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Slow premium growth hits insurers

By Wang Jiamei in Shanghai (Global Times)

08:30, February 22, 2013

Stock investors took a dim view of the mainland's listed insurers Thursday as anemic premium income growth contributed to disappointing January financial results from several of the sector's biggest players.

Specifically, New China Life Insurance Co and China Life Insurance Co reported earlier this week that their January premium incomes slid to 11.88 billion yuan ($1.9 billion) and 46.8 billion yuan, down 10.28 percent and 4.68 percent year-on-year respectively. Meanwhile, in a filing with the Shanghai Stock Exchange Thursday, China Pacific Insurance (Group) Co announced that its premium income reached 19.6 billion yuan in January, an increase of just 3.16 percent compared with the same month last year. Only Ping An Insurance (Group) Co of China was able to realize strong growth results during the month, when its premium income hit 37.86 billion yuan, up 20.95 percent year-on-year.

Taken as a while, these leading insurers, China's four largest, saw their premium incomes expand by an average of just 3 percent in the first month of 2013 over the same period last year.

These tepid results hung heavily over insurance stocks Thursday, as Ping An Insurance lost 4.18 percent to close at 46.74 yuan; while New China Life Insurance fell 3.92 percent to 27.19 yuan; and China Pacific Insurance surrendered 3.81 percent to 20.19 yuan.

"The January performances of these major insurance companies may signal that more sluggish growth is in store for the sector," Zhu Xiuqing, an insurance industry analyst from Z-Ben Advisors, a Shanghai-based fund investment consultancy, told the Global Times Thursday. "To improve the situation, it is necessary for insurers to explore new sales channels."

Recent data from the China Insurance Regulatory Commission (CIRC) show that total insurance premiums collected by some 60 life insurers in the country amounted to 995.7 billion yuan last year, representing a marginal rise of 4.1 percent over 2011.

"A substantial drop in insurance product sales at bank branches is one of the main reasons for such slow business growth," Zhu went on to say.

Many of insurers' sales are conducted at banks, yet stricter regulatory controls have narrowed this traditional sales channel in recent years, she explained.

For example, the China Banking Regulatory Commission (CBRC) issued a notice in December calling for banks to step up their scrutiny of wealth management products, including those backed by insurers, amid mounting concerns about the default risks posed by such investment vehicles.

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