domestic and overseas asset risks to support the "going global" strategy: At that time CNPC's overseas business was expanding rapidly, with a number of large oil and gas projects landing in Iraq, Kazakhstan, Turkmenistan, and elsewhere, and much of the assets located in geopolitically unstable regions. A group-level unified insurance platform was needed to coordinate risks across domestic long-distance pipelines, refining bases, overseas oilfields, and expatriate personnel, and to interface uniformly with host-country compulsory insurance and the international reinsurance market, solving the difficult problem of host-country compliance — a core driver for establishing the captive.

Turning insurance into a risk-reduction lever rather than mere compensation: Commercial insurers aim at underwriting profit and have limited incentive to invest in disaster prevention and loss control; a captive belongs to the Group, and its goal is not to earn premium profit but to reduce the Group's overall loss ratio. A captive can push risk control to the front, embedding risk surveys, hazard rectification, security investment, and HSE evaluation into underwriting conditions, shifting from "paying after a loss" to "pre-event loss control," and connecting insurance with the Group's production safety system.

Retaining risk funds and improving capital utilization efficiency: Premiums originally paid externally are retained within the Group, and insurance fund utilization is conducted under the regulatory framework to earn investment income; meanwhile, a tiered risk arrangement is retained — small, high-frequency risks are self-retained while large catastrophe risks are ceded to the international reinsurance market, balancing cost, capital, and risk exposure.

Benchmarking mature international peers: International oil majors such as BP, Shell, and ExxonMobil have all set up captives in offshore locations such as Bermuda as a standard configuration of group risk management. CNOOC had already established a captive in Hong Kong in 2000. CNPC's captive also benchmarks the prevailing international risk management model in the energy industry, filling a gap in the Group's risk management toolkit.

2.4 Policy Window Opened

In 2012 the former CIRC approved Baosai/Jianfa [2012] No. 1153, agreeing to CNPC's preparation of the exclusive property insurance company; at the end of 2013 the CIRC issued China's first special regulatory document for captives, the "Notice on Issues Concerning the Regulation of Captive Insurance Companies," clarifying the regulatory framework and opening the institutional channel for domestic captive establishment. CNPC's captive became the benchmark pilot, providing a model for subsequent industry-group captives such as railway and COSCO SHIPPING.

2.5 Positioning

CNPC's establishment of a captive was not simply to save money or avoid premiums, but — against the threefold backdrop of insufficient commercial insurance supply, the shortcomings of the old safety guarantee fund, and accelerated overseas globalization — to build a licensed, compliant, internationally reinsurable, and deeply HSE-integrated one-stop risk management platform, achieving a closed loop of risk self-retention, market co-insurance, reinsurance dispersion, and risk reduction.

3. Historical Evolution: From Production Safety Fund to Licensed Captive

CNPC Captive Insurance is not a one-time introduction of the captive concept into China, but an institutional upgrade of the oil and petrochemical industry's decades-long "risk self-retention" practice. To understand its positioning as the "first domestic captive and institutional pioneer," one must trace back to the production safety guarantee fund (safety guarantee fund) of the former petrochemical system.

3.1 The Safety Guarantee Fund: China's Earliest "Industry-Internal Self-Insurance"

The production safety guarantee fund is the earliest risk self-retention/captive system in China's oil and petrochemical industry, and the institutional prototype of captive insurance in China.

Institutional basis: Established with State Council approval under the "Measures for the Administration of the Production Safety Guarantee Fund of China Petrochemical Corporation" (Cai Gong Zi [1997] No. 268) jointly issued by the Ministry of Finance and the former Sinopec Group.

Operation: Funds are extracted at 4 per mille of the period-end original value of fixed assets plus the average book balance of inventory, operating as "industry-internal property insurance" within the petrochemical industry, providing timely economic compensation for property losses caused by natural disasters or accidents to support rapid restoration of production.

Nature: It was not an insurance legal person and held no insurance license; it operated through administrative extraction and closed operation — essentially the Group retaining risks within its own system, an early and primary form of the captive concept.

3.2 CNPC and the Safety Guarantee Fund: Same Institutional Origin, Direct Succession

Same institutional origin. CNPC Group and the former petrochemical corporation both trace their roots to the former Ministry of Petroleum Industry (divided after the 1988 institutional reform). Both groups continued to use the "industry-internal insurance" risk self-retention model — CNPC Group likewise maintained its own production safety guarantee fund.

Direct succession. CNPC Capital (holding 40% of the captive and additionally entrusted with the Group's 11% stake, giving it 51% voting rights) explicitly recorded in its 2018 annual report: "The captive also manages on a trustee basis the production safety guarantee fund of CNPC Group." That is, after CNPC Captive Insurance was established, it directly succeeded and managed the Group's original production safety guarantee fund, bringing this historical asset under the professional operating track of a licensed captive insurer.

