COSCO SHIPPING Captive: a case study in establishment, the specialised risk management platform of a state-owned shipping group

Core question: why did COSCO SHIPPING, the world's largest state-owned shipping group, establish a captive, and how does China's first shipping captive serve the group's fleet and overseas terminals?

• Entity and path: COSCO SHIPPING Property Insurance Captive Company Limited was established on 8 February 2017 with registered capital of RMB 2 billion in the Lingang area of the Shanghai Pilot Free Trade Zone, wholly owned by China COSCO Shipping Corporation Limited.
• Industry position: the seventh captive in mainland China and the first shipping captive in the country, holding an A.M. Best financial strength rating of A (Excellent) continuously since 2018.
• Core functions: risk management tool, insurance management platform and risk cost centre, serving the group's fleet, overseas terminals and the wider industry chain.
• Performance: insurance revenue of RMB 696 million and net profit of RMB 148 million in 2025; premium of RMB 682 million and net profit of RMB 75 million in the first three quarters of 2026, with a comprehensive solvency ratio of 389.96%.

Case overview: the first captive licence of the shipping national team

COSCO SHIPPING Captive was established on 8 February 2017 in the Shanghai Pilot Free Trade Zone with registered capital of RMB 2 billion, wholly owned by China COSCO Shipping Corporation Limited. It is the seventh dedicated captive in mainland China after PetroChina Captive in 2013 and China Railway Captive in 2015, and the first captive in China's shipping sector.

The company is positioned as an important part of the group's shipping finance cluster and carries three core functions: risk management tool, insurance management platform and risk cost centre. Compared with PetroChina in energy, China Railway in rail and Guangdong Energy in regional power, the defining feature of COSCO SHIPPING Captive is its focus on marine and hull insurance and its deep integration with global shipping assets, together with a leading position in green shipping insurance.

Background: why shipping needs a captive

The risk characteristics of shipping make the sector naturally suited to a captive model:

• Very large, globally mobile assets: the group operates one of the world's largest fleets, with vessels deployed on routes worldwide and individual ships worth tens to hundreds of millions of dollars, which no single commercial insurer can underwrite independently.
• Highly homogeneous, specialised risk: hull, protection and indemnity, war and cargo lines are highly technical, and external commercial insurers tend to price high and respond slowly.
• Rising global war and geopolitical risk: risk on routes such as the Red Sea and Black Sea has become routine, so a captive can centralise war cover and reinsurance and reduce dependence on the international market.
• Complex overseas terminal assets: the group invests in and operates dozens of ports worldwide, including Piraeus in Greece and Chancay in Peru, and cross-border risk arrangements need a professional platform.

After the CIRC opened the captive pilot in 2016, large central enterprises moved quickly. COSCO SHIPPING Group was approved to prepare in December 2016 and to open only 52 days later, on 25 January 2017, reflecting how urgently the group needed this professional risk management platform.

Path and key timeline

Shareholding and governance

The company is wholly owned by China COSCO Shipping Corporation Limited as a second-tier subsidiary, registered at 58 Ruixing Road in the Lingang area of the Shanghai Pilot Free Trade Zone, with additional offices at COSCO Shipping Tower, 5299 Binjiang Avenue in Pudong New Area, Shanghai.

On governance, the company has established a modern insurance corporate structure with a shareholders' meeting, board, supervisory board and senior management, and undergoes annual corporate governance assessments as required by the regulator. Its 2024 regulatory rating was B, ranking 14th among comparable institutions nationally. During 2024 it completed the creation or revision of 41 internal policies and established an enterprise-wide risk management system covering insurance, market, credit, operational, strategic, reputational and liquidity risk.

Scope of business and how the captive serves the group

The licensed scope covers property damage, liability, credit and surety insurance, short-term health and personal accident insurance, reinsurance of the above, and insurance fund investment. Clients are strictly limited to COSCO SHIPPING Group and its member companies. The way it serves the group can be grouped under five themes.

One: fleet cover, hull, war and renewal mechanics

The company works with the group's shipping companies to improve hull renewal arrangements and, against the normalisation of global war risk in areas such as the Red Sea and Black Sea, gives strong support to vessels trading in special zones. By coordinating hull, war, loss of hire and reinsurance cessions it helps the fleet secure stable protection on high-risk routes.

Two: overseas terminals, from Piraeus to Chancay

While handling inward reinsurance for mature overseas terminals in Piraeus in Greece, Abu Dhabi in the UAE, Zeebrugge in Belgium, Valencia and Bilbao in Spain, the company actively participates in insurance arrangements for the Port of Chancay in Peru, a key hub for the group's South American investment and a flagship Belt and Road project in Latin America. This extends the captive's scope from fleet to port assets.

