Sector outlook revised to 'positive'
(AFX)
Updated: 2006-07-26 15:45 "But just because China Life and PICC's listed insurance units are profitable
doesn't mean the groups are doing as well," Wong told XFN-Asia, without
commenting on either group's overall performance or offering a forecast.
A possible downside to profitability for China's insurance sector may come
from an unexpected place, as any competition for household savings takes away
potential premium income from the sector.
"The growth of the credit market in China will also pose a risk to the
industry," she said.
China Life recently said its total premiums of 111.4 billion yuan in the
first half represented growth of 22 pct year-on-year, while PICC P&C
reported a first-half premium income of 39.07 bln yuan versus 24.94 bln a year
earlier.
The ratings agency also released its China Insurance Outlook 2006-2007 today.
S&P said it based its 'positive' forecast for the China insurance sector on
the growth rates in more mature markets and the domestic market's low
penetration rate.
If the penetration rate in China can be raised to 3.5 pct within five years
from the current 2.7 pct, which S&P said is a possibility, industry premiums
will grow by an average 15 pct a year.
That projection assumes an average 8 pct annual growth rate for the Chinese
economy.
Ping An, AIG unit American International Assurance, and China Pacific
Insurance Group Co also fared well in S&P's Outlook.
(For more biz stories, please visit Industry Updates)
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