3.3 Essence: From "Administrative Safety Guarantee Fund" to "Legal-Person Licensed Captive"

In a word: the safety guarantee fund is an "industry-internal insurance without legal-person status and relying on administrative extraction," and is the institutional predecessor of the captive concept for oil companies such as CNPC and Sinopec; CNPC Captive Insurance (2013) is the legal-person, marketized, and licensed upgrade of this concept. Upon establishment it directly managed the Group's original safety fund, completing the handover between the old and new generations of risk self-retention vehicles.

3.4 A Parallel Path: Sinopec

Sinopec also underwent this evolution — it had a safety guarantee fund, and in 2013 established "Sinopec Insurance Co., Ltd." (an exclusive captive) in Hong Kong, the first enterprise to land an offshore captive after the central government introduced policies supporting mainland institutions in establishing captives in Hong Kong; CNPC, by contrast, chose to establish in Karamay on the mainland. The two groups' safety funds share the same origin, but took different upgrade paths (Sinopec went offshore via Hong Kong, CNPC stayed domestic).

CNPC Group is one of the world's largest integrated oil and gas enterprises: in 2025 its operating revenue reached RMB 2.86 trillion, oil and gas equivalent output hit a record 1.842 billion barrels, ethylene capacity exceeded 10 million tons per year, and wind and solar power generation grew 68%. Its risk characteristics determine the inevitability of the captive model:

Enormous and highly concentrated assets: oilfields, pipelines, refineries, tank farms, vessels, and overseas projects span the globe; a single commercial insurer can hardly underwrite independently.

Homogeneous and specialized risks: upstream exploration and development, midstream long-distance pipelines, and downstream refining and sales share highly homogeneous risk types, while the external market prices high and responds slowly to claims.

Complex overseas risks: business covers high-risk regions in the Middle East, Central Asia, Africa, and South America, with intertwined war, coup, exchange-rate, and legal-compliance risks requiring professional platform coordination.

Huge group insurance costs: the annual commercial insurance premium expenditure reaches billions of yuan; establishing a captive retains profits within the Group and optimizes costs through reinsurance arrangements.

According to a S&P Global Ratings report, under CNPC's commercial insurance management documents, CNPC Captive Insurance under takes 60% of the Group's insurance share, with the remaining 40% placed through public tender to commercial insurers on the terms of the first successful bidder. This "60% self-insurance + 40% commercial tender" tiered structure both ensures the Group's centralized control over core risks and uses external market competition to force the captive to improve efficiency.

4. Establishment Path and Key Timeline

5. Shareholding Structure and Governance

The shareholding structure is: CNPC Group holds 11%, PetroChina Company Limited holds 49%, and CNPC Capital Holdings Co., Ltd. (CNPC Capital, a listed company) holds 40%; the actual controller is SASAC of the State Council. The characteristics of this structure are:

Group parent 11%: The group parent directly holds 11%: retaining strategic control over the core risk management tool.

Listed PetroChina 49%: The listed company PetroChina holds 49%: directly binding the captive to the risk needs of the listed entity.

CNPC Capital 40%: CNPC Capital holds 40%: incorporating the captive into the Group's financial holding platform, in synergy with Kunlun Bank, Kunlun Trust, Kunlun Insurance Brokerage, Generali China Life, etc., forming a pattern of "comprehensive financial services supporting the Group's main business."

In governance, the company has established shareholders' meeting, board of directors, supervisory board, and senior management. Notably, the company has experienced intensive management turnover over the past three years: former chairman Wei Guoliang retired at the statutory age in 2024 (fined RMB 70,000 for compliance issues before leaving), Wang Hua became chairman in May 2025 and left in May 2026, and Hao Guangmin was approved as chairman in September 2026. The chairman position was vacant for a total of about 16 months over the three years. General Manager Chen Peng stepped down in August 2026, with founding team member Zheng Xiaowei proposed to take over.

6. The Captive as a Key Tool in Serving Group Risk Management

The company's business scope covers, within CNPC Group and its member enterprises: property loss insurance, liability insurance, credit insurance and guarantee insurance; short-term health insurance and accident insurance; reinsurance of the above; and insurance fund utilization business. Specific products span ten major categories: enterprise property insurance, engineering insurance, energy insurance, overseas insurance, short-term health/accident insurance, liability insurance, cargo transportation insurance, marine hull insurance, patent insurance, and cybersecurity insurance.

