Bloomberg News

New China Life Falls in Debut After Stock Priced Near Bottom

December 15, 2011

(Updates with closing share price in second paragraph.)

Dec. 15 (Bloomberg) -- New China Life Insurance Co., the nation’s third-largest life insurer, fell in its Hong Kong trading debut after selling stock near the bottom of a marketed range in its $1.9 billion initial share offering.

The stock dropped 9.8 percent to HK$25.70 at the close in Hong Kong. The Beijing-based company sold 358.4 million shares at HK$28.50 each in Hong Kong and 158.5 million shares at 23.25 yuan apiece in Shanghai, where it will start trading tomorrow. The benchmark Hang Seng Index declined 1.8 percent.

New China Life is raising more equity after its expansion in a market that has grown an average 30 percent a year during the past three decades brought its solvency ratio, a gauge of its ability to settle claims, below regulatory requirements. Chinese life insurers’ capital strength may weaken further as stocks declines amid an economic slowdown crimp profitability, Fitch Ratings said in an e-mailed report on Dec. 7.

“New China Life shares will likely remain flat in the near term given the weak market sentiment,” said Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd. “The company depends on bancassurance most among the big insurers, which is also a risk and may be part of the reason for its low valuation relative to China Life.”

Shares of China Life Insurance Co. and Ping An Insurance (Group) Co., the nation’s biggest insurance companies, have tumbled more than 30 percent this year. China’s benchmark Shanghai Composite Index and the Hang Seng retreated 22 percent.

--Bloomberg News, with assistance from Marco Lui in Hong Kong. Editors: Andreea Papuc, Linus Chua

To contact Bloomberg News staff for this story: Bloomberg News in Beijing at dzhang14@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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