Ping An Insurance

China Pacific cautious over stocks

PUBLISHED : Tuesday, 27 March, 2012, 12:00am
UPDATED : Tuesday, 27 March, 2012, 12:00am


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China Pacific Insurance, the mainland's third-largest insurer by market value, plans to curb its stock investments while increasing purchases of fixed-income products amid worries over a slowing domestic economy and the euro zone debt crisis.

The Shanghai-based insurer also said it would not raise additional funds in the near future as its finances are strong enough to support its business growth.

Yu Yeming, chief of China Pacific's asset management unit, said the A-share market outlook remained cloudy this year and the insurer would take a cautious stance.

The mainland's key stock index was among the world's worst-performing indicators in 2010 and last year before top securities regulator Guo Shuqing called investors to look for bargains and predicted an 8 per cent annualised return.

However, major state-owned insurers including China Pacific and Ping An Insurance, the mainland's second-largest insurer, thought otherwise. Ping An said earlier this month that it would focus on bond investments while reserving a reasonable portion of assets for stocks.

Yu said China Pacific would embark on a 'defensive strategy' for equity investments.

The Shanghai-based insurer reported a net profit of 8.31 billion yuan (HK$10.23 billion) last year, down 2.9 per cent from a year earlier.

China Pacific chairman Gao Guofu said it still had 10 billion yuan cash on hand that could be injected into its life and property insurance sectors to boost their solvency margin ratios. China Pacific's life insurance unit reported a solvency margin ratio - a measure of an insurer's ability to settle claims - of 284 per cent at the end of last year, while the ratio for its property arm stood at 233 per cent.