POA Positioning for Recovery – Meeting takeaways
Salient Points in Management Presentation:
- Quality of auto insurance business continues to improve. Management believes the impact from multi-year comprehensive auto insurance pricing reform is alleviating, with new market discipline and business model established. PICC P&C has targeted for 98% COR in FY21 for auto insurance business and target for 97% COR in FY22F, suggesting a continuous improvement in its underlying book quality.
- Beneficiary of the vehicle purchase tax exemption policy. Management indicated its auto insurance renewal business has continued to improve, as it benefit from the enhanced client management efficiency from its auto insurance renewal team. On auto insurance new car business, the recently announced vehicle purchase tax exemption policy on value less than Rmb300k new cars (2000 cc and below) is expected to boost the overall auto insurance premium market by Rmb8bn, or 1% of the market.
- Non-auto insurance refocuses on quality growth. PICC P&C suffered underwriting losses in 5 non-auto subsectors in FY21. This year, the insurer is refocusing on marginal profit contribution of its non-auto sector business by optimizing the pricing model, enhancing the claim efficiency and via better cost management. The insurer expects to improve the combined ratio of each of non-auto subsectors to less than 100%, except for liability insurance where it may suffered from the legacy book written from 4Q21.