Insurance Stocks Fall on Dropped Premium

Insurance stocks dropped amid the rise of other financial stocks on the Chinese stock market recently.

China Life Insurance Co., Ltd. (SHSE: 601628 and SEHK: 2628), the biggest life insurer in China, fell 2.53 percent on June 16. Ping An Insurance (Group) Company of China, Ltd. (SHSE: 601318 and SEHK: 2318), the domestic archrival of China Life, opened two percent lower and closed down 4.94 percent, ranking number one among financial stocks that suffered drop on the day. China Pacific Insurance (Group) Co., Ltd. (CPIC and SHSE: 610601), the nation's third biggest life insurer, slid 3.62 percent.

The falls should be mainly attributed to those insurers' dropped premium revenue, said industry experts. Statistics show that the original premium revenue China Life gained in the first five months of this year totaled CNY 145.6 billion, down 3.9 percent from 151.5 billion a year earlier, compared to an average annual drop of 1.6 percent in the first four months. The figure is achieved in May reached CNY 19.61 billion, diving 16.5 percent.

The original premium revenue Ping An' four units - Ping An Life Insurance Company of China, Ltd., Ping An Property & Casualty Insurance Company of China, Ltd., Ping An Health Insurance Company of China, Ltd. and Ping An Annuity Insurance Company of China, Ltd. - captured in the five months hit CNY 61.6 billion, CNY 14.82 billion, CNY 43 million and CNY 525 million, each. The figure it achieved last month was CNY 11.45 billion, soaring 21.5 percent, compared to a yearly rise of 30.1 percent in April.

The original premium revenue China Pacific Life Insurance Co., Ltd. and China Pacific Property Insurance Co., Ltd., CPIC's life insurance unit and property insurance unit, gained during the five months stood at CNY 29.6 billion and CNY 15.2 billion, down 9.8 percent and 18.8 percent, respectively.

There are three reasons for the dropped premium revenue, said Wan Feng, president of China Life. The first one is that the China Insurance Regulatory Commission (CIRC), the top Chinese insurance regulator, attached more importance to supervising insurers' solvency from late 2008. The second is the revenue insurers gain via selling investment-linked insurance products and some participating insurance products will be banned to be accounted as premium. And the last is insurers in the country were required to adjust business structure from last August.

(USD 1 = CNY 6.83)

Source: www.nbd.com.cn (June 17, 2009)

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