6.1 Overseas Project Insurance: Risk Coordination across 23 Countries and 55 Projects

Following international practice, the company undertakes overseas project insurance in accordance with the Group's equity share. As of end-2023, business covered 55 large and medium-sized investment projects in 23 overseas countries, with overseas asset risk management coverage exceeding 80%. Typical cases include:

Iraq West Qurna / Rumaila: Iraq West Qurna and Rumaila projects: supporting smooth insurance transition during the transfer of operating rights.

Mozambique: Mozambique project: promoting a centralized insurance management model.

UK/France refineries, Brazil: UK/France refineries and Brazil: recovering insurance interests through market-based means, helping the Group recover RMB 250 million in overseas insurance interests for the year.

Through years of accumulation, the company has built the Group's overseas risk database and established an extensive insurance service network in various resource countries.

6.2 Green Insurance and New Energy

In December 2023, the company wrote CNPC's first green index insurance — the "insufficient solar radiation index insurance" — in Pakistan, compensating for loss of photovoltaic generation caused by insufficient solar radiation, marking a breakthrough in the Group's insurance business supporting the full value chain of the photovoltaic industry. In 2025 the Group's wind and solar generation grew 68%, providing new room for green insurance business growth.

6.3 Risk Reduction and Lean Management

The company promotes "lean management and comprehensive measures to prevent risks," extending insurance services from "post-event compensation" to "pre-event disaster prevention" through risk assessment, hazard inspection, insurance training, and investment in safety materials. In engineering insurance, it conducts whole-process risk patrols for oilfield construction, long-distance pipelines, and refining and chemical projects.

6.4 Technology Insurance and Patent Insurance

The company has developed innovative products including cybersecurity insurance, patent application compensation expense insurance, and patent enforcement insurance, serving the Group's digital transformation and technology innovation protection needs.

7. Deep Involvement in the Group's Overseas Insurance Business

CNPC's overseas assets face complex geopolitical conditions, with war, political embargoes, host-country compulsory insurance laws, catastrophes, overseas personnel safety, and deep-water engineering risks; many of these risks are under-supplied, overpriced, and harshly worded in the international commercial insurance market. The captive is the core vehicle for coordinating the Group's overseas risks, and its roles and practices are as follows.

7.1 Core Roles of Overseas Insurance for the Group

Centralize insurance procurement for overseas assets and reduce overall insurance costs: consolidating scattered insurance procurement authority of project companies and joint ventures worldwide into unified negotiation and unified policy architecture, breaking the pattern of project-by-project placement, local-insurer premiums, and layer-by-layer brokerage markup; stabilizing long-term Group premium expenditure under a "self-retention + international co-insurance + tiered reinsurance dispersion" framework, with annual assistance to the Group in recovering overseas insurance interests reaching as much as RMB 250 million.

Fill the coverage gap for high-risk, difficult-to-place risks: for oil and gas assets in Iraq, Mozambique deep-water, Turkmenistan, Pakistan and other regions, risks such as war, political violence, expropriation, and deep-sea LNG engineering insurance are avoided by many international commercial insurers or carry extremely high deductibles; as the Group's internal risk-taking platform, the captive tailors policy terms to fill the coverage gap.

Unify risk standards and align with the Group's QSE/HSE systems: with differing insurance rules across overseas JVs, host-country regulation, and partners, the captive issues policies and risk-control checklists under unified Group risk standards, embedding CNPC's mature oil and gas safety production, security, and disaster-prevention standards into insurance conditions, turning insurance from a "post-event compensation tool" into a "pre-event risk-control lever."

Coordinate expatriate Chinese personnel safety and medical/rescue protection: dedicated coverage of overseas employer's liability, emergency transport for sudden illness abroad, emergency repatriation, and remote-area medical rescue, addressing the pain point of missing commercial rescue services in remote overseas projects and building a global rescue service network.

Stabilize cash flow and hedge international insurance cycle volatility: the international energy insurance market is strongly cyclical — rates surge and underwriting contracts after catastrophic events; a captive can smooth insurance cost cycles and protect the stability of medium- and long-term overseas project financial projections.

Comply with host-country insurance regulatory laws: some resource countries (e.g., Turkmenistan) require domestic placement with local insurers and compulsory cession; by co-insuring and reinsuring with host-country local insurers, the captive satisfies local statutory insurance requirements while retaining the Group's lead in policy terms, claims, and risk control.

7.2 Specific Practices in Serving the Group's Overseas Risk Management

(1) Tiered underwriting architecture: "self-retention + local co-insurance + international reinsurance" three-level risk dispersion

Low-frequency, medium-and-small-loss risks are directly self-retained by the captive.

