PICC Property and Casualty H1 net profit surges to CN¥16b

China’s biggest non-life insurer beat street estimates despite decelerating QoQ growth.

China state-owned non-life insurer of casualty, PICC Property and Casualty, saw its net profits leap by 25% to CN¥16b ($2.47b) for H1 2021, driven by higher investment income despite slow down in net profit growth from 41% YoY Q1 to 11% in Q2, according to a report by OCBC Investment Research.

The report revealed that auto insurance continues to be the group’s largest contributor although its contribution to total premiums fell to 48% of total compared to 53% last year due to reform pressures in the segment.

Auto premiums fell 7.8% YoY amidst auto insurance pricing reform. Growth of non-auto premiums, excluding credit insurance segment, grew 18% YoY with solid pickup across various lines such as cargo (+25%), liability (+19%), accident and health (+21%), agriculture (16%), commercial property (+7.5%) and others (+15%). 

Meanwhile, credit insurance premiums contracted 73% in H1 (compared to the 59% contraction last year) as expected, as the insurer continued to proactively cut exposure here in view of higher risks as guided before. Credit insurance has turned profitable, contributing a small underwriting profit of CN¥304m ($46.98m).

OCBC said that PICC P&C is supported by its extensive rural network and first-mover advantage and that the company is positioned to benefit from longer term consolidation in an industry where the top two P&C insurers command more than half the total market share (by premiums).

“With auto insurance accounting for two-thirds of FY19’s net earned premiums, tighter regulations and competition pressures have weighed on earnings. The company improved its disclosure standards in 2020, releasing combined ratios for key product lines for the first time,” OCBC added.