China Pacific Insurance Sees First-Half Profit Fall 57%

Shanghai-based China Pacific Insurance (Group) [90598] said the global financial crisis weakened performance in its life insurance segment, leading to a 57% drop in first-half net profit, to 2.36 billion yuan (US$346 million), from 5.51 billion yuan a year earlier.

Basic earnings per share were 0.31 yuan, compared to 0.72 yuan in the first half of 2008.

During the half ended June 30, operating profit for the insurance group was 3.05 billion yuan, down 41.9% from 5.25 billion yuan in 2008.

According to China Pacific Insurance, its life insurance business realized premium income of 35.15 billion yuan during the period, down 9.5% year-on-year, as a largely developed protection and long-term saving insurance businesses was offset by a reduced investment-linked business.

In the first six months, the insurer's new life business generated premium income of over 23 billion yuan, representing a drop of 20.1% from 2008.

China Pacific Insurance said 16.09 billion yuan in premium income was generated from its agency force, up 15.9%. This sales channel also accounted for 45.8% of the company’s total business.

Premium income generated from the group's direct sales channel rose 8.3%, mainly due to growth in accident insurance. Premium income generated from bancassurance fell 29.3%, attributed to the contraction of investment-linked business.

In property insurance, the group realized growth of 18.3% to 18.66 billion yuan.

Motor insurance realized premium income of over 13.44 billion yuan, up 25.8% year-on-year. Non-motor insurance realized premium income of 5.22 billion yuan, up 2.7%.

As of June 30, the group's market share was 11.8%, up 0.4% from year-end 2008.

By the end of June, China Pacific Insurance's investment assets amounted to over 331 billion yuan, up 15% from the beginning of 2008. Of its investment portfolio, equity investments accounted for 8.8%, infrastructure investments accounted for 4.6% and fixed-income investments accounted for 81%.

Reviewing first-half business performance, management said the company maintained "steady and healthy development." The life segment continued to "optimize its business structures" by focusing more on property and long-term savings products, as well as further expanding its sales channels. The property segment has controlled its operating risks and enhanced its underwriting profitability, the group said.

According China Pacific, during the first eight months of this year its life and nonlife subsidiaries -- China Pacific Life Insurance Co. and China Pacific Property Insurance Co. -- respectively recorded cumulative original premium income of 44.5 billion yuan and 23.9 billion yuan.

(By Rebecca Ng, Hong Kong news editor: [email protected])