Silver lining for some: virus shutdown boosts China
non-life insurers
Send a link to a friend
[March 12, 2020] By
Sumeet Chatterjee and Cheng Leng
HONG KONG/BEIJING (Reuters) - Chinese
non-life insurers are discovering a silver lining to the cloud spreading
over China's economic performance from the coronavirus outbreak - a
sharp drop in car accident claims.
Beijing's efforts to contain the new coronavirus have included
widespread travel and quarantine restrictions across the country and
although these are now being lifted, the loss of economic and social
activity meant there were few cars on the road in late January and
February.
"There's certainly a decline in auto insurance claims and the settlement
ratio due to less traffic and activity amid the virus outbreak," said a
senior Beijing-based executive at China Pacific Insurance Group Co Ltd
<601601.SS>.
A senior PICC executive based in Ningbo in China's northeast Zhejiang
province, the second worst-hit by the virus outbreak, said he expected
auto insurance claims and settlements to drop in the first quarter in
his city.
The executives declined to be identified as they were not authorised to
speak to the media. Representatives for China Pacific Insurance and PICC
did not immediately respond to a request for comment.
Such is the expected drop in motor accident claims, several brokers have
raised target share prices for the likes of PICC Property and Casualty
Co Ltd <2328.HK> and ZhongAn Online P & C Insurance Co Ltd <6060.HK>.
Motor insurance accounts for about three quarters of Chinese non-life
insurers' business while health insurance - where virus-related claims
would fall under - accounts for less than 5%, according to Swiss Re.
[to top of second column] |
A electric bus goes on a usually busy main road in the Sanlitun
shopping district after the city emptied ahead of Chinese New Year
in Beijing, China, February 4, 2019. REUTERS/Thomas Peter -/File
Photo
In contrast, for the non-life insurance sector globally, motor and
health insurance each account for about a third of premiums.
While the insurance executives predicted claims from buses, trucks and
taxis would rebound as people returned to work in China, brokers still
expect the virus-related drop in claims will be enough to boost
full-year earnings despite a slowing economy.
ZhongAn's mean target price this month has been raised to HK$26.84, up
from HK$24.22 in January, according to a Refinitiv poll of 15
brokerages.
Nomura analysts also lifted their PICC target share price last week by
0.7%. Shares in PICC, the biggest non-life insurer in China, have fallen
15% since the Lunar New Year break, compared to a 12% fall for a broader
gauge of Chinese stocks in Hong Kong <.HSCI>.
(Reporting by Sumeet Chatterjee in Hong Kong and Cheng Leng and Zoey
Zhang in Beijing; Editing by Jennifer Hughes and Edwina Gibbs)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|