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Christine Chan

Insurer sees interest rates rather than growth curbs weighing on the sector

China Insurance International Holdings (CIIH) believes the mainland insurance sector will not be affected by government moves to moderate economic growth, but notes that higher interest rates may complicate the task of investing premium revenues.

The company said yesterday it had collected reinsurance premiums worth  $700 million in the first quarter of this year, boosting its bottom line to  $40 million.

Speaking after the company's annual general meeting yesterday, deputy chief executive Kenneth Ng said: 'In the reinsurance market, no news is good news.'

Executive director Sammy Lau said: 'Last year, we had the outbreak of Sars  and typhoons in South Korea',  which delivered a double blow to the company's reinsurance operations.

Mr Ng stressed that the quarterly numbers were not necessarily indicative of yearly reinsurance results,  but  they did signify  good progress towards annual profit goals.

Another deputy chief executive, Dong Ming, said China's measures to cool down the economy had no obvious impact on the insurance sector, 'but we are closely monitoring the possible effects on the industry'.

Although aggregate life, accident and health premiums on the mainland fell 0.77 per cent in the first quarter, CIIH's 50 per cent-owned Tai Ping Life Insurance posted premium growth of 45.4 per cent year on year to 1.25 billion yuan.

The Shanghai, Beijing, Guangzhou and Chengdu branches of Tai Ping Life were key contributors to the result.

Mr Dong said CIIH's 30 per cent-owned Tai Ping Insurance, a property and casualty company, also  posted strong premium growth, collecting 206 million yuan in the first quarter, a 78.4 per cent increase over  the same period last year.

He was cautious about this year's investment environment, which could be affected by a rise in interest rates.

About 60 per cent of the company's investable funds  is parked in bonds.

A further 10 per cent to 15 per cent is in equity markets, with the remainder in cash.

Last year, returns on funds invested in Hong Kong reached 6.7 per cent, while funds on the mainland yielded 3.9 per cent.

Mr Dong said the mainland authorities would soon implement a rule allowing insurers to invest directly in  A-share markets, rather than through mutual funds.



Reinsurance boosts CIIH