Shares required by host-country law are formed into a co-insurance pool with local insurers (e.g., the Amu Darya project in Turkmenistan, co-insured with that country's local insurer) to satisfy territorial regulation.

Catastrophe, war, and deep-sea engineering large-value risks exceeding the captive's capital-bearing capacity are placed on the international energy reinsurance market via excess-of-loss reinsurance to control solvency risk; simultaneously, geopolitical developments are dynamically tracked and periodic overseas project compliance and risk assessments are conducted to adjust cession structures.

Insurance is synchronized with project ownership changes: during operating-right transfers and equity closing of Iraq Rumaila and West Qurna, policies are shifted and liability succession completed in advance to avoid insurance gaps.

(2) Implementation of centralized overseas project insurance management, promoting "one project, one solution"

Focused coordination of key projects: for billion-level projects such as Mozambique Area 4 deep-water LNG, promotes centralized insurance management, unified policy structure and claims rules, aligning insurance standards with foreign partners such as BP and Eni; for UK/France refineries and Brazil deep-water assets, sorts out legacy policies, recovers historical policy interests, and reclaims unreasonable premiums and claim interests.

Product matrix adapted to diverse overseas risks: property (oil and gas facility all-risks, drilling platform/deep-water engineering, business interruption); special risks (war and political violence, kidnap and ransom); personnel (overseas employer's liability, overseas medical transport, expatriate accident); innovation (overseas new-energy index insurance, cross-border supply-chain performance protection), etc.

Front-loaded underwriting due diligence: before underwriting, joint on-site risk surveys with the Group's overseas QHSE and project management teams identify security hazards, process risks, and natural-disaster exposure, setting differentiated deductibles and limits, and making risk rectification a precondition for underwriting.

(3) Overseas risk reduction management (pre-event risk control, shifting from claims to disaster prevention)

On-site risk rating and inspection: together with Group safety and engineering experts, conduct asset risk assessment and rating of overseas stations, pipelines, and platforms, issuing risk-improvement recommendation letters; for projects with prominent hazards, set policy constraints requiring rectification within a deadline before renewal.

Disaster-prevention and loss-control resource investment: coordinate disaster-prevention materials and security equipment investment, support overseas project emergency response plans; for high-conflict, high-security-risk areas, improve security schemes in parallel.

Risk training and communication: provide insurance-and-safety training to overseas project Chinese managers and local employees, clarifying risk reporting, accident claim procedures, and on-site loss-reduction handling points.

(4) Cross-border claims service mechanism to address overseas survey, loss-adjustment, and recovery pain points

Build a global entrusted survey and loss-adjustment network: deploy cooperative surveyors in key regions such as Iraq, Mozambique, and Kazakhstan; conduct first-time on-site surveys after a loss to avoid bias by local overseas surveyors toward host-country partners.

Unify claims standards: with frequent claims disputes in Sino-foreign JVs, the captive locks in loss-adjustment, settlement, and recovery rules in policies in advance and negotiates uniformly on behalf of the Group; settles promptly to support rapid post-disaster repair and resumption of production.

Integrated subrogation recovery: for third-party liability accidents, conduct cross-border recovery uniformly and return recovered proceeds to the Group, replacing the previously fragmented and inefficient project-by-project recovery.

(5) Dynamic risk monitoring, early-warning, and reporting mechanism

Establish a tracking mechanism for geopolitical risks, natural disasters, and host-country policy changes, continuously tracking sanctions, insurance regulation changes, conflict escalation, hurricanes, and floods, reporting overseas insurance risk-exposure reports to the Group periodically, and proposing policy adjustments, limit adjustments, and risk-avoidance recommendations.

Emergency response mechanism for major sudden events: geopolitical conflict, major explosions, and platform accidents trigger emergency procedures — rapid loss assessment, advance claims payment, and coordination of reinsurance recoveries to safeguard project emergency funds.

Data aggregation: continuously aggregate claims records and loss data from 55 projects in 23 countries to build an overseas oil and gas loss database, feeding back into risk assessment at the Group's overseas investment initiation and feasibility study stages.

(6) Talent and synergy mechanism

Build an overseas insurance professional team with combined capability in energy engineering, international insurance, foreign-related law, and geopolitical risk, working in synergy with CNPC Capital, Kunlun Brokerage, and overseas project QHSE departments.

Benchmark the overseas risk-control models of international oil-major captives (BP, Shell captives) to continuously optimize policy terms, reinsurance structures, and risk-control standards.

