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Chinese insurers flag profit drop; Aviva to sell part of Hong Kong unit

S&P Global Market Intelligence offers our top picks of insurance news stories and more published throughout the week. Please note that some entries may have links to third-party sources that may require a subscription.

Chinese insurers expect drop in profit

* New China Life Insurance Co. Ltd. expects its 2016 full-year net profit attributable to shareholders to decline by about 45% year over year, partly due to a significant decline in investment income.

* China Life Insurance Co. Ltd. expects up to a 50% drop in full-year 2016 net profit. The company said net profit attributable to its equity holders for 2016 is estimated to decline between 40% and 50%, from 34.70 billion yuan in 2015.

* China Taiping Insurance Holdings Co. Ltd. expects to report an approximately 25% decline in its net profit attributable to shareholders for full-year 2016. The company said the decrease was primarily due to relatively higher realized gains from the group's equity investments during 2015.

Foreign reinsurers get nod to set up shop in India

* Swiss Re Ltd. and XL Catlin received permission from India's Insurance Regulatory and Development Authority, or IRDAI, to set up branches in Mumbai. Swiss Re's branch will open Feb. 1 and will be known as Swiss Reinsurance Co. Ltd., India branch, while XL Catlin's operation in the country will be a branch office of XL Insurance Co. SE.

* Lloyd's of London received final approval from IRDAI to set up a reinsurance branch in the country. The U.K.-based business will open a branch in India in time for renewals of reinsurance deals in April.

M&A updates

* U.K.-based Aviva Plc agreed to sell 40% and 20% of its Hong Kong insurance subsidiary, respectively, to Chinese hedge fund Hillhouse Capital Group Holdings Ltd. and tech giant Tencent Holdings Ltd. The agreement is aimed at developing AVIVA Life Insurance Co. Ltd.'s digital insurance business.

* Prudential Plc, AIA Group Ltd. and Manulife Financial Corp. are said to be among the parties interested in bid for Siam Commercial Bank PCL's insurance unit. Initial bids are expected to be submitted in early February.

* Fairfax Financial Holdings Ltd. is said to be in early talks to sell a 25% stake in its India-based joint venture ICICI Lombard General Insurance Co. Ltd. for up to US$1 billion. Fairfax owns a 35% stake in ICICI Lombard.

* Sundaram Finance Ltd. said it would not proceed with the proposed merger of Sundaram Insurance Broking Services Ltd. and LGF Services Ltd.

Ratings actions

* A.M. Best has revised the outlooks to stable from positive, and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of New India Assurance Co. Ltd. (New India) (India).

* A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" of Nippon Life Insurance Co. of America (NLB) (Des Moines, Iowa, USA). Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of "aa-" of its parent, Nippon Life Insurance Co. (Nissay) (Japan).

* Fitch Ratings affirmed Pacific & Orient Insurance Co. Bhd.'s insurer financial strength rating at BBB+, with a stable outlook.

* Moody's Japan K.K. raised the outlook on Tokio Marine & Nichido Fire Insurance Co. Ltd.'s rating to stable from negative and affirmed the insurer's rating.

In other news

* The China Insurance Regulatory Commission issued new stricter regulation on insurers' investments in equities as part of its efforts to control risks.

* Nippon Life Insurance will venture into overseas project finance investments in the fiscal year starting April as it accelerates its shift into nontraditional investment routes.

* AMP Ltd. said it closed its venture capital arm to focus on improving its overall performance after booking about US$1 billion in impairment and one-off charges for the fiscal year ending June 30.

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