Talks cool on bid for stake in China United or China Continent
Insurance Australia Group had stalled talks to take a 20 per cent stake in either China United Property Insurance or China Continent Property & Casualty Insurance on concerns over the mainland insurers' weak financial situation, sources said.
'The due diligence was not very encouraging,' said one source. 'China United is in deep trouble because they have underwritten too many car insurance policies and are having a very high claim ratio.'
China United was examining bids from potential strategic investors in a move to boost its share capital, said its publicity chief who identified himself as Mr Li. 'It's well on its way but we have no imminent information to disclose at this point,' he said.
IAG declined to comment. A spokesman for China Continent, also known as Dadi Insurance, said he was unaware of any talks with the Australian insurer.
Car insurance represents about 70 per cent of all premiums in the mainland's general insurance industry - a high proportion by western standards - and intense competition has reduced profitability. A lack of reliable data in the market has also led to poor policy selling.
