(The following statement was released by the rating agency)
HONG KONG, April 24 (Fitch) Fitch Ratings does not expect the 20 April 2013
earthquake in China's south-western Sichuan province to have a significant
impact on Chinese insurers' financial performance or solvency position. While
market-wide claim statistics are scarce and the losses are still developing,
initial claim figures from several insurance companies and the insurance
regulator suggest that the losses on an incurred basis from the catastrophe are
manageable and will not trigger market-wide solvency issues for Chinese
The insured losses from this event are unlikely to be material as the affected
regions lack large manufacturing plants or raw material production centres.
Additionally, insurance coverage in the key quake area remains low, likely less
than 1% in terms of the ratio of insured loss to economic loss.
Economic losses for the May 2008 7.9-magnitude quake in Wenchuan county of
Sichuan, which destroyed infrastructure and properties extensively, amounted to
USD124bn while the total insured losses were about USD366m.
While Fitch believes the claim cases of the April 2013 disaster will escalate,
the accumulated incurred losses are unlikely to substantially exacerbate the
underwriting margin of major non-life players such as PICC Property and
Casualty Company (PICC) and Ping An Property and Casualty Company (Ping An)
which are active in Sichuan province.
PICC and Ping An together captured a market share of more than 60% in the
property and casualty segment in Sichuan, according to the 2011 statistics from
the China Insurance Regulatory Commission (CIRC). Nonetheless, premiums written
from Sichuan, mainly from the provincial capital Chengdu, generally accounted
for less than 7% of most major non-life insurers' total written premiums.
The destructive 7.0-magnitude earthquake this month hit Lushan county of Ya'an
city in Sichuan, causing at least 193 fatalities and injuring more than 12,000
people. According to CIRC, about 295 claim cases were reported while the claim
payment amounted to CNY10.02m at 21 April 2013.
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