China Pacific not looking for overseas buys
China Pacific Insurance (Group), the mainland's third-largest insurer, says it has no plans to use the proceeds from its HK$25.9 billion initial offering to buy overseas assets.
The Shanghai-listed insurer is set to float its H shares on December 23, and the offering could rank as the year's second-largest if priced at the top end of the HK$26.80 to HK$30.10 range.
China Pacific's rival Ping An Insurance (Group), the country's second-largest insurer, is a major shareholder of Fortis, the European bank.
Earlier this year, Yang Chao, the chairman of the mainland's biggest insurer, China Life Insurance, said the group was looking for overseas acquisitions.
However, China Pacific chairman Gao Guofu said the insurer did not intend to buy any foreign assets. Net proceeds from the initial public offering will fund existing operations in its subsidiaries and their future growth.
While China Life and Ping An had been diversifying into the banking and securities sectors, China Pacific had been focusing on the insurance industry, analysts said.
Yuan Wenli, a senior analyst at global financial consultancy Celent, said China Pacific might focus on broadening its pension business and extending its insurance value chain instead of moving into other areas in the financial sector.
'There are a lot of opportunities in the pension and health insurance areas in China,' Yuan said. 'That allows China Pacific room for further development.'
However, analysts also said annual financial reporting by Chinese insurers from this year onwards was likely to be affected by new accounting rules that would integrate the country's accounting system with international standards.
The rules have significant repercussions for listed companies and may cause the book value of premium income to shrink.
Under the new rules, issued by the Ministry of Finance last year, income from investment-type insurance products, which contributed a large proportion of the premium income of mainland insurers over the past few years, will not be booked as premium income.
'For insurance companies like China Pacific, which has sold many products with high assumed interest rates, the financial results for 2009 and coming years might be adversely affected,' Yuan said.
Separately, shares of China Longyuan Power Group Corp, Asia's largest wind farm operator, were trading at HK$9.13 in the grey market, 11.9 per cent above their offer price of HK$8.16, according to Phillip Securities. Longyuan shares will be floated on the Hong Kong bourse today.
Shares of Shenzhen-based developer Kaisa Group Holdings closed at HK$3.44 in the firm's trading debut yesterday, 0.29 per cent below the offer price of HK$3.45.
PCD Stores (Group), a mainland luxury department store operator, has priced its offering at HK$1.95 per share, at the high end of the range of HK$1.65 to HK$2, raising HK$2.93 billion, according to Bloomberg. It will start trading on December 15.
