PICC Property and Casualty, the mainland's largest non-life insurer by premiums, returned to profit in the first half of the year, helped by Mother Nature. The insurer reported a 322 million yuan (HK$365.42 million) net profit, against a 292 million yuan loss a year earlier, as claims because of natural catastrophes declined. No interim dividend was proposed. Natural catastrophes affect the performance of PICC as it offers cover for motor vehicles, properties and cargo. The huge amount of claims from last year's snowstorms and the Sichuan earthquake led to the loss last year. Despite the turnaround, chairman Wu Yan warned of 'difficulties and challenges' in the second half of this year. 'The company will pay close attention to the changes in the economic and financial environments and their effect on the insurance industry, achieve an in-depth understanding of the favourable conditions and difficulties facing the development of the industry,' Mr Wu said. PICC, partly owned by troubled insurer American International Group, reported lower net claims of 29.2 billion yuan, down 4.2 per cent from a year earlier. The loss ratio - the amount of claims as a proportion of premium income - stood at 72.7 per cent in the first half, compared with 75.9 per cent previously. This narrowed the underwriting loss to 1.21 billion yuan from 2.09 billion yuan. Turnover increased 13.7 per cent year on year to 67.05 billion yuan, driven mainly by stronger sales of motor insurance, which increased 6.83 billion yuan during the six months. This is offset by a lower investment income, which stood at 1.37 billion yuan, down 37 per cent from a year earlier. Mainland insurers are allowed to invest only in bank deposits, government and financial bonds, stocks, securities-oriented funds and non-listed firms. Motor insurance is the company's major business line, representing 74.6 per cent of total premium earned in the first half. This is followed by commercial property insurance, which represents 7.1 per cent, while liability insurance represents 3.5 per cent, accidental injury insurance 3.3 per cent, cargo insurance 2.6 per cent and others - including credit insurance, agricultural insurance and energy and aerospace - 8.9 per cent. Mr Wu said for the second half of this year, the company would focus on achieving the annual profit target by improving underwriting and the profitability of the motor insurance segment. He also wants to see better risk management, claim settlement capabilities and development of new business and promote cross-selling. PICC shares closed down 2.01 per cent at HK$5.36 yesterday before the results were announced.