Three: green insurance, Asia's first Poseidon Principles underwriter

The company is the first insurer in Asia to join the Poseidon Principles for Marine Insurance (PPMI) and takes a deep part in setting international shipping decarbonisation standards. Specific green insurance work includes:

• Lead underwriter of the first LNG project fleet with a wholly Chinese background: as lead insurer it provides hull, war and loss of hire cover in one package and is building a global emergency response network around owner needs.
• Shore power system insurance: covering risk across the chain from equipment manufacture to installation and use, supporting green port development.
• Ballast water treatment equipment insurance: covering product quality and liability, including ecological damage claims arising from equipment failure under IMO D-2 standards.
• A model environmental pollution policy: the company wrote the first policy under the Shanghai Pudong New Area environmental pollution liability insurance model clauses, providing a practical reference for the city's industry standard.
• Distributed solar: 11 distributed photovoltaic projects insured in connection with the Tianjin COSCO SHIPPING clean energy project.
• Research on EU ETS allowance insurance: helping the shipping industry manage compliance risk as it is brought into the EU emissions trading system.

During 2024 the company provided RMB 20.691 billion of green insurance cover for green industry and ESG-related risk within the group, up 16% year on year from RMB 17.809 billion in 2023.

Four: technology and supply chain insurance

• Specialised and innovative enterprises: insurance for 27 companies on the group's specialised and innovative development list, including five national little giant enterprises.
• Cyber insurance: cyber cover for several of the group's information management systems.
• Digital services: a fast claims function called Suyipei, system interfaces with group companies, and joint research with Fudan University on applying AI to shipping insurance.

Five: ESG investment and green finance

At the end of 2024 the company held RMB 82.28 million of green financial assets, up about 121% year on year, mainly in public ESG bond funds, green bonds and green asset-backed securities, balancing safety and yield in a falling domestic rate environment.

Operating results: steady and sustained profit

In the first three quarters of 2026 the company wrote insurance revenue of RMB 682 million and net profit of RMB 75 million. At end-September total assets were RMB 6.936 billion, net assets RMB 2.619 billion and insurance contract liabilities RMB 3.56 billion, with a comprehensive solvency ratio of 389.96%. It is worth noting that Q1 2026 recorded a quarterly loss of RMB 8.73 million, reflecting the marked seasonality of hull business, where renewals cluster at the start of the year.

As one of only four profitable mainland captives, alongside PetroChina Captive, China Railway Captive, COSCO SHIPPING Captive and Guangdong Energy Captive, COSCO SHIPPING Captive earned net profit of RMB 148 million on annual premium of about RMB 700 million, demonstrating strong underwriting profitability.

Comparison with other mainland captive cases

The three central enterprise captives represent different sector paths: PetroChina was the pioneer, China Railway is the onshore ecosystem service model serving 200 million passengers, and COSCO SHIPPING is the global asset and green transition model, whose reach spans worldwide routes and overseas ports and connects directly to international regulatory frontiers such as the EU ETS and IMO decarbonisation.

Lessons and points to watch

The lesson from COSCO SHIPPING Captive is threefold:

• A captive is not simply a way to save premium but a platform for coordinating global asset risk: when group assets span the world across fleet, ports and logistics, external commercial markets struggle to deliver integrated, tailored solutions, making a captive the natural choice.
• Green shipping is the captive's main differentiation battleground: by joining PPMI, underwriting LNG fleets and developing shore power and ballast water cover, the company positions itself as a provider of risk solutions for the group's low-carbon transition rather than a passive claims channel.
• The A.M. Best A rating carries industry signal value: held continuously since 2018, it shows that solvency and risk management meet the standards recognised by the international reinsurance market, providing a base for cessions and overseas expansion.

Several points remain to watch:

• Offshore captive arrangements: with large global assets, whether the group follows CNNC Insurance and SF Insurance in setting up an offshore captive in Hong Kong or Singapore to carry overseas war and political risk.
• Full-year performance after the Q1 2026 loss: whether hull renewal seasonality affects the full-year result will become clear with the 2026 annual report.
• Productising EU ETS carbon cover: the shift from research to formal underwriting, and whether it becomes a new growth driver.
• Chancay and new Belt and Road terminals: how insurance arrangements are coordinated through the captive after the Port of Chancay opened in 2024.

Conclusion

COSCO SHIPPING Property Insurance Captive Company Limited is the first captive in China's shipping industry and its most globally minded professional captive. With RMB 2 billion of registered capital, a domicile in Lingang in the Shanghai Free Trade Zone and 100% ownership by COSCO SHIPPING Group, it delivers the group's three functions of risk management tool, insurance management platform and risk cost centre. Through fleet coordination, extension to overseas terminals, green shipping insurance innovation as Asia's first PPMI signatory and lead underwriter of an LNG fleet, and expansion into specialised and cyber lines, it has upgraded the captive model from internal cost saving to global asset risk solutions and green transition enablement. A continuous A.M. Best A rating, net profit of RMB 148 million in 2025 and a comprehensive solvency ratio near 390% confirm the financial sustainability of the model. It represents a new direction for central enterprise captives, moving from onshore service towards global asset coordination and green transition.