"Keeping Watch Over China's Business Risk and Insurance"
Vol. 2 , No. 2 - July 5, 2001
TOPICS THIS ISSUE:
CHINESE NEWS
- GAB ROBINS BECOMES 1ST INTERNATIONAL INSURANCE ADJUSTING FIRM IN BEIJING
- PING'AN INSURANCE JOINS INSUROPE NETWORK
- CHINA'S INSURANCE LAW FACES CHALLENGES IN ORDER TO REMAIN COMPETITIVE
INTERNATIONAL NEWS
- S&P LOWERS INDEPENDENT INSURANCE RATINGS TO BB FROM BBB+
- INDEPENDENT INSURANCE CLOSES TO NEW BUSINESS
IT'S YOUR HEALTH
- TRAVELER IN ASIA SERIOUSLY INJURED IN TOUR BUS ACCIDENT
- HANKY, PANKY?
EyeWatchina is intended to be used for news purposes only. It should not be taken as comprehensive advice, and its producers will not be held responsible for any such reliance on its contents. EyeWatchina, Copyright 2001 WaterStreet Asia in cooperation with Lehman, Lee & Xu, All Rights Reserved.
CHINESE NEWS
GAB ROBINS BECOMES 1ST INTERNATIONAL INSURANCE ADJUSTING FIRM IN BEIJING
GAB Robins Inc. has opened a representative office in Beijing, becoming the first international insurance firm to operate in the capital city.
Statistics show that since last year, four public insurance appraisal companies have been formed in China, with another one in the planning stages. By the end of last year, only 800 people worked in the insurance appraisal industry nationwide-69 of whom were based in Beijing, reports the June 11 Xinhuashe (Xinhua News Agency).
Meng Zhaoyi, deputy director of the China Insurance Regulatory Commission's (CIRC) International Affairs Department, noted that China's insurance market is potentially huge, with minimum annual growth rates estimated to be at least 35 percent.
However, the development of the intermediary insurance market is relatively slow and has already become a bottleneck holding back sustained growth of the insurance industry. Therefore, quickly establishing healthy insurance appraisal mechanisms is an extremely urgent task, according to the article.
Industry insiders are now suggesting that while intermediary insurance institutions should be established as soon as possible, the appropriate government agencies should also pay close attention to drafting laws and regulations for the intermediary insurance industry to rapidly create a healthy and unified market, the story said.
Source: www.chinaonline.com , 13 June 2001
PING'AN INSURANCE JOINS INSUROPE NETWORK
The Ping'An Insurance Co. and the Insurope Network have signed an agreement of cooperation and alliance in Shanghai. The agreement makes Ping'An the only mainland firm to become a member of the Insurope Network.
The Insurope Network, headquartered in Brussels, Belgium, is the world's third-largest multinational insurance benefits association. Currently it has 55 independent member companies operating in 65 countries and regions worldwide.
Upon becoming an Insurope member, Ping'An pledges stronger partnership with other Insurope member companies in compliance with the Agreement of Cooperation and Alliance in an effort to provide the employees of transnational corporations with world-standard benefit plans.
Source: Jinrong Shibao (Financial News), May 31 2001
CHINA'S INSURANCE LAW FACES CHALLENGES IN ORDER TO REMAIN COMPETITIVE
Insurance law, which forbids one company from conducting both life and property insurance businesses at the same time and forbids one company from conducting insurance, banking and securities businesses at the same time, faces challenges China's insurance law bans one insurer from conducting both life and property insurance businesses at the same time to prevent the transfer of money from one insurance division to the other and to prevent other inappropriate business practices. In addition, a single company may not conduct insurance, banking and securities services at the same time. Around the world, insurance, banking and securities companies are merging to improve efficiency. It seems China should change its laws.
Source: China Reform News , 2001.06.13
INTERNATIONAL NEWS
S&P LOWERS INDEPENDENT INSURANCE RATINGS TO BB FROM BBB+
LONDON, -- Standard & Poor's today lowered its counterparty credit and insurer financial strength ratings on U.K.-based insurer Independent Insurance Co. Ltd. (Independent) to double-'B' from triple-'B'-plus. At the same time, Standard & Poor's revised the CreditWatch implications on Independent to negative, from developing, where they were placed on May 24, 2001.
The lowering of the ratings follows the failure to complete the capital raising plans being pursued by its parent company, Independent Insurance Group PLC, and the subsequent temporary suspension of business, pending clarification of the appropriate level of technical provisions and the reinsurance position. The double-'B' rating reflects the company's weakened capital position in addition to its significantly damaged business reputation that will be difficult to recover from. The CreditWatch negative designation reflects the possibility of a further deterioration in the group's financial position if the technical provisions need to be increased and the reinsurance protection proves not to be robust.
