AIG in long-term commitment to China’s PICC -PICC chief

* AIG committed to its PICC holdings, PICC says

* PICC could issue subordinate debt to boost solvency ratio

HONG KONG, April 15 (BestGrowthStock) – AIG (AIG.N: ) remains a
long-term investor in China’s top non-life insurer PICC
(2328.HK: ), the Chinese insurer said on Thursday, even as the
embattled U.S. firm unwinds its holdings in other assets to
repay the U.S. government.

“The response from AIG is that they are committed to holding
our shares, and I hope the two sides will continue to maintain a
good relationship,” Chief Executive Officer Wang Yincheng told
reporters at a news conference to discuss PICC’s 2009 results.

AIG is PICC’s single-largest shareholder, owning almost a
third of the company whose total market capitalisation is nearly
HK$88 billion ($11.3 billion), according to Thomson Reuters
data.

The U.S. insurer has been under pressure to sell off
non-core assets to repay the $182 billion bailout it received
from the U.S. government during the height of the financial
crisis.

PICC on Wednesday reported earnings that exceeded market
expectations, helped by strong premium growth and an accounting
rule change. [ID:nHKF002313]

The company said it may also issue subordinate debt to shore
up its solvency ratio, hitting its shares in late morning trade.
At midday, PICC shares were down 3.55 percent, lagging a 0.4
percent advance on the benchmark Hang Seng Index (.HSI: ).

PICC’s solvency ratio fell to 111 percent in 2009 from 145
percent in 2008, giving it less leeway in making investment
decisions and raising the spectre of tighter regulatory
oversight.

“That is a direction which we are currently working
towards,” PICC’s Wang said, when asked if the company had any
plans to issue subordinate debt.

Chinese regulations allow insurers to invest in equities
only if they have a solvency ratio of above 150 percent. The
China Insurance Regulatory Commission can also ask insurers who
have a solvency ratio of between 100-150 percent to take steps
to avoid insolvency.

PICC shares are up 12 percent so far this year, beating the
flat performance on the big board.

Stock Market Analysis

(Reporting by Kelvin Soh and Clare Jim; Editing by Jacqueline
Wong)

AIG in long-term commitment to China’s PICC -PICC chief