Shares of PICC drop 8.7pc as punters cash in
Shares of PICC Property and Casualty, the mainland's largest non-life insurer, slumped 8.7 per cent yesterday as its annual underwriting earnings fell and investors took profit after the stock made strong gains this year.
PICC shares fell 46 HK cents to close at HK$4.83 yesterday. Despite the decline, the stock has risen 21.05 per cent this year.
The company's underwriting profit fell 59.9 per cent last year to 604 million yuan, due to a decline in premium rates of its major insurance products and increased costs.
'They need to put in a lot of work to turn it around,' said an analyst from a European-based bank.
PICC's total net profit jumped 121.5 per cent to 2.1 billion yuan last year because the company reversed an investment loss of 336 million yuan to a 2.66 billion yuan gain. Net premium income only grew 4.2 per cent to 55.61 billion yuan.
Chairman Wu Yan said yesterday that the insurer planned to use its general insurance's nationwide network and brand name to cross-sell life insurance products. The company would also open offices all over the country for life insurance business this year, he added.
'We will see a tremendous development over the next two to three years,' Mr Wu said.
The company said on Tuesday it was in talks to buy a 29 per cent stake in PICC Life for 841 million yuan. PICC Life is a joint venture of its parent PICC Holding, Asia Financial, Japan's Sumitomo Life Insurance and Bangkok Bank.
Mr Wu said PICC's stake would come from the three foreign investors, who may each sell half their stake. PICC Holdings would retain 51 per cent of the venture, he said.
Mr Wu said he would not rule out expansion into other financial areas that would complement its insurance business.
Wang Yi, PICC's president and chief executive, expected motor vehicle insurance would improve after the insurance regulator restricted the premium rate discount.
PICC would also benefit from the expansion of other product lines, such as third-party liability insurance, and greater penetration of rural areas, he said.
The insurer's effective tax rate would be reduced to 25 to 30 per cent from 45 per cent last year after the government's unification of corporate income tax was implemented next year, Mr Wang said.
Separately, Mr Wu said PICC had met requirements to list in the A-share market but the timing for such a move would depend on market conditions.
