CHINA / National |
China's PICC 2006 profit doubles(Reuters)Updated: 2007-04-18 09:03 PICC Property & Casualty , China's top non-life insurer, posted a more than two-fold jump in 2006 earnings, driven by investment gains and strong growth in premiums amid a booming economy. PICC, which is 9.9 percent owned by U.S. giant American International Group , earned 2.08 billion yuan (US$269 million), compared with a restated 940 million yuan in 2005. Analysts on average had been expecting the insurer to post profits of 2.2 billion yuan, according to a poll by Reuters Estimates. China's non-life insurance market, which has grown by more than 17 percent a year over the past five years, remains one of the world's fastest growing. But non-life insurance penetration remains low in China, at just US$16 in annual premiums paid per capita and less than 1 percent of GDP, well below Asian and world averages. By comparison, Hong Kong's non-life insurance penetration rate stood at 1.3 percent of GDP in 2005, while Japan's was 2.2 percent and the United States stood at 5 percent. PICC, which is expected to benefit from Beijing's new non-life regulations, said it accounted for 45.1 percent of the non-life insurance market in China in 2006. New automotive policy terms standardising underwriting and pricing took effect on April 1. PICC saw its net premiums earned rise 4.2 percent to 55.62 billion yuan in 2006, contributing an underwriting profit of 604 million yuan, lagging the 1.51 billion yuan in 2005. Net investment income jumped 14.3 percent to 1.69 billion yuan. The top non-life insurer's effective tax rate dropped to 45.2 percent, compared with 51.7 percent in 2005, the highest among the three insurers listed in Hong Kong. Its combined ratio, which measures its cost-effectiveness, stood at 98.9 percent in 2006, compared with 97.2 percent in 2005. In a separate statement, PICC said its unaudited premium income for the first quarter of 2007 was 24.23 billion yuan, under Chinese accounting standards. PICC also said it was in talks to buy new shares, representing 29 percent of the enlarged share capital of PICC Life Insurance Co. Ltd., from its controlling shareholder for 841 million yuan. Shares of PICC rose 79 percent last year, yet still underperformed the index of Hong Kong-listed Chinese companies , which rose 94 percent. New Chairman Wu Yan, the former president of the country's top life insurer China Life , is expected to initiate changes to improve investor perception of PICC. China Life on Tuesday reported that 2006 profit more than doubled to 19.96 billion yuan against 9.31 billion yuan in 2005, and ahead of analyst expectations of 18.2 billion yuan. |
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