PICC vice-chairman steps down over disappointing results

PUBLISHED : Saturday, 19 April, 2008, 12:00am
UPDATED : Saturday, 19 April, 2008, 12:00am


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Wang Yi, a vice-chairman, president and chief executive of Hong Kong-listed PICC Property and Casualty, resigned yesterday. He is likely to be reassigned to an industry rival.

The move followed disappointing earnings results last year for the mainland's largest non-life insurer.

Shares of PICC have declined 14.54 per cent this week as earnings missed industry estimates by a large margin.

A news release from PICC said Mr Wang's resignation was due to 'a change of work', but did not elaborate on why he was stepping down.

PICC vice-president Guo Sheng-chen will serve as interim president, said executive director and board secretary Liu Zhenghuan.

Ms Liu said that the resignation of Mr Wang, who had been the president since 2003, was a result of 'management reallocation' within the insurance industry.

The company will make a further announcement today.

Sources said that Mr Wang's departure would allow PICC chairman Wu Yan to more actively participate in daily operations.

'Mr Wu is very experienced in managing a company's operations and Mr Wang's resignation should not affect the company too much,' a source said.

The resignation is pending approval from the board of directors and the insurance regulator. A spokesman for the insurance regulator declined to comment.

Shares of PICC traded as high as HK$17.08 in October last year amid strong market sentiment, as investors bid up mainland insurance plays for stellar investment returns.

Since then, PICC's shares have lost two-thirds of their value.

PICC on Tuesday reported net profit of 2.99 billion yuan, up 43.7 per cent from a year earlier.

It experienced underwriting losses for the first time since it was listed.

PICC has acknowledged disappointment over its performance, largely because of expansion in distribution channels, higher incentive packages for staff, and property-related expenses.

Analysts said Mr Wang's resignation came as a surprise despite the poor results.

'I think this was unexpected internally. They don't have a replacement chief executive well in place beforehand,' said Sheng Nan, an analyst at UOB Kay Hian. 'As an industry leader, PICC lost its competitive advantage due to surging expenses. With higher claims to premium ratios expected this year, cost control becomes even more important.'

PICC casualty

PICC trouble spots

43.7 per cent rise in net profit came in way below expectations of more than 150 per cent

Insurer suffered 190 million yuan loss in the second half

Administrative expenses of 11.3 billion yuan led to an underwriting loss of 1.43 billion yuan for the year