Insurance
China relaxes rules on corporate bond investment
2009-10-23
China is allowing insurers to invest 40% of their assets in corporate bonds, up from 30% now. The China Insurance Regulatory Commission (CIRC) said bonds that insurers invest in large-size state-owned enterprises, Hong Kong-listed red chips, or companies issuing H-shares, must be rated BBB (A previously) or above by qualified rating agencies. Meanwhile, the CIRC also removed the criteria that had required those bond issuers in which insurers are allowed to invest to be in profit for the previous three financial years. Annual interest payments on the bond investments should now be less than the issuing company’s average distributable profit over the previous three financial years. As of the end of June, the combined assets of Chinese insurers amounted to RMB3.7tn, which means that RMB1.48tn can be used to invest in corporate bonds under the amended rules.
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Foreign insurers are still optimistic about China’s insurance market
2009-10-20
According to a survey sent to 40 multinational insurers operating in Shanghai by the Shanghai Bureau of the China Insurance Regulatory Commission (CIRC), although multinational insurers have been significantly affected by the financial crisis and slowed down overseas business expansion, their long-term confidence on China’s insurance market has not been shaken. For example, premiums of foreign insurance companies decreased from RMB 12.173bn in 2007 to RMB 9.971bn in 2008, with the annual growth rate decreasing from 61.93% in 2007 to -18.09% in 2008 and market share decreasing from 25.22% in 2007 to 16.62% in 2008. In 2009Q1, the premiums of foreign insurers were down 14.06% y-o-y, with market share down to 13.74%. However, most multinational insurers surveyed are still optimistic about China’s insurance market. China is enjoying robust economic growth and Chinese residents’ wealth is growing steadily, but the penetration rate is relatively low, indicating high potential for the Chinese insurance industry. Some specified insurers engaging in health insurance, credit insurance and auto insurance have high expectations for certain segments of the industry.
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Gov’t allows insurance companies to directly invest in property market
2009-10-12
China’s new Insurance Law, effective October 1 2009, allows insurers to invest in real estate; the regulatory details on such investments are expected to be released soon. The move could trigger an influx of RMB 150-180 billion of insurance money into the country’s property market, positive to commercial property segment; though some analysts believe it will only have a minor impact in the short term and are upbeat on high-end commercial properties in first or second-tier cities.
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New Chinese Insurance Law to protect the rights of policy holders
2009-10-01
On February 28 this year the Standing Committee of the National People’s Congress passed the second major amendment to the 1995 Insurance Law of the People’s Republic of China. The amended law comes into force from 1 October 2009. The new revisions of the insurance law mainly focus on protecting the rights of policy holders and insurance beneficiaries. One of the new rules states that the failure of policy holders to release crucial information is a serious “fault”, instead of an “offense” as defined by the old version. Another big change, the insurer is now required to fully explain detailed insurance terms and conditions before the client signs the contract. The new rules also require insurers applying to set up branches to prove their ability to meet their liabilities in the preceding two preceding two quarters and in the previous year. In addition, the new law sets more provisions on automobile insurance, which had been a concern of many consumers.
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PICC Group completes restructuring into stockholding company
2009-09-24
People’s Insurance Co., (Group) of China (PICC), the state-run parent company of PICC Property & Casualty Co., (PICC P&C, 2328.HK) has completed its restructuring into a stockholding company. According to earlier media reports, the move is part of a roadmap for PICC Group to eventually introduce strategic investors and become a publicly listed company. PICC Group is China’s second largest insurer by premiums. In 2008, PICC Group realized RMB 144.6 billion in insurance premium.
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China’s insurance premiums up 6.5% in Jan-Aug
2009-09-23
China’s insurance industry realized RMB 759.5 billion in insurance premium income during the first eight months of this year (up 6.5% Y-o-Y), according to statistics released by the China Insurance Regulatory Commission (CIRC). Premiums of life insurance companies were RMB 561.2 billion (up 2.4% Y-o-Y), and premiums of non-life insurance companies were RMB 198.3 billion (up 20.1% Y-o-Y). The CIRC said that the insurance sector’s total assets increased 21% from a year earlier to RMB 3.68 trillion in August. However, the figure reflects a 4% decline compared with RMB 3.8 trillion in July as the Shanghai Composite Index fell more than 22% last month. In August, the insurance sector’s total investment slid 4.35% from RMB 2.44 trillion to RMB 2.34 trillion, representing the first decline since March of this year.
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China’s banks start to invest in insurance industry
2009-09-19
On September 10, the China Insurance Regulatory Commission (CIRC) announced that Bank of Communications (601328.SS) was approved to acquire 51% stake of China Life CMG and Bank of China (601988.SS) was approved to invest in Heng An Standard Life through its subsidiary BOC Insurance. In addition, ICBC (601398.SS), China Construction Bank (601939.SS), and the Bank of Beijing (601169.SS) show great interest in the insurance sector. As early as 2006, several banks expressed their willingness to invest in or set up insurance companies, but were not permitted. Finally in January 2008, the State Council allowed banks to invest in insurance companies, but it was not until today officially approved.
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Listing has become a hot topic in China’s insurance industry recently
2009-09-17
Going public has become a hot topic recently. On Monday this week, Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ), the substantial shareholder of Tianping Auto Insurance Co., Ltd., claimed that Tianping had signed Stock Issuing and Listing Service Agreement with Guotai Junan Securities Co., Ltd. Following from this, it was said that PICC (PICC P&C: 2328.HK) was approved to be listed on A-share and H-share markets though PICC denied this when accepting an interview. China Reinsurance (Group) Corporation is also preparing for listing and invested RMB3.3 billion in China Everbright Bank in September. In addition, early this year Xincheng Life Insurance Co., Ltd. set up the goal of going public in 2012. CPIC (601601.SS) and AIA are also actively planning to be listed in Hong Kong.
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