China's life insurance sector is to face strong challenges in 2009, said Wan Feng, president of China's biggest life insurer China Life Insurance Company Limited (601628.SH, 2628.HK), based in Beijing, capital city of China.
Firstly, the increase of people's disposable incomes, a direct measurement for people's insurance demand, has been strongly influenced by the global financial crisis.
Secondly, the to-be-released new accounting policy, which is to make some changes on the calculation of premium revenues, will bring some impact on the life insurance firms' industry structure and profitability.
Next, the bancassurance business, as a major profit contributor to the country's life insurance sector, has driven the fast growth in life insurance sector this year. However, such business might be affected in the coming new year due to industry structure adjustment.
Lastly, it is the uncertainty about the stability and conversion of the sales team. As most of the country's life insurance firms are relying heavily on sales of universal insurance products and investment-linked insurance products currently, it is hard to predict whether the sales team can adapt themselves to the industry adjustment in the near future.
Last month. the life insurance premiums for China's top three insurance groups, China Life, Ping An Insurance (Group) Company of China, Ltd. (601318.SH), and China Pacific Insurance (Group) Co., Ltd. (CPIC, 610601.SH), all slipped.
China Life achieved premiums of CNY 16.2 billion in October, a growth of 41.6% year over year but down 30.80% month on month. However, that was the first time for China Life to reap less than CNY 20 billion premiums in a single month this year. Despite this, the life insurer still realized CNY 264.8 billion total premiums in the first ten months of this year, an increase of 55.69% year over year.
Ping An Life Insurance Company of China, Ltd., the life insurance subsidiary of Ping An, in the month gained premiums of CNY 7.1 billion or so, rising 9% year on year. Based in the southern boomtown Shenzhen, Ping An Life Insurance Co. in January through October gained primary premiums of CNY 84.52 billion.
Shanghai-based China Pacific Life Insurance Co., the life insurance member of CPIC, reaped premiums of CNY 4.3 billion in the month, down 7.62% year on year. The life insurer made original premium revenues of CNY 58.9 billion in the first ten months this year, rising 46.5% year on year.
(USD 1 = CNY 6.82)
Source: www.hexun.com (November 27, 2008)
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