Capital boost vital for mainland insurers
( 2003-10-30 09:48) (China Daily HK Edition)
The mainland's life insurers need to boost their capital by 15-20 billion
yuan (US$1.81 billion-US$2.41 billion) to achieve an adequate level of
capitalization, Standard & Poor's (S&P) said yesterday.
The non-life insurance sector needs 7-10 billion yuan (US$843.37
million-US$1.2 billion), the rating agency said, adding the estimates were based
on limited information.
Citing public listings as the most likely method of raising new capital,
S&P said the planned HK$4.3 billion (US$551 million) Hong Kong listing of
PICC Property & Casualty Co is a positive development for the mainland
non-life sector.
Given PICC P&C's 70 per cent market share, "a successful equity offering
by the company would certainly boost the financial strength of the overall
non-life sector," said Connie Wong, a credit analyst of S&P.
Meanwhile, S&P assigned a developing outlook to the mainland insurance
sector. The positive factors behind the outlook include the expected strong
growth of the market given its low penetration, tougher regulatory control,
development of new products, improving technical expertise and risk management,
increasing distribution channels and more focus on profitability.
The challenges before mainland insurers, however, include poor financial
strength, restriction on investment channels, negative spreads of life insurers
and competition from foreign entrants, S&P said.
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