Insurance News
- China Continent seeks capital injection
Date: 16-Mar-2007 Sources: (Shenzhen Daily)
CHINA Continent Property & Casualty Insurance Co., the country's fifth-biggest non-life insurer, hopes to win a US$1 billion cash infusion from its parent this year to drive an ambitious business expansion, industry sources said yesterday.
China Continent, a player in a non-life industry dominated by PICC Property and Casualty Co., had applied for a capital injection from State parent China Reinsurance (Group) Co., which owns nearly 70 percent of the firm, sources said.
At a recent board meeting, China Continent set a target of nearly doubling its total premiums to about 12 billion yuan (US$1.55 billion) in 2007, the sources said. The Shanghai-based insurer collected a total of 6.36 billion yuan of premiums in 2006.
'China Continent is now turning to China Reinsurance for help,'an insurance source in Shanghai said.
'Competition in property insurance is very tough,'said the source. 'You have to expand your capital first, otherwise you can't afford your clients if you expand too fast.'
The domestic property insurance market remains underdeveloped but some see potential with income levels galloping ahead in past years and more people now able to afford cars and houses in the world's fourth-largest economy.
Much of the expansion of past years has focused on the life insurance industry. Now, some analysts fear a repeat of the margin-eroding, tooth-and-nail competition of the 1990s that discouraged most foreign investors.
China Continent's main domestic rivals include PICC Property and Casualty Co. and unlisted China Pacific Property Insurance, in which Australia's Insurance Australia Group Ltd. is in talks to buy a nearly 25 percent stake.
The level of annual premiums that China Continent hopes to get to this year, though nearly double 2006's amount, is still only roughly equivalent to what rival PICC receives in one month.
But the firm is keen to expand, in an industry where size matters.
China Continent had already collected more than 1 billion yuan of premiums in the month of January and its parent China Reinsurance was so far 'very satisfied?with the pace of that business growth, the sources said.
'A capital injection is just like an activator, which will assure the company to reach its annual goal of premiums,'said a second source. 'The parent company knows the point very well.'
China Reinsurance, the country's biggest reinsurer, plans to raise as much as US$2.6 billion in a dual Shanghai and Hong Kong initial public offering in September to bankroll a rapid expansion, insurance sources said last week.
Sponsor Results:
