Insurance & Reinsurance 02 (Oct 14 - Dec 25)

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Insurance-sector fund IAK is around breakeven over the past year.

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<Research Report>BofAML: P&C Insurance Better than Life Insurance This Year, Top Pick PICC P&C

Bank of America Merrill Lynch, in its report, expected that China's P&C insurance industry will be better than life insurance this year. Of all Chinese insurance stocks, PICC P&C (02328.HK) is the top pick.

The research house said that market expectation on life insurance fundamental growth outlook is high, but expectation on P&C is relatively low due to the concerns of the ongoing Commercial Motor Insurance De-tariffication, which is expected to be launched by end 2016. Market is concerned about that the combined ratio will turn worse.

However, the research house believed that the market concern is overdone. Combined ratio will likely not see a significant deterioration before pricing is fully deregulated.

The expenses ratio is likely to improve, driven by a decline in fixed cost per unit and better bargaining power.

The broker revised up the target price of PICC P&C to $21.04 from $18.7, which is equivalent to a 2.4x 2016 P/B. The rating was maintained at Buy and the 2016-2017 earnings forecast was lifted to 15%.

In addition, Bank of America Merrill Lynch trimmed the target price of CHINA LIFE (02628.HK) to $30.66 from $36.2 and maintained the rating at Underperform.

The target prices of PING AN (02318.HK) and CPIC (02601.HK) were cut to $59.21 and $38.29 from $60.7 and $42.13, while both of ratings were retained at Buy.

Source: AAStocks Financial News

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<Research Report>BofAML's Latest Ratings & TPs for China Insurers (Table)

Bank of America Merrill Lynch, in its report, updated the latest investment ratings and target prices for Chinese insurance stocks:

Stock/ Investment Rating/ Target Price (HK$)
PING AN (02318.HK)/ Buy/ 60.7->59.21
CPIC (02601.HK)/ Buy/ 42.13->38.29
CHINA TAIPING (00966.HK)/ Buy/ 36->34.97
CHINA LIFE (02628.HK)/ Buy/ 36.2->30.66
NCI (01336.HK)/ Neutral/ 45.04->37.39
PICC GROUP (01339.HK)/ Neutral/ 4.79->4.46

Source; AAStocks Financial News

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Insurance-stock fund IAK is flat over the past 18 months.

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test

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HK Insurance Stocks

Source: SCMP

http://m.scmp.com/business/markets/arti ... rbs-policy

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HK: Capital outflow curbs dim insurers' outlook

In order to stop capital outflow, China said it will crack down on a popular tool UnionPay credit and debit cards. It is well known that Chinese gamblers use such cards for cash advances in Macau either for gambling or simply to take their money out of the mainland.

In the past ten years, local HK insurance agents have worked hard to tap this market. As long their clients come to Hong Kong to sign insurance contracts mostly in US dollars it is legal.

Using UnionPay is convenient. But Beijing has now imposed a limit. A maximum US$5,000 (HK$39,000) may be used per single transaction to buy overseas insurance products.

AIA (1299) fell 4.8 percent yesterday to a 1-year low at HK$38.95 while Manulife (0945) slumped 5 percent. AIA said the effect is not big as it does not limit the number of transactions per day.

Widespread market talk surfaced recently about a Chinese citizen who purchased an insurance contract from a well- known firm in the SAR. The premium was HK$100 million! The agent received a huge commission.

Then two months later the client canceled the contract and got back the premium. The agent disappeared. Now many local insurers are very cautious.

Source: Dr Check, The Standard

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HK Insurance

Most analysts believe the curb barring UnionPay cardholders, who are mostly mainlanders, from making more than a US$5,000 (HK$39,000) single payment for buying insurance would be limited.

Nomura, however, warned AIA's growth in new business value, a measure of projected profitability, may fall by about 5 percentage points as a result of the restriction that comes into effect today.

It will probably remove about 30 percent of AIA's total weighted premium income in Hong Kong, Bolun Tang, an analyst at China International Capital Corp, wrote in a separate note.

Deutsche Bank esimated roughly one third of AIA's business in the SAR comes from mainland customers, adding the new rule does not limit the number of transactions, hence mainly full- payment insurance policies will be affected.

Source: The Standard HK

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China Becomes World's 3rd Largest Insurance Market

China Insurance Regulatory Commission mentioned that China has become the world's third largest insurance market and it made 26% of the total contraction for the growth of international insurance market, ranking the top, Xinhuanet.com reported.

During the 12th five-year plan, China's national premium income increased from RMB1.3 trillion (in 2010) to RMB2.4 trillion (in 2015), representing an average annual growth of 13.4%.

During the period, the profit in the industry increased from RMB83.7 billion to RMB282.5 billion, surging by 2.4 times.

Source: AAStocks Financial News

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HK: The Credit Card Loophole That Gets Around China's Capital Curbs

by Alfred Liu

China broker offers clients 1st class to Hong Kong plus hotel

Multiple swipes popular amid limits placed on UnionPay cards

More than 800. That’s how many times Hong Kong insurance agent Raymond Ng swiped the credit cards of a mainland Chinese client buying HK$28 million ($3.6 million) worth of insurance policies in the city earlier this month.

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... flow-curbs