Insurance & Reinsurance 02 (Oct 14 - Dec 25)

[winston]

<Research Report>CICC Expects PRC Insurers to Still Show Strong VONB Growth

CICC, in its report, said in 1H16, the net profit of PRC insurance stocks fell 31% yearly;

The book value rose 1% compared to end-2015;

The VONB of life insurance rose 47% yearly;

The EV rose 7%.

P&C insurance sector combined operating ratio (COR) deteriorated 40 bps yearly.

Net investment yield fell 10 bps to 4.9% on average.

CICC said the life insurance VONB growth of PRC insurers will remain strong in 2H16, but profits will still face pressure. CICC expected improvement in life new business.

The broker said P&C insurance will show steady earnings performance in 2H16, and the growth in investment income should offest the deterioration in underwriting profits.

CICC said among PRC H shares, it preferred PICC GROUP (01339.HK), NCI (01336.HK), PING AN (02318.HK) and CHINA TAIPING (00966.HK), giving these stocks ratings Buy.

Source: AAStocks Financial News

[winston]

China insurers for Connect

by Esther Yu

China's insurance regulator said yesterday the country's insurance firms can buy and sell Hong Kong shares through the existing stock connect.

The move will give insurers "more flexibility in choosing investment targets," said the announcement posted on the official website of the China Insurance Regulatory Commission (CIRC).

Previously, mainland insurers could invest in Hong Kong shares through a limited quota qualified domestic institutional investor scheme, but now they can do so via the Shanghai-Hong Kong stock connect scheme.

China's insurance industry saw its first-half earnings slide 54 percent to 105.6 billion yuan (HK$122.4 billion), the CIRC said in July, squeezed by falling investment returns.

It is estimated investable amount stood at more than a trillion yuan.

The step will help insurers take advantage of a recent rally in Hong Kong stocks, which advanced to a one-year closing high on September 2, led by a burst of Chinese money flowing into the city's blue-chips at the fastest pace in nearly 18 months.

In April last year, the China Securities Regulatory Commission allow public funds to take part in the Shanghai-Hong Kong connect. The move subsequently led to the Hang Seng Index climbing to more than 28,000 points, a new high after the 2008 financial crisis.

Mainlanders have been investing more heavily in Hong Kong stocks in recent months, with the southbound flow of capital climbing for 25 consecutive days. Yesterday, a "net buy" of HK$5.387 billion was recorded.

Technology giant Tencent (0700), HSBC (0005), Longfor Property (0960) and Ping An Insurance (2318) are among those with the highest turnover.

The market closed at 23,919 points yesterday after advancing 177 points with developers and state-backed firms taking the lead. But the HSI futures remained flat last night.

Will Leung Chun-fai, head of investment strategy at Standard Chartered Hong Kong, said the new move would have a positive effect on Hong Kong stocks given that there would be one more source of capital flow from the mainland.

Since the yuan is still in a downtrend, the Hong Kong stock market also provided a relatively easy way out to mainland capital, he said, and this was why international financial stocks were chased after in the market recently.

He expects the flow of money from the mainland to sustain for a while.

Source: The Standard

[winston]

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

Bank of America Merrill Lynch, in its report, updated the investment ratings and target prices of Chinese insurers:

Stocks/ Ratings/ Target prices (HK$)

CPIC (02601.HK)/Buy/35.79->37.07
CHINA LIFE (02628.HK)/Buy/24.81?>25.47
NCI (01336.HK)/Neutral/32->37.03
CHINA TAIPING (00966.HK)/Buy/23.37->23.84
PING AN (02318.HK)/Buy/52->52.26
PICC GROUP (01339.HK)/Neutral/3.24?>3.77
PICC P&C (02328.HK)/Buy/17.45
CHINA RE (01508.HK)/Neutral/1.92->2.1

Source: AAStocks Financial News

[winston]

<Research Report>C Suisse: More Positive on PRC Insurers under New Regulations; Prefers Ping An, PICC P&C

Credit Suisse, in its report, stated that China Insurance Regulatory Commission (CIRC) has recently issued notices to regulate universal insurances while also allowing insurance capital to invest in HK stocks via direct channels (Shanghai-Hong Kong Stock Connect).

The research house became more positive on life insurance sector as the environment was increasingly healthy. It reiterated Overweight on Chinese insurers.

The research house expected life insurers with share prices lagging behind to outperform market in short term and that it preferred quality life insurers/P&C names in medium term under low rate environment, including PING AN (02318.HK) and PICC P&C (02328.HK) with targets of $49 and $17.22.

Source: AAStocks Financial News

[winston]

Hong Kong insurers brace as they become acquisition targets, sparking interest from global buyers

Hong Kong insurers are drawing worldwide interest thanks to buoyant sales of life policies to mainland visitors

Mainlanders spent HK$30.1 billion buying life insurance products in Hong Kong in the first half of this year, representing 37 per cent of all policies sold during the period.

Last year mainlanders bought HK$31.6 billion, represents 24 per cent of all policies sold.

The regulator will not allow someone who does not know insurance to manage an insurance companies.

The buyers usually would need to keep the existing management to ensure the company is managed in a professional manner”

Source: SCMP

http://www.scmp.com/business/banking-fi ... on-targets

[winston]

by iam802

Insurance to be offered through direct channel without commissions from next year - BNM

KUALA LUMPUR: Beginning next year, insurers will be required to offer pure protection products through a direct channel without commissions, said Bank Negara Governor Datuk Muhammad Ibrahim.

