After suffering a major setback at the end of last century, China Insurance (Holdings) Co Ltd (CIH) is now gathering steam for an expansion in the coming few years, expecting expeditious growth from the home market.

 

The overseas flagship of China's rapidly growing insurance industry has rolled out an ambitious plan for the five years ending in 2010, aiming to almost triple its assets to 107 billion yuan (US$13.2 billion), from 35.9 billion yuan (US$4.4 billion) at the end of last year.

 

Net assets are expected at 6.2 billion yuan (US$765 million) by 2010, bringing returns of 10-15 percent. Premiums are also expected to double.

 

"This is a very arduous target," said Feng Xiaozeng, chairman of CIH, which owns Hong Kong-listed China Insurance International Holdings (CIIH). "But we are confident of meeting the target."

 

The group, which now owns 19 subsidiaries and has operations in foreign markets such as the United Kingdom and Singapore, is still recovering from losses incurred during the Asian financial crisis that swept the region at the end of the last century. CIIH reported HK$43.7 million (US$5.6 million) of losses for the first half of last year.

 

"The group is in a stage of recuperating from a major illness, and needs to grow stronger," said Feng, who before taking over the helm at CIH in May last year was vice-chairman of China Insurance Regulatory Commission, China's insurance regulator.

 

The past five years of restructuring and infrastructure building have paved the way for faster growth, however, Feng said. Total assets doubled, and net assets increased substantially. A pension insurance firm was set up, and the two subsidiaries of Taiping Insurance and Taiping Life Insurance have set up a solid presence in the mainland market.

 

Business growth was stable last year. The group's premiums rose by 16.4 percent year-on-year to 12.3 billion yuan (US$1.5 billion). Taiping Life reported a premium growth rate of 18.6 percent and Taiping Insurance 51 percent.

 

The return on investments stood at 4.1 percent, up from 2004's 3.9 percent.

 

In the coming five years, the group has placed its strategic focus on the domestic market, largely buoyed by the huge growth potential.

 

"Currently the domestic market is seeing faster growth in both business volume and network construction than overseas markets," said Lin Fan, president of CIH. "In the future we will also focus on the domestic market while bringing along overseas markets."

 

High hopes are pinned on Taiping Insurance, which sells primarily property insurance, and Taiping Life, the group's major operations in the home market.

 

Lin said if the two firms can break even this year as planned, "it will make this year a major turnaround for the group."

 

Taiping Insurance aims to break even this year by both Hong Kong and mainland accounting standards, and Taiping Life will try to break even under Hong Kong accounting rules.

 

"If the two companies can break even (this year), then CIIH will likely make a profit," said Ng Yu Lam, director and chief executive officer of CIIH, which owns 30.05 percent of Taiping Insurance and 50.05 percent of Taiping Life.

 

In overseas markets, the group plans to establish three regional management centres. The Hong Kong and Macao property insurance centre will be based on Ming An Insurance Co (China) Ltd, the Southeast Asia and Oceania regional centre will centre on China Insurance (Singapore) Co Ltd, and the European regional centre on China Insurance (UK) Co Ltd.

 

The reason for setting up such regional management centres is to enhance management of overseas operations, further consolidate resources and tap the business potential from the ongoing overseas expansion of Chinese companies, according to Xie Yiqun, managing director and vice-president of CIH.

 

(China Daily January 21, 2006)