Chinese Insurance Stocks Decline Amid Regulatory Changes

Strategic Insights -

Insurance stocks have been on a downward trend in recent days due to several factors, including a decrease in premium revenue. China's biggest life insurer, China Life Insurance Co., Ltd., fell 2.53% on June 16, while domestic archrival Ping An Insurance (Group) Company of China, Ltd. dropped 4.94% and closed as the top financial stock to suffer a decline. The falls are mainly attributed to insurers' dropped premium revenue, as industry experts explain.

Key Takeaways:

  • China Life Insurance Co., Ltd. fell 2.53% on June 16, while Ping An Insurance (Group) Company of China, Ltd. dropped 4.94% and closed as the top financial stock to suffer a decline.
  • The original premium revenue China Life gained in the first five months of this year totaled CNY 145.6 billion, down 3.9% from CNY 151.5 billion a year earlier.
  • Ping An Insurance's four units - Ping An Life Insurance Company of China, Ltd., Ping An Property & Casualty Insurance Company of China, Ltd., Ping An Health Insurance Company of China, Ltd., and Ping An Annuity Insurance Company of China, Ltd. - captured CNY 61.6 billion in premium revenue in the first five months.
  • China Pacific Insurance (Group) Co., Ltd. saw a 3.62% decline in stocks, with its life insurance unit and property insurance unit experiencing a 9.8% and 18.8% drop in premium revenue, respectively.
  • Wan Feng, president of China Life, attributed the decreased premium revenue to three main reasons: increased supervisory efforts by the China Insurance Regulatory Commission (CIRC), the ban on accounting some insurance products as premium revenue, and insurers being required to adjust their business structures.
  • China Pacific's life and property insurance units experienced significant declines in premium revenue.

Statistics:

  • China Life's original premium revenue in the first five months of the year totaled CNY 145.6 billion, down 3.9% from CNY 151.5 billion in the same period last year.
  • Ping An's total premium revenue for its four units in the first five months stood at CNY 61.6 billion, CNY 14.82 billion, CNY 43 million, and CNY 525 million, respectively.
  • China Pacific Insurance's life insurance unit and property insurance unit gained CNY 29.6 billion and CNY 15.2 billion in premium revenue, respectively, in the first five months of the year.
  • Ping An's premium revenue from investment-linked insurance products and participating insurance products rose 21.5% and 30.1% in May and April, respectively.

Sources:

  • SinoCast Daily Business Beat via COMTEX
  • Comtex SmarTrend Alert
  • Comtex News Network, Inc.