Sector outlook revised to 'positive'
(AFX)
Updated: 2006-07-26 15:45
Standard and Poor's ratings services said it has revised its outlook on
China's insurance sector to 'positive' from 'developing' to reflect expectations
that the financial strength of the industry will improve in the medium term,
with China Life Insurance Co Ltd seen to be among the strongest performers.
Factors such as improving operational fundamentals, strong potential growth
and regulatory commitments to policy holder interests are likely to offset
challenges such as tough competition, lack of talent and weak capitalization,
S&P said in a statement.
The larger, more established insurers will be better positioned to leverage
risk and weather any slowdowns or regulatory changes, it said.
"China Life and PICC P&C are large enough to sacrifice market share in
order to reform and focus on their most profitable operations," Connie Wong,
director of S&P's financial services ratings, told XFN-Asia on the sidelines
of an insurance conference.
PICC Property and Casualty Co Ltd's (HK 2328) recent moves to focus on its
strong-earning units was proof of this activity.
The insurer today said it would contribute 160 million yuan in capital to
affiliate PICC Asset Management Co Ltd (PICC AMC). The amount represents 20
percent of the enlarged capital of PICC AMC.
PICC P&C said in a statement the capital injection is expected to enhance
the affiliate's investment structure and help it earn stable returns. PICC AMC
provides investment management services to PICC P&C.
China's insurance sector is likely to become the world's biggest in terms of
premiums within a decade, S&P added at today's conference.
(For more biz stories, please visit Industry Updates)
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