Pacific Century posts sharp rise in earnings
Pacific Century Insurance Holdings, the insurance flagship of Richard Li Tzar-kai, said net profit surged almost eight times last year, thanks to handsome gains from its investment in the financial markets and an increase in premiums.
Profit jumped to HK$322.4 million from HK$42.5 million in 2005 while turnover rose 9.1 per cent to HK$1.99 billion. It did not propose a final dividend, unlike a year ago when it paid four HK cents a share.
The key earnings growth driver was a HK$558.9 million net investment gain, up from HK$76.9 million a year earlier. Total investment income including interest surged to HK$919.2 million from HK$373.8 million.
'Despite periods of significant volatility, 2006 turned out to be an exceptionally good year for investors in equities,' the company said in a statement. 'We also took advantage of the year-end rally to trim our equity exposure.'
The insurer said its embedded value, an indicator of future income, rose 26 per cent to HK$6.231 a share mainly because of a 12.2 per cent increase in insurance contracts to HK$363.2 million and a 192 per cent jump in investment contracts to HK$330 million.
Single and first-year premiums rose 13.2 per cent to HK$335.2 million, while the renewal premium increased 8.3 per cent to HK$1.6 billion, raising total premiums 9.1 per cent to HK$1.96 billion.
Management expenses rose 54.1 per cent to HK$468 million mainly due to expansion and HK$57.2 million in one-off charges including a provision for litigation.
'Our business is in better shape than ever and we expect our growth momentum to continue into 2007,' executive chairman Francis Yuen Tin-fan said.
The company did not cite a reason for its share trading suspension since Monday amid a South China Morning Post report that it was up for sale. Market sources have said two foreign firms are bidding for the insurer's controlling stake.
