Insurers Adjusted Stock Investment in Q3

China Life Insurance Company Limited (601628.SH), China Life Insurance (Group) Company, and China Life Reinsurance Company Ltd. totally held 154 stocks with the combined market value of CNY 64.6 billion by this September. In the three months ended September 30, 2009, China Life bought in 202 million additional shares of China Minsheng Banking Corp. (600016.SH), 190 million additional shares of China Petroleum & Chemical Co. (600028.SH) and 39.999 million additional shares of PetroChina (601857.SH).

As of September 2009, the southern boomtown Shenzhen-based Ping An Insurance (Group) Company of China (601318.SH) held 22 stocks with the combined market value of CNY 5.71 billion. Another insurer Shanghai-based China Pacific Insurance (Group) Company (CPIC, 601601.SH) by the end of the third quarter held 52 stocks, the market value of which stood at CNY 7.06 billion. CPIC in the quarter bought in 22.28 million additional shares of Bright Diary & Food (600597.SH).

After the adjustment in the stock investment, China Life, Ping An and CPIC held more medicine, petrochemical and power-related stocks. For example, China Life and Ping An are the shareholders of Sanjiu Medical & Pharmaceutical Co. (000999.SZ), Beijing Double-Crane Pharmaceutical Co. (600062.SH) and Yabao Pharmaceutical Group (600351.SH). China Life and CPIC are the shareholders of Sinochem International Corporation (600500.SH), Sichuan Chuantou Energy Co. (600674.SH) and GD Power Development Co. (600795.SH). Meantime, these Chinese insurance giants reduced the information technology, catering and drink-related stocks in the same quarter, according to their latest financial reports.

Some local government-backed enterprises in China are having the desire to set up insurance companies. Up to about 20 insurers are being prepared and they mainly cluster in Guangxi, Shandong, Jiangxi, Henan and so forth. Most of these companies are sponsored by local state-owned enterprises in each province.

These initiators ate understood to consider the market competition when deciding to set up a life insurer or a property insurer. Comparatively speaking, the property insurance sector is of greater potential in the insurance industry than the life insurance sector; and the competition in the property insurance sector is not that stiff as in the life insurance sector. That is why most of the sponsors prefer property insurance companies.

Among all these upcoming insurers, those in Guangxi, Shandong and Zhengzhou have drawn wider attention.