Insurers brace for avalanche of claims
Updated: 2008-05-14 07:21
By Kwong Man-ki(HK Edition)
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Mainland insurance companies are expecting huge claims following the loss of life and property from the Sichuan earthquake.
And China's largest life insurer, China Life, expects the claims to far exceed those from the snowstorms that hit southern China earlier this year, the company's president, Wan Feng, said yesterday.
The firm, which competes with smaller Ping An Insurance, has 110,900 policy holders in Wenchuan County, site of the epicenter of the earthquake, Wan said.
Wan said compensation for the earthquake will be "a huge test for the entire Chinese insurance industry".
China Life has already received claims related to deaths in Shaanxi, Gansu, Yunnan and Chongqing, Wan said. Figures for claims related to the snowstorms in southern China were not immediately available, but the disaster resulted in total direct costs of about 151.65 billion yuan.
Karl Thomson Investment Consultants Executive Director Patrick Shum expressed concern for the three Hong Kong-listed mainland insurers - China Life, PICC and Ping An.
"The huge claims will slightly hurt the companies' earnings," he said, "and the plunge in A-shares will also hit the investment income of the companies."
Shares of PICC dropped 3.18 percent yesterday, and its two peers rose more than 1 percent.
Shum said the second quarter profits may not be dragged deeply, because "even though the claims should be higher than the claims related to the snowstorm, it only accounts for a small portion of their profits".
Reuters contributed to this story.
(HK Edition 05/14/2008 page2)