Amid an industry frustrated by weak growth from auto insurance, Huatai Insurance Co Ltd, which primarily sells coverage for cars and homes, expects a 20 percent growth in insurance premiums this year.

The property and casualty insurer is outperforming others in the auto insurance sector, China's largest property insurance market.

Huatai Chairman Wang Zimu said premium income next year should grow even faster, likely by 20 to 30 percent, as its network grows bigger and a new data centralization project allows the company to "step on the gas."

The company's premiums totaled 1 billion yuan (US$120 million) last year.

During the outgoing year, the 10-year-old company experienced its best overall profit, driven mostly by investment returns from the bond market, the official said.

"Overall profit is at an all-time best," Wang said, declining to give a specific numbers.

Wang said investment return is also the best the company has ever seen.

Most of the insurer's profit comes from the bond market, which has been bullish this year, as the authorities allowed more companies to issue bonds to accelerate the development of the market and reduce the economy's reliance on the banking sector.

Wang said Huatai Insurance managed an underwriting profit this year, although some of its peers are expected to incur losses from selling insurance. Rampant fraud and price undercutting have kept auto insurance premium rates low, although some insurers raised rates.

As one of the leading Chinese property insurers, Huatai Insurance has shown improved performance during the past two years. After suffering a few years of losses in underwriting, it initiated a strategic reform in 2003; it suspended high-risk operations such as vehicle loan insurance, halted the expansion of branches, and trimmed its staff.

Last year, premiums rose by 22.85 percent to 1 billion yuan (US$120 million), while the quality of underwriting also improved significantly with the combined ratio, or losses and expenses divided by premiums, registering a robust 91 percent.

The July completion of a new data centralization project replaced the 17 databases at its branches with a single one in Beijing. Company executives say it has paved the way for accelerating growth even more.

"That means we are not afraid of stepping on the gas now," Wang said.

The data centralization project, which covers underwriting, reinsurance and claims processing systems, enables the head office to monitor business data real time. It reportedly improves competitiveness by aiding settlement of claims over policies sold in a different city, and substantially enhances its risk management capacities, said Zhang Jialin, chief operating officer of Huatai Insurance.

"It was a very complex project, but it's very important for the company as it gives us a real unified platform," he said.

Huatai Insurance is one of the first local insurers to centralize databases at a comprehensive level.

Zhang dismissed scepticism about the company's decision to spend big money on the data system rather than expanding networks at a faster pace. Huatai opened only two provincial-level branches this year.

Zhang said the cost of the data project more than 20 million yuan (US$2.4 million) was not high.

(China Daily December 22, 2005)