2010-09-15 09:35

Customers in Beijing walk past an ad for PICC. The insurance company is seeking investors to become listed in the near future. [Nan Shan / For China Daily]

Insurance conglomerate in final round of tying up strategic investors

Beijing - The People's Insurance Company (Group) of China (PICC), the country's leading insurance conglomerate, is in the final stages of roping in strategic investors, thus paving the way for its imminent listing, the group's top management said on Tuesday.

"We've entered the final stage of discussions, and the deal will be definitely inked in the fourth quarter," said Zhou Shurui, chairman of the auditing committee of the PICC Group.

He declined to give details about the potential partner but said it is a domestic company.

"As soon as we bring in the strategic investor, we can quickly embark on the listing procedure according to the time window," Zhou added.

By the end of August, the group realized profits of 4 billion yuan ($591.7 million), with its assets totaling 389.8 billion yuan. Its premium income exceeded 170 billion yuan, up 35 percent than the same period last year.  

Though non-life insurance business is still the largest revenue driver for the group, contributing to around two thirds of profits, Zhou said the life insurance business will see vigorous growth in the following few years.

By August-end, PICC Life Insurance Co Ltd reported a 60.5 percent year-on-year increase in premium income, to 59.4 billion yuan. PICC Health Insurance Co Ltd saw an 85.6 percent increase in premium income, to 7 billion yuan, in the same period.

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Zhang Zhiting, PICC Life's assistant president, said the company is anticipating premium income and total assets touching 68 billion yuan and 140 billion yuan respectively by the end of the year.

A recent survey by Heng An Standard Life Insurance and Nankai University showed that Chinese people's recognition of the importance of life insurance has gradually improved. The index monitoring this change has increased from 66.85 in 2007 to 72.87 this year, indicating the huge growth potential of the life insurance business in the country.

PICC Group's quickened steps in seeking a listing is to better fuel the fast expansion of its subsidiaries while maintaining a solvency ratio close to the regulator's requirement.

So far, the group's solvency ratio has been above 100 percent with PICC Property and Casualty Company Ltd maintaining a ratio of around 125 percent in August.

The China Insurance Regulatory Commission set 100 percent as the minimum requirement for a sound solvency ratio, but only companies with a ratio higher than 150 percent are allowed to invest into real estate and unlisted firms.

Wu Yan, PICC Group chairman, however, said the solvency ratio would not affect the company's investment plan, as it is a dynamic figure.

As PICC Group stepped up its listing process, other Chinese insurance companies including Taikang Life and China Reinsurance Corp have applied for an initial public offering in Shanghai, with one or two insurers expected to go public in the fourth quarter, the Securities Times reported on Monday, citing unidentified investment bankers.

China Reinsurance has hired Galaxy Securities Co as its underwriter while CITIC Securities is helping Taikang Life prepare for the IPO.