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Insurance sector growing fast
(China Daily)
Updated: 2005-01-08 09:14
China's insurance industry continued to grow rapidly last year on the back of
strong economic growth, while reform and structural adjustments deepened, the
industry regulator said on Friday.
Premiums totalled 431.8 billion yuan (US$52 billion), up 11.3 per cent from
2003, the China Insurance Regulatory Commission (CIRC) said, outstripping an
estimated economic growth of 9.3 per cent.
Total assets held by insurance companies stood at 1.18 trillion yuan (US$142
billion) at the end of last year, jumping by nearly 30 per cent on a
year-on-year basis.
Preliminary statistics also indicated a substantial improvement in
profitability, according to Wu Dingfu, chairman of the CIRC.
"Last year witnessed the best profitability performance industry-wide," he
told the commission's annual conference without giving specific detailed.
Foreign insurers operating in the country witnessed faster growth, with
premiums surging by an annualized 45.7 per cent to 9.8 billion yuan (US$1.2
billion), or 2.3 per cent of total premiums. The 37 foreign insurers grabbed a
15.3 per cent market share in Shanghai and 8.2 per cent in Guangzhou, South
China's Guangdong Province.
The commission said life insurance premiums rose 7.2 per cent year-on-year to
322.8 billion yuan (US$38.9 billion), slowing down from higher growth rates in
recent years due to factors such as business readjustments by insurers and an
interest rate increase last October.
Many Chinese life insurers trimmed unprofitable business, mostly
single-premium type products, in a bid to improve profitability, and put more
efforts into selling protection-oriented traditional products, which the CIRC
said had proven successful.
"Although the pace (of premium growth) came down, 2004 was the most
profitable year in recent years," Chen Wenhui, director of the CIRC's Life
Insurance Regulatory Department, told reporters on the sidelines of the
conference.
The investment structure saw some improvement, the commission said, with bank
deposits, the safest but the lowest yielding category, accounting for 33 per
cent of all investments, down by 5.1 percentage points from 2003.
The proportions of Treasury bonds and financial bonds, mainly those issued by
policy-oriented banks, increased by 6.8 and 0.4 percentage points respectively,
it said.
Hailing last year's achievements, Wu said much remains to be done this year.
The CIRC will push insurance companies harder in improving corporate governance
as a way to deepen insurance reform, the official said, pledging to support
insurers in ushering in strategic investors from home and abroad and enhance the
role of board of directors.
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