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PICC says AIG has no intention of selling PICC shares

(Agencies)
Updated: 2009-04-16 15:29

PICC Property & Casualty, China's top non-life insurer, said on Thursday American International Group (AIG) has no intention of selling its stake in the Chinese insurer.

But shares of PICC fell as much as 10 percent before recovering slightly to HK$4.88 (63 cents), down 6.9 percent at midday on Thursday, as investors were disappointed by its forecast-lagging 2008 earnings.

AIG, which has a 9.9 percent stake in PICC, is trying to sell off assets in a bid to pay back the government and last week its Chief Executive Edward Liddy said AIG had reached agreements to sell 10 businesses despite "the most challenging market environment in memory".

Related readings:  Report: AIG to get 30 bln dollars more bailout aid  AIG gives out more bonuses than previously reported  PICC Property to transfer its 20% stake  Bank of China says won't bid for AIG unit

"AIG has showed strong interest in keeping a long-term co-operation relationship with us and has no intention to sell down its stake at the moment," Chairman Wu Yan told reporters.

The US insurer will notify PICC if it wants to dispose of its interest in the Chinese company, he said.

AIG can sell its PICC stake freely after a lock-up period of the stake expired last October.

Analysts say PICC is facing a challenging 2009 and its stock has been trading at full value.

Credit Suisse downgraded the stock to neutral from outperform after PICC reported a 98 percent plunge on its 2008 net profit to 50 million yuan ($7.3 million) due to higher underwriting losses and lower investment income.

PICC shares will underperform due to worse-than-expected 2008 results, higher expense ratios in 2009 and higher-than-peer reinvestment risk due to the shorter-than-peer duration of its bond portfolio, Deutsche Bank said in a research note on Thursday.