The State Council approved the State-owned PICC's reform scheme late last year, which will split China's largest non-life insurer into a holding company and a joint-stock property insurance firm.

The implementation of the reform will take place this year and the joint-stock property insurance firm will try to launch its IPO "as early as possible," PICC General Manager Tang Yunxiang told the company's annual work conference yesterday.

Tang said the IPO would be listed overseas, but did not elaborate.

Calling the joint-stock reshuffle an "all-round and profound" reform, Tang said related reforms that range from corporate governance to human resource management will also be sped up.

The company, which controls almost 75 per cent of China's non-life insurance business, witnessed strong growth momentum last year, the general manager said. Premium income rose to 54.8 billion yuan (US$6.6 billion), up 8.44 per cent on a year-on-year basis, while underwriting profits jumped by 20.6 per cent from a year earlier to 3.9 billion yuan (US$470 million).

"Businesses grew rapidly, profitability was boosted noticeably and the financial situation improved further," Tang said.

The company set a 5 per cent premium growth target for this year. The reason the target was lowered, the official said, was to ensure the success of the joint-stock restructuring, which he said was a "massive project," and an anticipated slowdown in the growth of premiums from auto insurance, its dominant premium earner.

An auto insurance liberalization programme came into effect on January 1, allowing insurers to set rates and terms on their own. It is widely expected to squeeze profit margins and increase competition in a sector that generates around 60 per cent of the domestic property insurance industry's total premiums.

"A standard market with orderly competition can hardly be formed in a short time," Tang said. "In some regions, adjusting rates is likely to remain the dominant way of competing."

A price war already crippled the industry with widespread losses as the liberalization programme was tested in South China's Guangdong Province last year. Analysts are watching for signs of renewed undercutting.

Tang urged his colleagues to strictly abide by the auto insurance programme approved by regulators, closely monitor market trends, improve services and encourage innovation to keep its competitive edge.

(China Daily January 10, 2003)