PING AN LIKELY TO SUFFER LEAST FROM SNOWSTORM CLAIMS, SAYS CITIGROUP

Chinese insurer Ping An is likely to suffer less than its major peers because of China’s recent severe snowfalls, according to an analysis from Citigroup. The investment bank said that Ping An’s focus on urban cover meant that losses were likely to be less frequent and were also more likely to be covered by reinsurance. Citigroup analysts estimated Ping An’s total direct non-life losses as a result of the storm at some CNY200m ($27.82m), out of a total estimated liability of more than CNY3bn, according to official estimates released last weekend. Some 70% of Ping An’s premium income comes from the leading cities. Citigroup said that PICC P/C was likely to be the non-life insurer most affected by the severe weather events, given its market share of 40% and broad rural exposure. Citigroup has cut its earnings estimate at PICC by 21% to CNY3.85bn. “We hold the view that most claims affecting direct (primary) insurers will come from a high frequency of small motor insurance claims”, the bank said. Meanwhile, shares in PICC tumbled today by 7.8% to HKD7.80. China Life was off 8.3% to HKD29.30 and Ping An fell 9.7% to HKD55.60. In further comment, rating agency Standard & Poor’s reiterated its positive outlook on Chinese insurers, stating that, although some insurers might see a small deterioration in profits because of the recent snowstorms, the credit profiles of most insurers should be able to cope.