China's largest non-life insurer, the People's Insurance Company of China (PICC), has completed its joint-stock restructuring after six months of hectic work, taking a major step closer to its much-desired goal of going public.

It was the first of China's three state-owned insurance bellwethers to emerge from their widely observed restructuring efforts. The China Life Insurance Company has finished registration of its restructured company and China Reinsurance Company is scheduled to unveil its new face by the end of October, sources said.

China's relatively young insurance companies are facing growing competitive pressure from their global counterparts now that the country has become a member of the World Trade Organization. "So we have to step up reform, foster competitive group companies and accelerate integration with the international community," Wu Dingfu, chairman of the China Insurance Regulatory Commission, told an unveiling ceremony of the company's restructuring on Saturday.

The PICC was renamed the PICC Holding Company, and owns the two new subsidiaries, PICC Property and Casualty Co Ltd and PICC Asset Management Co Ltd.

The PICC's core operations were transferred to PICC Property and Casualty, which is widely believed to be the entity seeking to float. The property insurance arm has a registered capital of 8 billion yuan (US$963 million) and more than 60 billion yuan (US$7.2 billion) in assets, according to Tang Yunxiang, general manager of PICC Holding and chairman of the two new subsidiaries.

PICC Holding, which has a capital base of 15.5 billion yuan (US$1.8 billion), will serve as a representative of the state in overseeing the group's state-owned assets.

The asset management firm, with 100 million yuan (US$12 million) in registered capital, will be responsible for managing the group's own assets initially, executives said.

Company executives refused to say when and where the property insurance firm is expected to be listed, but one senior executive said the plan to go public had already been postponed by the outbreak of SARS (severe acute respiratory syndrome), adding that the company had prepared a new set of financial statements containing latest company statistics.

"Were it not for SARS, we could have...(been listed)," said the executive who declined to be named.

Other reports said the company has submitted an application to float on Hong Kong's stock exchange to raise an estimated US$500 million to US$600 million in September or October. The special administrative region was one of the areas hardest hit by the SARS epidemic.

Tang Yunxiang said it remained an "arduous task" for employees of the new property insurance firm to break away from old habits and mindsets associated with its planned-economy history. But he urged the firm to abide by the rules of international capital markets, highlight key indicators such as profits and cash flow, and strive to increase shareholders' equity.

The PICC's premiums in the first half of the year stood at 33.4 billion yuan (US$4 billion), up 2.8 percent from the previous year. Underwriting profits fell by 4.4 percent on a year-on-year basis to 6 billion yuan (US$722 million), as rising sales of policies and the occurrence of a number of huge accidents drove up compensation levels.

The 54-year-old PICC had a total of 59.4 billion yuan (US$7.2 billion) in assets at the end of 2002, according to its website. The debt-to-asset ratio was 82.01 percent.

(China Daily July 21, 2003)