China Insurers Suffered Investment Losses in Jan-Apr

During the four months from January to April 2010, Chinese insurance companies suffered investment floating losses of about 10.11 billion, the first time for them to suffer such losses from the equity investment.

During the first four months of this year, the total assets in China's insurance sector hit CNY 4.3 trillion and up to CNY 2.8 trillion were used for making investment. At the same time, the bank deposits of insurers reduced by CNY 13.45 billion.

Lately, China's insurance industry watchdog China Insurance Regulatory Commission had a discussion meeting, aiming at expanding the investment of insurers' capital. For instance, up to 25% of the total insurance assets will be allowed to be invested in stocks and funds. In addition, insurance companies will be permitted to invest in Hong Kong-traded stocks. Still, the policy for insurance companies to make property investment and private equity investment has not come out yet. Officials of the insurance regulator point out that the investment channels will be further enlarged for insurance companies in the future.

The financial center Shanghai-based China Pacific Insurance (Group) Co. (CPIC, 601601.SH, 2601.HK) this year focuses on the long-term investment in selected stocks. During the first three months of 2010, the listed insurer achieved investment yields of CNY 5.32 billion, still lower than China Life Insurance Co. (601628.SH) but higher than Ping An Insurance (Group) Co. of China Ltd. (601318.SH, 2318.HK). During the four months from ended April 30, 2010, CPIC made premiums revenues of CNY 53.8 billon, including CNY 35.2 billion life insurance premiums and CNY 18.6 billion property insurance premiums, according to the new accounting standards.

When making the stock investment, the company prefers such stocks as consumption, low-carbon industry, and energy conservation-related stocks, as well as those large-cap blue chips. At the same time, the insurer vows to ensure the fixed income instruments account for about 80% of its total investments, according to senior officials of the company.

China's listed insurance companies are expected to bring fat returns to insurance stock investors in the coming years. This year, the subsequent installment premiums of China Life Insurance Co., Ping An Life Insurance Co. and China Pacific Life Insurance Co. (CPIC Life) are expected to keep a higher-than-20% growth. Currently, Beijing-based China Life, Shenzhen-based Ping An Life and Shanghai-based CPIC Life are guessed to compete further in the wealth management sector, attempting to increase the premium revenues in the future.