Ming An to triple mainland network
Ming An (Holdings), a non-life insurer partly owned by Cheung Kong (Holdings), plans to triple its mainland network in a bid to more than double its premium from that market in five years after profit slumped 46 per cent last year.
Ming An reported profit of HK$306 million for last year, down from HK$570 million in 2005, as premium fell 2 per cent to HK$1.08 billion.
Still, the figure was higher than the minimum forecast of HK$254 million it made when the firm was listed in Hong Kong in December last year.
The insurer, which has four mainland outlets, planned to open 12 to 14 branches in major cities such as Beijing and Shanghai in the next two years, each costing HK$2 million to HK$3 million, chief executive Peng Wei said.
Mr Peng said the company targeted to earn 50 per cent of premium from the mainland in five years.
Last year, the mainland contributed 22 per cent of the insurer's premium and Hong Kong accounted for the remainder.
'Ming An will be more likely to compete with other foreign insurers in China on more technical insurance products given its regulatory advantage of being considered as a domestic insurer,' Guotai Junan Securities (Hong Kong) analyst Luo Jing said. 'However, the initial investment may add burden to its cost this year.'
Ming An is tapping into the fast-growing insurance market in the mainland, where the government is shifting pension liabilities to the private sector. Non-life sectors are also seeing rising demand amid the country's robust economic growth.
In a report yesterday, HSBC said the market was likely to grow at 13 per cent a year, although it would become more competitive as domestic banks were starting to provide insurance services.
'The initial investment in the mainland may be lost at first, but we will balance the loss with more investment return and growth in Hong Kong this year,' Mr Peng said.