7.3 Risk Shortcomings of Overseas Business

Overseas business is accompanied by significant challenges: volatile host-country laws, contraction of war-risk underwriting capacity in the international reinsurance market, complex sanctions-compliance red lines, and difficulty in cross-border recovery; when conducting overseas business, the captive must continuously balance territorial compliance, the Group's risk-control objectives, and its own solvency constraints.

8. Operating Performance: Largest Scale but Profit Pressure

8.1 Reasons for the 2025 Profit Plunge

In 2025 the company's premiums grew 18.44%, but net profit fell sharply from RMB 236 million to RMB 61 million, a drop of 74%. There are three core reasons:

Investment-side loss: In 2025 both the investment return and comprehensive investment return were -0.48%, the only negative investment return among property insurers that year. Based on total assets of RMB 10.539 billion, the investment loss impacted about RMB 51 million. This is directly related to the company's 2024 RMB 8.1 million fine for "making investment decisions directly under an entrusted-investment arrangement" — the company issued trading instructions that bypassed the entrusted insurer asset-management institution during entrusted investment, hollowing out the fiduciary institution's active-management function.

Data governance weakness: In Q4 2025, because the single-item assessment score for information systems was below 70, the risk comprehensive rating was downgraded directly from AA to BBB, exposing weaknesses in IT systems and data governance.

Management instability: three chairmen in three years and a 16-month position vacancy affected continuity of operating strategy.

It is worth noting that the 2025 combined loss ratio of 73.07% actually improved from 76.51% in 2024, indicating that underwriting itself was improving and the profit decline mainly came from investment and compliance factors. Net profit of RMB 159 million in H1 2026 is already close to the full-year 2024 level, showing that operations have stabilized after the new team took office.

9. The Special Logic of Captive Scale Expansion

S&P reports and Sina Finance analysis point out that the logic of a captive growing in scale differs from that of a commercial insurer: a commercial insurer adding ten thousand more vehicles gains independent risks where the law of large numbers stabilizes payouts; but a captive adds new assets of the same parent — the larger CNPC's asset base, the more its risk exposure grows. This means a captive cannot simply chase premium scale; it must improve risk management capability on both the underwriting and investment sides in parallel. Behind the RMB 1.808 billion of premiums in 2025 is asset expansion from the Group's record 1.842 billion barrels of oil and gas equivalent output, 10 million tons of ethylene capacity, and 68% growth in wind and solar generation.

10. Insights and Outlook

As the "sample zero" of China's captive insurance industry, CNPC Captive Insurance's experience and lessons are equally important:

Strategic consideration in registration location: choosing Karamay over Beijing both responded to the Western Development strategy and Xinjiang industrial guidance policies and reflected the Group's intent to bring the risk management tool down to the site of its main business.

The institutional value of "60% self-insurance + 40% commercial tender": the tiered structure both ensures centralized control over core group risks and provides a pricing benchmark through external market competition — a replicable template for large-group captive governance.

The investment side is a hidden risk of captives: the -0.48% investment return in 2025 shows that a captive cannot focus only on underwriting; insurance fund utilization capability is equally critical, and the division of responsibilities in entrusted investment must be strictly observed.

Management stability affects long-term value: three chairmen in three years and a downgrade from AA to BBB show that, as a long-term risk management tool, a captive needs stable operating strategy and governance continuity.

What to watch going forward:

Whether the "financial coordination + professional operation" division between new chairman Hao Guangmin (finance background) and proposed general manager Zheng Xiaowei (insurance background) can restore profitability.

Against the backdrop of 68% growth in Group wind and solar generation, whether green index insurance and new-energy insurance can become new business growth points.

Whether the risk database of 55 projects in 23 countries can be further translated into reinsurance bargaining power and external market service capability.

After data governance and information-system rectification, whether the risk comprehensive rating can recover from BBB back to AA.

CNPC Captive Insurance Co., Ltd. is the pioneer of China's captive insurance industry. With registered capital of RMB 6 billion, registration in Karamay, and a three-tier equity structure of "Group + listed company + financial platform," it created an institutional paradigm for central-SOE captives in China. Over 12 years, it has undertaken 60% of CNPC Group's insurance share, covered 55 projects in 23 overseas countries, and reached RMB 1.808 billion in premiums in 2025, ranking first among the four domestic captive insurers. But the 74% plunge in 2025 net profit, negative investment returns, and the downgrade of the risk rating to BBB also reveal the realistic challenge that captives face — "easy to underwrite, hard to invest, compliance cannot be relaxed." As the "sample zero" of China's captive industry, its successes (tiered underwriting, overseas coordination, green innovation) and lessons (investment overreach, data governance, management turmoil) together form the reference system for subsequent cases such as China Railway Insurance and COSCO SHIPPING Captive.