Ming An sets 3-year turnaround goal
Ming An Holdings, which is partly owned by Cheung Kong (Holdings), aims to turn around its mainland insurance business in three years after sinking into the red in the second half of last year.
Chief executive Peng Wei said yesterday the non-life insurer was on track to reduce the soaring expansion costs incurred from building up the national network in the country.
'We are a year ahead to complete the establishment of a national network. As cost begins to stabilise, it's likely we will book a profit after two to three years,' he said.
The mainland business contributed 53.7 per cent of total gross premium income, compared with 32.2 per cent in 2007. Business from Hong Kong contributed the remaining 46.3 per cent.
The plunging stock market and accelerated pace of mainland expansion left Ming An with an attributable loss of HK$375 million to shareholders last year, against a profit of HK$716 million in 2007.
The earnings loss exceeded the HK$162 million loss estimated by analysts and wiped out its first-half profit at HK$19.77 million.
'The stock market environment is expected to be volatile this year and returns on investment will not significantly improve,' Mr Peng said, adding that the firm would return to basics and focus on the importance of underwriting profit again.
The company's investment loss stood at HK$11 million last year, against a HK$911 million gain a year earlier.
Equity investments, which currently make up about 3 per cent of the total investment assets, will be kept at a low level.
To boost underwriting profit, Mr Peng said Ming An would maintain a loss ratio - a measure of underwriting profitability - of about 55 per cent, lower than the industry average of 70 per cent.
Nomura Securities said in a report that investors should focus on the loss ratio to gauge the trend in the company's underwriting discipline in both Hong Kong and the mainland. Its results could also be distorted by potential reserve releases in the prior year.