The loss ratio increased by 2.6 percentage points to 66.2 per cent, driven partly by higher claim costs from motor insurance as the cost of automotive components increased, while more claims resulted from frequent disasters.

PICC P&C posted an 18.5 per cent increase in investment income to 9.9 billion yuan last year. As the recovery in capital market resulted in lower impairment losses, net realised and unrealised losses also decreased to 342 million yuan from 913 million yuan in 2012.

The profitability of the mainland's non-life insurers has been under pressure because of increasing claim costs. The underwriting outlook for PICC P&C this year remained challenging because of competition in the motor insurance sector, Morgan Stanley analysts said earlier in a research note.

Meanwhile, China Taiping Insurance said its profit rose 16.3 per cent to 15.3 billion yuan, fostered by growth in insurance business and investment income. Gross premium income increased by 41.7 per cent to 85.5 billion yuan, with life insurance premiums rising 44.9 per cent and 41.6 per cent growth in property and casualty premiums, it said in a statement to the Hong Kong stock exchange yesterday.

The capital market recovery saw China Taiping's investment income grow 68.3 per cent last year to 11.2 billion yuan, with total investment yield lifting by 1.5 percentage points to 5.1 per cent.

Chief financial officer Li Tao said yesterday that the insurance business was expected to grow strongly this year due to stronger economic momentum.