Chinese insurers saw record growth in premium revenues in the
first quarter but their profitability will likely be challenged by
the slowing economy and the volatile capital market, the Chinese
insurance regulator said on Tuesday.
Total premium revenues across the insurance industry rose to
1.19 trillion yuan ($184 billion) in the first quarter, an increase
of 42.18 percent from the same period of last year, according to
data from the China Insurance Regulatory Commission.
Life insurance business outperformed the property and auto
insurance businesses, with their total premium revenues rising by
50.18 percent year-on-year to 845.9 billion yuan.
Bai Yun, an official at the CIRC, said that the more attractive
rate of life insurance products than the bank deposit interest rate
after the regulator liberalized the pricing mechanism for life
insurers has helped drive up their premium revenues.
"The revenue growth has also been supported by the boom in
sales through banking channels," he said at a news conference
Foreign insurers have also gained a greater presence in the
Chinese market. Their premium revenues in the first quarter stood
at 65.5 billion yuan, up by 71.68 percent year-on-year. Their
market share expanded by 0.94 percentage point to 5.47 percent,
according to the insurance regulator.
However, the insurance regulator forecast profit decline for the
Chinese insurers in the first quarter amid a slowing economy and a
volatile capital market.
The regulator estimated that the total profits of the Chinese
insurers will drop by 55.29 percent to 38.9 billion yuan in the
first quarter from the same period of last year. Life insurers, in
particular, will likely suffer a profit decline of as much as 72.56
Wang Guojun, an insurance professor at the University of
International Business and Economics, said that the volatile
capital market will have a negative impact on the insurers'
"It is normal to see insurers' profits under pressure
when the capital market does not perform well. The decline has also
to do with the high base last year when the stock market was
surging," he said.
Total investment returns of the Chinese insurers in the equities
markets dropped by 100.5 billion yuan from the beginning of the
year, according to the insurance regulator. The average rate of
investment return stood at 1.2 percent in the first quarter, down
from the 2.23 percent in the same period of last year.
In March, global credit rating agency Moody's Investors
Service Inc changed the outlook for China's life insurance
industry from stable to negative, noting that the Chinese life
insurers' profitability and capitalization will weaken against
the backdrop of weaker macroeconomic conditions and falling
(Source: China Daily USA, by Li Xiang)
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