China Pacific Insurance Has No M&A Plans Despite Hong Kong Listing
By Rebecca Ng
China Pacific Insurance (Group) Co. Ltd. [90598] said it will focus on domestic organic growth instead of growing through mergers and acquisitions once it completes its capital-raising activity through a Hong Kong listing by the end of December.
The Shanghai-based insurer said it will offer about 861 million H-shares [Hong Kong shares] through the global offering. Of that, around 43 million shares will be offered in Hong Kong.
The insurer aims to raise capital of up to HK$25.9 billion (US$3.3 billion), with an issuing price of between HK$26.80 and HK$30.10 per H-share. It is expecting to list in Hong Kong on Dec. 23.
Guofu Gao, chairman of CPIC, said at a press conference that CPIC is an “insurance business-focused” company, and the proceeds from the global offering will “support its business developments in the coming three years.”
“Currently, we do not have any plan for mergers and acquisitions in China and overseas, but we will focus on the domestic insurance business,” said Gao.
He also said management does not have any investment plans in Taiwan, though the Chinese government earlier announced a policy to develop the Haixi Economic Zone on the west coast of the Taiwan Strait.
Foreign Investors
The insurer said it has six cornerstone investors, including two foreign insurers: Germany’s Allianz S.E. [85014] and Japan’s Mitsui Sumitomo Insurance Group Holdings Inc. [52662]. The other four are China or Hong Kong-based investors: Chinese state-owned agricultural trading and processing company China National Cereals, Oils & Food Stuffs Corp.; China Overseas Land & Investment Ltd.; midsize Hong Kong lender Dah Sing Banking Group Ltd.; and Regal Real Estate Investment Trust Chairman Lo Yuk-sui. These investors committed to subscribe to a total US$395 million worth of CPIC shares, the insurer said.
Allianz confirmed with BestWeek Asia/Pacific that it participated in the CPIC capital raising and invested US$150 million, with a lock-up period of six months. Mitsui Sumitomo said it has invested US$65 million to the Chinese insurer.
Singapore-based Christoph John, regional head of corporate communications of Allianz Asia Pacific, said Allianz and CPIC entered into a non-binding set of key cooperation principles on Dec. 3 in Shanghai, where CPIC is based.
John said cooperation between the insurers will include “asset management, particularly the pension business, as well as evaluating the future cooperation in areas of insurance product development, reinsurance and investment.”
“CPIC’s business model is similar to ours,” said John. He added that CPIC is a “top three” player in both life and property/casualty insurance, with an “excellent brand name and strong distribution capability” in China.
CPIC was established in 1991 and is headquartered in Shanghai. The insurer originally planned to list in Hong Kong in 2007 when it was listed on Shanghai’s stock exchange, but the global financial crisis led to the IPO’s postponement. With the market recovery this year, CPIC said it decided to reactivate its Hong Kong public offering as an H-share global offering on Dec. 10 and expects to trade in Hong Kong beginning Dec. 23.

Progressive Takes Auto Insurance Down Under
Progressive is now offering car insurance in Australia, a place they say is already accustomed to Internet-based consumerism.
The insurance became available to Australians on Dec. 9. The business, operating as Progressive Direct, will be headed by Australian native Simon Lindsay, said the company.
“Australia is an ideal country because of its wide broadband penetration,” Tom King, Progressive’s business leader for international operations, told BestWire. “They are leaders in online banking. They really embrace online self-service.”
King, who said there are about 21 million people and 10 million cars in Australia, noted the insurer is not looking to sell a lot of policies right away during what he called a “modest” launch, meant primarily to prove the Web site is working effectively.
Progressive will initially use a paid search engine campaign to drive sales, King said. A creative campaign is in development and could be unveiled in 2010, he said. The company has no plans to bring “Flo,” the company’s U.S. television commercial character, to Australia, King said.
—Chad Hemenway

Australia’s Nonlife Sector Reports Falling Net Profit
Australia’s nonlife insurance industry reported a 25% drop in net profit to A$2.5 billion (US$2.3 billion) for the financial year ended June 30, 2009, according to the Australian Prudential Regulation Authority.
This makes the third straight fiscal year the nonlife sector experienced falls in net profit. In the year ended June 2007, the sector’s net profit fell 11% to A$5 billion, 32% to A$3.4 billion in the year ended June 2008.
In the year ended June 2009, net premium income rose 4.6% to A$23.6 billion and investment income surged 45% to A$4.8 billion, according to APRA’s report on 116 direct insurers and 17 reinsurers.
As a consequence of increased adverse weather events, net incurred claims jumped 25% to A$17.9 billion for the year ended June 2009. This also continued a consecutive rise of net incurred claims, to A$14.4 billion in the year ended June 2008 from A$12.3 billion a year earlier.
In the latest fiscal year, the sector’s net loss ratio was 76, up from 64 and 56 in the two previous years.
The industry reported an underwriting loss of A$538 million.
—Iris Lai

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