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China Insurance (Holdings) Co Ltd (CIH), the local insurance industry's overseas flagship, is expecting more expeditious growth in the home market in the coming three years.
The Hong Kong-based company predicted yesterday both of its mainland arms Taiping Insurance Co Ltd and Taiping Life Insurance Co Ltd will begin making a profit in 2006, enabling the group to reap fruits from three years of infrastructure construction and brand building.
"We expect to start making a profit (from mainland operations) in 2006," Yang Chao, chairman and general manager of CIH, told reporters.
Insurance firms, especially life insurers, typically spend their first five to eight years in the red, analysts say.
CIH was founded in 1931. After it was restructured into a subsidiary of the People's Insurance Company of China, it ceased all of its domestic insurance business but continued its overseas operations, developing them into the domestic insurance industry's flagship in the international market.
It won regulatory approval three years ago to sell policies again on the Chinese mainland through the two subsidiaries of Taiping Insurance and Taiping Life.
To back up the mainland operations, CIH's investors decided earlier this month to recapitalize Taiping Life by 800 million yuan (US$96 million), and inject another 500 million yuan (US$60 million) into Taiping Insurance.
The recapitalizations will bring the capital bases of the two firms to 2.3 billion yuan (US$277 million) and 1 billion yuan (US$120 million) respectively.
Executives of Taiping Life said its premium income is expected to top 7 billion yuan (US$840 million) this year, nearly doubling from last year's 3.6 billion yuan (US$433 million).
The life insurer is expecting faster growth next year, hoping its recently approved pension business will catalyze premium growth in the areas of annuities and group insurance.
Taiping Life won regulatory approval earlier this year to set up the nation's first specialized pension firm.
Miao Jianmin, chairman of Taiping Insurance, said his firm plans to build more branches in China's vast inland areas next year to tap potential market.
(China Daily December 1, 2004)
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