Insurers Favor Chemical, Steel Stocks

During the three months from this January to March, China's insurance institutions invested a lot in petroleum, chemical and steel-related stocks.

By April 25, the market cap of shares that insurance companies held in petroleum and chemical companies stood at CNY 1.935 billion, accounting for 15% of the total market cap of these insurers' stock investment during the three months ended March 31, 2011.

Of these, the market cap of shares that China Life Insurance Co. (601628.SH, 2628.HK) held in Hubei Xingfa Chemicals Group (600141.SH) was as much as CNY 203 million. In addition, Ping An Insurance (Group) Company of China, Ltd. (Ping An, 2318.HK, 601318.SH) and China Pacific Insurance (Group) Co., (CPIC, 601601.SH. 2601.HK) in the first quarter bought 2.36 million shares of Wuxi Double Elephant Micro Fiber Material Co. (002395.SZ), with the combined market cap hitting CNY 70.55 million.

Also, Ping An Insurance received fat returns from Jinan Iron and Steel Company Limited (600022.SH). Even though the insurer was not one of the top ten negotiable shareholders of Jinan Iron and Steel in the first quarter, the former still had fat investment returns, as the latter has witnessed a 98% share price surge this year.

According the 2010 annual report of the southern boomtown Shenzhen-based Ping An Insurance, the listed insurer last year gained the net profits of CNY 17.94 billion, rising 23.9% from the previous year, with the earnings per share up 21.7% to CNY 2.3. In the reporting year, the life insurance unit Ping An Life Insurance Co. achieved the net profits of CNY 8.42 billion, a year-on-year decrease of 18.9%; while the property insurance arm Ping An Property and Casualty Insurance Co. (Ping An P&C) made net profits of CNY 3.87 billion, growing 472.6% compared with the figure in 2009.

As the nation's largest life insurer, Beijing-based China Life disclosed in its 2010 annual report that it gained the net profits of CNY 33.7 billion in the year, a growth of 2.27% from the previous year. Based in Chinese business hub Shanghai, CPIC over the past year realized the net profits of CNY 8.56 billion.

Another listed Chinese insurer PICC Property and Casualty Company Limited (PICC P&C, 2328.HK), the non-life insurance unit of the People's Insurance Company (Group) of China Limited, achieved net profits of CNY 5.2 billion in 2010, with earnings per share of 0.468, according to 2010 annual report of the Hong Kong-traded insurer.