Insurer hopes to make a turnaround
Updated: 2008-08-21 06:58
By Joey Kwok(HK Edition)
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PICC Property and Casualty (PICC P&C), the biggest property insurer in China, said the natural disasters earlier this year will not have any impact on the company's balance sheet in the second half and it hopes to make a turnaround.
In the aftermath of the snowstorms in southern China and the devastating Sichuan earthquake, PICC P&C had to meet higher claims which led to a 292 million yuan loss in the first six months. The insurer's loss ratio jumped from 67.1 percent to 75.9 percent, an increase of 8.8 percentage points.
Vice chairman and executive director Wang Yincheng said the company will have reported a gain excluding the net claims caused by the disasters.
"Most of the net claims have already recorded in the first-half results," Wang added.
According to the central government's insurance laws and regulations, PICC P&C should maintain a minimum solvency margin of 12.4 billion yuan on funds and reserves.
Wang said the company has met the requirement of solvency margin adequacy ratio in the first half, therefore it will not commit to any more financing activities to maintain its adequacy on funds and reserves.
Wang said that the development in life insurance, now accounting for 28 percent of the company's products, has improved rapidly. He expected that the life insurance business will maintain a balance within three to four years.
Since the A-share market experienced major corrections in the first half, PICC P&C has also adjusted its investment portfolio accordingly. The company has reduced its exposure to equity investments and increased position in fixed income investments, such as bonds.
The company's net investment income increased 32.8 percent to 2.19 billion yuan, but its realized and unrealized investment gains dropped 76.4 percent to 668 million yuan.
Chairman and executive director Wu Yan said the company valued its investment on fixed income investments.
"I would say it is still valuable to invest on the economic market of China," Wu said.
Looking forward, the company expects the macro-economic development in China will continue to grow and the non-life insurance sector will maintain relatively rapid development.
(HK Edition 08/21/2008 page2)