PICC goes to market with a jumbo deal
The dominant player in China's non-life insurance sector has captured investors' attention with its strong growth in premiums
The Hong Kong initial public offering planned by People's Insurance Company of China (PICC) could raise between US$3 billion and US$4 billion and become the biggest deal in the Asia-Pacific region this year.
Founded in 1949, PICC was one of the first state-owned insurers in the rapidly expanding Chinese market and ranks as the country's largest non-life insurer, with a significant presence in the property and casualty sector.
According to one person familiar with the deal, robust growth in net premiums and nationwide synergies between the property and casualty businesses and life and health units are the two key selling points for the long-awaited listing.
"As a dominant player in the non-life insurer market, PICC has successfully captured investors' attention but the valuations and the projected growth rate in premiums remain the biggest hurdles," said a Hong Kong-based fund manager who attended the pre-marketing event but did not want to be identified.
The fund manager added that PICC's over-dependence on the domestic equity market is a drag on its overall profitability.
The six Hong Kong-listed insurers are trading at an average price-to-embedded value of 1.4 times based on figures from the latest fiscal year.
Embedded value, a common measure used in the insurance industry, is the sum of the adjusted net asset value and the present value of future profits of a firm.
