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July 21, 2009

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Insurers seen to double profit

CHINA'S top insurance regulator yesterday forecast insurers in China may double their profit in the first half this year as the economy recovers.

They are estimated to earn a combined profit of 26.1 billion yuan (US$3.8 billion) in the first six months, a surge of 98 percent from a year ago, said the China Insurance Regulatory Commission.

"The industry has shown a better-than-expected performance in the first half and has managed to ward off risks and boost growth," the top insurance body said.

Three more insurers in the property and casualty insurance sector are expected to post a profit, pushing profitable P&C insurers to 11 firms. China has more than 40 P&C insurers on its mainland.

The returns on insurance investment topped 109.97 billion yuan in the first half, better than the year-ago level.

China's stock market is the best performing globally this year, with the benchmark Shanghai Composite Index soaring 79 percent. The bullish stock market has boosted insurers' investment returns, which were hit hard last year amid the equity market rout.

"The central government's macro-economic policies have helped boost the insurance market," CIRC Chairman Wu Dingfu said. But he cautioned that the insurance industry is also facing rising risks even as the stock market climbs.

Insurers netted a combined premium of 597.6 billion yuan in the first half, an annual growth of 6.4 percent.

More policyholders redeemed their policies amid the recovering stock market as they channeled capital from premium payments to equity investment.

The CIRC asked insurers to trim their reliance on bancassurance to shift focus from investment to financial protection. However, with the booming stock market, insurers may be reluctant to switch.


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