China Life now eyes US$3bil IPO

Beijing: China Life Insurance Co, the country's biggest life insurer, will seek as much as US$3bil in an initial share sale, 50% more than earlier planned, as it competes to be the first Chinese insurer to go public overseas. 

The state-owned company, which controls more than three-fifths of China's life insurance market, will announce details of the sale today with advisers China International Capital Corp, Citigroup Inc, Credit Suisse First Boston and Deutsche Bank AG, its president Wang Xianzhang said in an interview here. 

“We had initially planned to raise about US$2bil from our share sale in Hong Kong,'' Wang said. “Our profit has been so good last year and in the first half this year that our advisers are encouraging us to revise our target.'' 

China Life, Ping An Insurance Co, and rival insurers are seeking funding as they step up to replace the government in providing health and welfare coverage for the country's 1.3 billion people. China's insurance market expanded by about a third in each of the past three years, with premium income rising 45% last year to 305.3 billion yuan (US$37bil), or 234 yuan per person. 

China Life had a “genuine need” to raise capital, said Andrew Salton, who manages US$2.5bil of investments at Standard Life Investment Ltd in Hong Kong.  

“Insurance businesses in their early stages are hungry for cash, and they have good long-term potential,'' he said. 

More fees from an increased sale would also be a boon for underwriters Credit Suisse, Deutsche Bank and Citigroup, after global equity sales fell 50% in the first half from the same period last year, according to Bloomberg data. Equity sales for the first half from Asia excluding Japan and Australia are also half that of 2002. 

China Life, which accounts for about half the country's total insurance assets, will sell stock in a new unit that holds all its insurance policies sold since 1999. The unit was formed as part of a reorganisation announced in May for improving the quality of the assets on China Life's books. 

China Life's profit increased 8% last year to 815 million yuan as more people bought more policies from the company, which employs 65,232 people. It posted 128.7 billion yuan of premium income last year, and had 300 billion yuan of assets. – Bloomberg  

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