Standard & Poor's expects to update this CreditWatch within the next few weeks, as further information becomes available concerning the group's capital position. -- CreditWire
Source: PRNewswire, June 14, 2001
INDEPENDENT INSURANCE CLOSES TO NEW BUSINESS
LONDON, June 14 (Reuters) - Independent Insurance Group Plc on Thursday became the second British insurer to close its books to new business in recent months, saying it was unable to secure fresh capital to shore up its finances.
Independent, which writes general insurance, said it could not proceed with its plans to raise capital and had decided to stop selling new policies or renewing the existing ones.
Equitable Life, a life assurer, closed its fund in December and sold parts of the business to mortgage bank Halifax following a gaping hole in its finances.
The company, whose main business is selling cover to firms and wealthy individuals against damage to their property, has been trying to win investor support for a share placing worth about 150 million pounds ($209 million). It was also in preliminary talks about selling its business.
But investors shied away from injecting capital without any assurances on the level of future liabilities associated with a long-term liability business.
"It has not yet proved possible to provide information sufficient to ascertain the appropriate level of technical provisions," Independent said in a statement to the London Stock Exchange, where its shares have been suspended since Monday.
A source close to the company said discussions about raising capital were off the agenda for now.
Independent has said it is conducting an investigation into the appropriate level of provisions and into a reinsurance contract that has proved unfavorable.
The source said it would be hard to sell the business without putting a cap on the liability. Other options would be to get a capital injection from outside sources, or to renegotiate the reinsurance contract, he said.
The company wanted to use the extra capital to unwind the reinsurance contract bought earlier this year to prop up its liability business. The division had an increase in claims because more people are suing companies after accidents.
The premium on the contract is 110 million pounds against cover of 278 million pounds. Independent said last week it had received new information which may not be favorable to the company.
Independent also said former Chief Executive Michael Bright had resigned "from the board and as an employee of the company, without compensation, on Tuesday with immediate effect."
STOCK REMAINS SUSPENDED
The company said its shares remained suspended and it would make a further announcement "as soon as is reasonably practicable." Independent, which was founded in 1987 and floated on the stock exchange in 1993, ran into capital problems after fast expansion of the business in recent years.
The stock plunged to around 80 pence last week from around 145 pence three weeks ago, amid talk of a heavily discounted rights issue. Before the company issued a profits warning in February, its shares were hovering around 400p.
The stock has underperformed the insurance sector by more than 65 percent since it issued its profit warning in February and followed that in March with poorly received results. Its full-year profits fell 64 percent - with concerns also over the future profitability of its liability business.
Source: Reuters, 14-Jun-2001
IT'S YOUR HEALTH
TRAVELER IN ASIA SERIOUSLY INJURED IN TOUR BUS ACCIDENT
A group of backpackers traveling through the wilderness in northern Asian were injured when their tour bus flipped over. Most of the passengers survived the accident with minor bruises. However, the leader of the group, a 20-year-old man, was seriously injured and had to be taken to the local hospital. He had several broken ribs and air in the cavity between his chest wall and his lungs. The local facility there was not equipped to deal with his condition, and it began to deteriorate quickly. A friend on the tour notified his emergency medical assistance company, MEDEX of the situation.
Time was a critical factor, as the patient's condition worsened. He was in severe pain and was having difficulty breathing. MEDEX worked to find an air ambulance that would be able to evacuate the patient immediately. It was a complicated evacuation, requiring air clearance in many regions. MEDEX was able to work through all customs clearances, obtain all the necessary visas, and within 24 hours the patient was in the air, en route to Helsinki, Finland. On board the plane was a thoracic surgeon and a registered nurse who immediately began administering more advanced care.
As MEDEX worked to keep the patient's family and employer constantly updated, the plane landed safely in Finland. Just two days after being admitted to the hospital in Helsinki, he was breathing on his own and in good spirits. He was discharged a week later and MEDEX arranged a flight back to the United States, where the patient made a full recovery. He said the care he received was excellent and he greatly appreciated the assistance. The patient's employer was happy to be updated frequently and said that the quick MEDEX actions may have saved the patient's life.
Re-printed with permission from The Odyssey Volume 12
HANKY, PANKY?
In 1998, Chinese used 2.18 million tons of tissues, the second highest in the world. To produce 1 ton of tissues, 17 trees would have to be felled. So there are good health and environmental reasons to think about before you use another tissue. The China Consumers Association (CCS) warned that some tissues are illegally made with a kind of organic compound called fluorescent whitening agent. This agent is forbidden by national standards. The compound contains a chemical which causes cancer and is very dangerous to humans, according to research.
The CCS is urging Chinese consumers to stop using tissues and to use old-fashioned handkerchiefs made of fabric instead.
China Daily 2001
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