China Pacific Insurance to Launch $6 Bln IPO

SHANGHAI - China Pacific Insurance (Group) Co, the country's No. 3 life underwriter, will soon launch initial public equity offerings in Shanghai and Hong Kong, which analysts said could raise more than $6 billion.

The China Securities Regulatory Commission will review China Pacific Insurance's (CPIC) plan to issue local currency A shares for a listing in Shanghai on Monday, the regulator said in a statement posted on its Web site late on Thursday.

CPIC plans to issue 1 billion A shares, or 13 percent of its expanded share capital, for a listing on the Shanghai Stock Exchange, with proceeds to be used to supplement its capital base, the company said in a share issue prospectus.

It was not immediately clear when the company's H-share issue plan would be reviewed by Hong Kong regulators.

"CPIC has a relatively important role in China's sunrise insurance sector," said industry analyst Wang Xiaogang at Orient Securities. "Its IPO will be welcomed by the market, with a pricing reflecting its potential and leave leeway for gains in its listing debut."

Analysts forecast CPIC to price its Shanghai A shares at around 25 yuan each, allowing its domestic offer to raise 25 billion yuan ($3.4 billion) to become the mainland's eighth largest initial public equity offering.

CPIC said its H shares would be priced no less than its Shanghai shares. Based on analysts' forecasts for the Shanghai pricing, its Hong Kong sale could raise $3 billion and bring the total amount raised in its IPO to $6.4 billion.

CPIC recorded a net profit of 3.823 billion yuan in the first half of 2007, more than triple full-year earnings in 2006 and 2005, according to the prospectus.

The company had a 9.5 percent share of China's life insurance market and 11.6 percent of the country's property insurance market in the first half of this year. Life insurance accounted for 65 percent of its total premium income and property 35 percent.

CPIC predicted its net profit would reach 6.446 billion yuan for the full-year 2007, giving it per-share earnings of 0.84 yuan, jumping from 0.23 yuan in 2006 and 0.26 yuan in 2005.

Analysts forecast that Shanghai IPO price would give CPIC a price-to-earnings (PE) ratio of 30 times based on its 2007 forecast earnings, leaving room for a strong debut.

But Chinese analysts insist China's insurance industry has extremely strong potential because of low penetration in a country which has only begun to dismantle a cradle-to-grave welfare system.

By the end of 2006, China's per-capita life insurance premium was only $34, compared with $2,829 for Japan and $1,790 for the United States, CPIC quoted industry data as showing.
($1 = 7.39 Yuan)