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PICC Property plans HK share sale
( 2003-09-29 11:03) (Agencies)

PICC Property & Casualty Co., a unit of China's biggest property insurer, planned to sell shares for the first time in early November in what would be Hong Kong's biggest public offer this year, said bankers involved in the sale Friday.

The company, which may raise as much as US$725 million in the sale tentatively slated for Nov. 3, plans to brief investors starting this week, the bankers said. Official marketing was planned to begin on Oct. 13 with pricing on Oct. 29, they said.

The sale will give overseas investors their first chance to buy listed shares of a Chinese insurer. PICC Property is raising funds to expand as the State sells off assets to private industry, increasing the need for property insurance. It's the first of three public share sales planned by Chinese insurers.

"The industry trend is good as sales growth will be tremendous,'' said Kenneth Kwan, who helps manage US$150 million at Bank of Communications, China's fifth-largest State-owned lender.

"Still, growth will be subject to competition and it's difficult to gauge its level of profitability until you've had a deep look into its financials."

PICC Property planned to sell about 25 percent of its shares, raising the Hong Kong dollar equivalent of between US$483 million and US$725 million, people involved said last month. Proceeds from the sale will help the company expand and meet capital demands as it tries to sell more policies.

China International Capital Corp. and Morgan Stanley will manage PICC Property's share sale.

The company, which controls about three-quarters of the domestic market, faces increased competition as China opens its insurance industry to foreign competition after being admitted to the World Trade Organization in December 2001.

Foreign insurers sold less than 2 percent of the insurance policies sold in China in 2001. China, which has a population of 1.3 billion, will lift restrictions on where foreign insurers can operate at the end of 2004.

Property insurance premiums totaled 47.65 billion yuan at the end of June, 13 percent more than the same time last year, compared with 8 percent economic growth in the country, according to figures provided by the China Insurance Regulatory Commission. It accounted for 25 percent of China's total insurance premium last year.

China Life Insurance Co., the nation's biggest life insurer, at the beginning of this year said it planned to raise as much as US$3 billion in a first-time sale.

Ping An Insurance Co., 25 percent owned by Goldman Sachs Group Inc., HSBC Holdings Plc and Morgan Stanley, had planned to sell shares overseas this year though it's yet to obtain approval from the government, people involved in the sale said earlier.

People's Insurance, the oldest insurer in China dating back to 1949, was ordered to suspend domestic services for two decades in the 1960s. It returned to business in 1978.

PICC Property, a unit of People's Insurance, posted a 5.4 percent rise in sales to 51 billion yuan last year, half the increase of a year earlier, the people said. Profit last year fell by a third to one billion yuan because of an unrealized investment loss, they said, declining to be more specific.

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