Insurance & Reinsurance 02 (Oct 14 - Dec 25)

[winston]

China: There was general belief that the insurance companies would eventually have to buy NPLs to support the banks and the gov’t would ultimately create a new bad bank to absorb the NPLs.

Source: Barron's Asia

[winston]

<Research Report>UBS Latest Ratings & TPs for Chinese Insurers (Table)

UBS, in its report, listed the latest target prices and ratings for Chinese insurance stocks:

Stock/ Investment Rating/ Target Price (HK$)
CHINA LIFE (02628.HK)/ Neutral/ 21.5
PING AN (02318.HK)/ Buy/ 48.41
CPIC (02601.HK)/ Buy/ 38.61
PICC P&C (02328.HK)/ Buy/ 17.2
PICC GROUP (01339.HK)/ Buy/ 3.96
NCI (01336.HK)/ Buy/ 48->32.97
CHINA TAIPING (00966.HK)/ Buy/ 37->29.23
CHINA RE (01508.HK)/ Buy/ 3.37->2.6

Source: AAStocks Financial News

[winston]

Chinese insurers run "Titanic" risks for titanic returns

By Sumeet Chatterjee

HONG KONG, June 26 (Reuters) - Years of breakneck growth for China's top insurers has been partly fuelled by a splurge on risky investment products that could punch multi-billion-dollar holes in their balance sheets if the slowing economy triggers heavy debt defaults.

Holding of assets other than shares, bonds and cash had more than quadrupled in five years to 984 billion yuan ($150 billion).

These alternative investments - which include opaque, risky shadow banking-linked assets such as trust schemes and wealth management products (WMP) - account for roughly 16 percent of the top five's total assets, up from 5 percent in 2011, the second-largest asset class after fixed-income products, the survey showed

Source: REUTERS

http://www.dailymail.co.uk/wires/reuter ... z4CecE68B9

[winston]

Will These 3 Insurance Stocks Survive the Brexit? (AV, PUK, MET)

Insurance stocks AV, PUK and MET have faced particularly heavy selling

By Wayne Duggan

Source: Investor Place

http://investorplace.com/2016/07/brexit ... 3cQh7h96M8

[winston]

not vested

<Research Report>JP Morgan Expects Insurers to Have Share Buybacks & Appealing Div; AIA & PING AN Strong Candidates

JP Morgan said that the market was highly volatile after the Britain's vote to leave the European Union.

Since most Asian insurers underperformed the market from the beginning of the year due to being "equity market proxy" with "lower bond yield", the research house expects insurers to resume buybacks and provide attractive dividend return.

Of all insurers, AIA (01299.HK) and PING AN (02318.HK) are strong candidates under these categories.

Source: AAStocks Financial News

[winston]

not vested

China’s Insurers To Nosedive, Warns CLSA

By Shuli Ren

Chinese insurance companies are poised to issue profit warnings, warned CLSA. The broker sees 20-99% year-on-year decline in profit in the first-half.

The insurance companies face two major challenges this year.

First, interest rate risk. As the People’s Bank of China cut its benchmark interest rates to boost the economy, insurance companies have a harder time finding reasonable yields for their life insurance policies.

Yes, lower yields for longer is also a problem in China now. The 750-day moving average of government bond yields fell by 12 basis points in the first-half this year this year, versus only 1 basis point a year ago.

Second, mainland China’s stock markets are doing badly. CLSA estimates that in the first-half last year, 37-56% of gross investment income came from non-recurring investment income, because of the A-share bull market.

As a result, CLSA analyst Patricia Cheng has a Sell rating on all the Chinese insurance companies, except for Ping An Insurance (2318.Hong Kong), which is more diversified and has non-insurance revenue.

PICC Group (1339.Hong Kong) is likely to be hit the hardest, seeing 99% decline in profit, estimates Cheng, while Ping An is on the other end of the street, down 20% only.

Ping An Insurance is a top 10 holding at BNP Paribus’ asset management arm. To see why, check out my July 19 blog “Q&A: BNPP Investment Partners On TSMC, HKEx, Ping An Insurance, ASEAN Banks“.

Today, China Pacific (2601.Hong Kong) fell 1.4%, China Taiping Insurance (966.Hong Kong) dropped 1.2%, New China Life (1336.Hong Kong) was down 0.9%. Ping An and PICC were little changed.

Source: Barron's Asia

[winston]

China’s insurers issue profit warnings amid low interest rate environment

China Life Insurance, the nation’s largest insurer, said on Friday its net profit for the first six months of the year may plunge from between 65 per cent to 70 per cent from 31.49 billion yuan posted over the same period in 2015, blaming dismal investment income.

Joining China Life in alerting investors to declining fortunes on Friday were China Reinsurance Group, China’s biggest provider of insurance to insurers, state-owned China Taiping Insurance, as well as China Pacific Insurance headquartered in Shanghai.

Source: SCMP

http://www.scmp.com/business/companies/ ... erest-rate

[winston]

Munich Re Profit Far Above Estimates

Munich Re announced the quarterly results ended 30 June 2016.

During the period, net profit faded 9.4% to EUR974 million, which is better than the estimated EUR556 million.

Net investment income reached EUR2.75 billion, up 9.1% yearly, far exceeding the market estimates of EUR1.85 billion.

Gross premium income amounted to EUR11.93 billion, down 4.3% yearly.

Source: AAStocks Financial News

[winston]

Chinese insurers spot a silver lining in country’s demographic time bomb

Shanghai facility for wealthy retirees costs more than double the city’s average monthly pension

Source: SCMP

http://www.scmp.com/news/china/society/ ... aphic-time

[winston]

China Cracks Down On High-Yield Life Insurance Policies

By Shuli Ren

Hong Kong-listed Chinese insurers soared after the China Insurance Regulatory Commission put the brakes on high-return life insurance policies, essentially short-term wealth management products.

Universal Life is one type of such policies, offering 5-6% annual return commonly. Players like Evergrande Life even offers 8%.

And such policies have been funding unlisted insurers to buy mainland China’s A-shares.

Qianhai Life Insurance of Baoneng Group has been issuing these “life insurance” policies to fund its purchase of China Vanke‘s (200002.China) shares. Regulators understandably are worried because if China Vanke’s shares plummet, Qianhai would not be able to honor its life policies.

Under the new rule, the maximum guarantee rate of Universal Life is cut by 0.5 percentage points to 3%, and the total payout has to depend on the actual investment performance from the Universal Life account.

“This reflects the regulator’s concern for excessive competition and potential negative spread. We expect crediting rate of UL to start to show a meaningful decline,” noted CLSA’s Patricia Cheng.

The listed insurers gained today because in the past they were forced to offer similar products to keep their overall market share, even though investment returns in China have been falling.

China Life Insurance (2628.Hong Kong) gained 3.8%, China Pacific (2601.Hong Kong) rose 3.8%, Ping An Insurance (2318.Hong Kong) rose 1.7%, China Taiping Insurance (966.Hong Kong) rose 2.9%, and New China Life (1336.Hong Kong) was up 1.7%.

Source: barron's Asia