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(EMAILWIRE.COM, December 24, 2012 ) Needham, MA -- Fitch Ratings recently released a statement that Mainland life insurers' premium income growth (PIG) would maintain a limited basis as a result of low returns to policyholders. The limitation is the result of a weak stock market and competition continuing to rise.
Single-digit growth is all the is in the forecast, according to the global credit agency.
The premiums based on income would see particular improvement within the next year, due to investments simply being weak limited the ability of insurers to pay dividend that would entice policyholders, according to Director of Insurance Ratings Joyce Huang.
The rise in competition as well as wealth-management products play a part in the outcome as well, in regards to insurers' premium income, say Huang. If there is any silver lining, it is that she expects growth rates to be higher than this year.
PIGs grew at 2.4% for the first half of 2012. That is the same growth at this time last year, and is a considerably slower pace than what was seen during a 6.8% growth last year, or the 28.9% in 2010.
It is assumed insurers will add sales staff and push the selling of products with higher margins of profit in order to handle the slowdown in premiums. Huang believe this is the only true way to maintain a stable outlook for insurers' profitability, which is integral to the entire processes maintaining motion.
Haitong securities PIG research report recently forecast noted there would likely be improvement by next year. Investors will be seeking higher returns within the environment that is conducive low interest rates.
The recent sale of HSBC's stake in Ping An Insurance, as well as Carlyle Group removing its remaining 7.6% stake in the China Pacific Insurance company (if rumors are to be believe) has many doubting the mainland's entire insurance sector.
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