PICC says AIG won't sell stake
Updated: 2009-04-17 07:10
(HK Edition)
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HONG KONG: PICC Property & Casualty, China's top non-life insurer, said yesterday American International Group has no intention of selling its stake in the group.
But shares of PICC fell nearly 10 percent yesterday, as investors were disappointed by its forecast-lagging earnings.
PICC, which reported a 98 percent plunge on its 2008 net profit, is confident that earnings will rise in the coming years, Chairman Wu Yan told reporters.
"The company's performance in the second half was better than the first half despite a very tough market situation, so we are confident that our profits will rise in 2009 and after," he said.
PICC reversed a loss in the first half and posted net profit of 342 million yuan for the six months ended December 2008. That compared with a loss of 197 million yuan in the same period last year and average forecast of 1.17 billion yuan profit from 5 analysts polled by Reuters Estimates.
The figures were derived by deducting first-half figures from the full-year as the company did not provide a breakdown for the second half.
For the full year, it posted a net profit of 50 million yuan versus 2.99 billion yuan in 2007 due to higher underwriting losses and lower investment income.
Wu also said PICC's investor, AIG, had no immediate plan to sell its stake in the company.
"AIG has showed strong interest in keeping a long-term cooperation relationship with us and has no intention to sell down its stake at the moment," he said, adding AIG will notify the company if it decides to sell PICC shares.
AIG, which has a 9.9 percent stake in PICC, can sell its PICC stake freely after a lock-up period of the stake expired last October.
The US insurer is trying to sell off assets in a bid to pay back the government, and last week its chief executive, Edward Liddy, said AIG had reached agreements to sell 10 businesses despite "the most challenging market environment in memory".
However, analysts say PICC is facing a challenging 2009 and its stock has been trading at full value.
Credit Suisse downgraded the stock to neutral from outperform after the earnings report.
Deutsche Bank said it expected PICC shares to underperform due to worse-than-expected 2008 results, higher expense ratios in 2009 and higher-than-peer reinvestment risk due to the shorter-than-peer duration of its bond portfolio.
Reuters
(HK Edition 04/17/2009 page8)