Center

China Pacific chief throws in towel

By Hu Yuanyuan (China Daily)
Updated: 2006-08-02 09:03

Moreover, the Shanghai-headquartered life insurer's market share, which depends on bancassurance and group insurance, shrank to 8 per cent in the Shanghai market in the first six months.

Its individual insurance sector, a core business for life insurers, had a premium just over 20 million yuan (US$2.5 million), even lower than that for many joint-venture insurers.

Meanwhile, CPLI is also dogged by solvency problems.

The CIRC warned the insurer last July when its actual solvency indicator dropped to minus 4.67 billion yuan (US$584 million), 9 billion yuan (US$112.5 million) short of CIRC's target.

Partly to tackle its solvency problems, the group last month issued subordinated bonds worth 2 billion yuan (US$250 million).

Meanwhile, the group is also bringing in foreign strategic investors to improve its corporate governance.

CPIG sold 25 per cent of its life insurance arm last year to US-based global private equity investment firm Carlyle Group and US insurer Prudential Financial for US$400 million.

In July, Insurance Australia Group agreed to pay about US$280 million for nearly 25 per cent of its non-life insurance arm.

Insiders added that differences with other CPIG board members over a financial college backed by the group could have contributed to Wang's departure.

CPIG poured 1 billion yuan (US$125 million) into the school in 2004. The project, strongly supported by Wang, was also believed to breach insurance regulators' regulations on insurance capital investment.

"As a long-term project, the college requires lasting investment, but it has yet to prove its effectiveness," an industry analyst, who wished to remain anonymous, told China Daily.