"The high internet and mobile phone penetration in Malaysia suggests that internet or mobile insurance makes good sense,” he said at the 6th Malaysian Insurance Summit.

“Other untapped channels include banking agents, retail chains, employers and cooperatives. We expect the industry to fully adopt these channels to diversify delivery of services,” Muhammad added.

He said that new products and delivery channels that enhance outreach ultimately contribute towards expansion of a larger industry, and pool of customers for all participants in the insurance sector as a whole.

“In other words, it is not a zero sum game. Everybody will gain,” he said.

Source: The Star

http://www.thestar.com.my/business/busi ... -says-bnm/

[winston]

Yuan drop spurs mainland rush for Hong Kong insurance policies

How long does it take to swipe a card 200 times and get the paperwork all signed? The answer is about an hour, according the China Securities Daily.

But Hong Kong insurance agents are more than happy to go through such a card swiping marathon.

Recently, as the renminbi weakened beyond 6.7 against the greenback, expectations of more downside has prompted a fresh round of rush among mainland Chinese for overseas assets, such as Hong Kong insurance policies.

Compared with the pound sterling’s sharp decline since the Brexit vote, the 4 percent year-to-date fall in the renminbi is far less significant.

While we have not heard Britons rushing to sell the pound to avoid its further depreciation, mainland Chinese have reportedly been trying every possible channel to move their money abroad.

Fueled by better returns, more transparent terms and interest in foreign currency assets, mainland demand for Hong Kong insurance products have been robust in the past few years.

The recent bonanza may push Hong Kong insurance purchases to another record this year.

In a tightening move to stem capital outflow earlier this year, mainland regulators capped the limit on using China UnionPay cards to transfer money abroad for buying insurance policies at US$5,000 per transaction.

Soon after, multiple swiping became the standard way to get around the rules.

One strategy is to hold the policies for a few years and then cash out to get a lump sum in Hong Kong dollar or US dollar.

Afterwards, insurance customers can use that fund to buy other assets such as overseas properties.

Another common strategy is to use the policy as a collateral to borrow funds from banks and then immediately deploy it for investments in foreign securities, the daily reports.

Typically, insurance buyers can borrow about US$700,000- US$800,000 against a US$1 million policy.

Insurers would hook their mainland clients up with private bankers for the latter to help them set up a portfolio.

Bonds are said to be popular, including those of emerging markets. Unit trusts and stocks are also hot.

“We have a client who is a big fan of Apple Inc. He borrowed US$800,000 against his policy and invested all of that in Apple shares,” an insurance agent told the newspaper.

Source: EJ Insight

http://www.ejinsight.com/20161024-yuan- ... -policies/

[winston]

UnionPay bans mainlanders from using card to buy insurance investment products in Hong Kong

by Laura He and Wendy Wu

Pace of capital exodus likely to pick up in the current and coming quarters, putting further downward pressure on the yuan, analysts say
China’s capital outflows set to grow in Q3 and accelerate further in 2017, analysts say
The Chinese currency has fallen more than 1.5 per cent in value against the US dollar over the past fortnight. Photo: Reuters
Offshore yuan drops to six-year low even as central banker sought to sooth market’s concerns

State-backed UnionPay, the mainland’s biggest bank card provider, said on Saturday it had banned customers from using its services to buy investment-related insurance products in Hong Kong with immediate effect, the latest move by the authorities to try to stem an outflow of cash as the yuan continues to weaken.

Holders of UnionPay cards issued on the mainland could no longer buy any insurance product that included “investment-related contents” in Hong Kong, according to a statement issued by UnionPay.

Customers could, however, still buy pure insurance products covering accidents, deaths and illnesses, the statement said

Source: SCMP

http://www.scmp.com/news/hong-kong/econ ... investment

[winston]

Insurance loophole tightens

by Esther Yu

China's biggest bank card provider, UnionPay, said it will tighten regulations over how mainland customers can use its debit and credit cards to purchase Hong Kong insurance products, potentially restricting another gateway for capital flight.

Beijing, which has intensified a crackdown on illegal outflows this year, is concerned that buying overseas insurance has become a way for Chinese to skirt restrictions on capital outflows by disguising investment intentions.

UnionPay said mainland customers are "not allowed to buy any insurance product [that] includes investment- related contents" in the SAR, but could still purchase "pure" insurance against accidents, death and illness.

UnionPay, which said it had seen a "significant increase in overseas insurance transactions via cards issued from mainland China," added that the rules underlined existing regulations.

China has seen accelerated capital outflows over the past year with a slower economy, concerns over yuan depreciation, and volatile stock markets So far this year, regulators have uncovered illegal capital outflows of US$8.43 billion (HK$65.75 billion).

Prudential closed down 2 percent in London on the news, while AIA's (1299) American depositary receipts slipped 1 percent.

Source: The Standard

[winston]

‘You shouldn’t be acting like a hedge fund’, insurance regulator warns Evergrande

China’s insurance regulator urges Evergrande to avoid speculation in stocks, focus on principles of long-term value investment

Source: SCMP

http://www.scmp.com/business/companies/ ... ator-warns