Stock News 2013: China's Life Insurance Companies

Insurance (Photo credit: Christopher S. Penn)

China’s life insurance companies expect a lower growth on premium in the next year or two. Over the long term, insurance companies will benefit as they adapt to the changes.

Sally Yim of Moody’s said, “For now, the sector is experiencing the constraints from its previous focus on short-term and savings-type products, as well as a significant reliance on the bancassurance channel.”

Some of Moody’s assumptions are:

• Premium growth will lag behind China’s GDP growth
• Profitability will remain a challenge due to rising expenditures
• Insurance companies are exposed to the volatility of equity markets
• New businesses will be limited due to low premium growth
• In 2012, premiums were at 4.5%. Growth in household incomes will generate premium growths of 7.5% to 8.5% in 2013 and 7.0% to 8.0% in 2014.

The expected single digit low growth is driven by:

• Narrow platform for insurance companies
• Wealth products sold by banks as alternative to insurance products
• Increase in competition as more Chinese banks distribute their own insurance products
• Chinese insurance companies are moving toward risk-based liberalization of investments and products. This include moving away from low-margin savings-type products and focus on protection-type products.

http://pinoyfiq.com/pinoyfiq/financial-education/state-of-life-insurance-companies-of-china

Related articles

• State of China's Life Insurance Companies (pinoyfiq.com)
• Cigna Gets High Marks in American Medical Association's (AMA) New Administrative Burden Index (dailyfinance.com)