Anti-epidemic insurance downgrade expectations fell through, CITIC Financial’s emergency re-evaluation of the diagnosis model is bound to impact February profits (provided by the industry)

[Reporter Li Lianghui/Taipei Report] The Epidemic Prevention Command Center stated a few days ago that Taiwan’s COVID-19 should be downgraded in May and June this year. Due to the huge gap with the original model for the estimated amount of general compensation, CITIC Financial (2891) has urgently restarted It is estimated that Sun’s China Trust Property & Casualty Insurance’s diagnosis model will have a real impact on the self-accounted profit in February. The preliminary assessment will be “not a negligible small number”. The general compensation estimate may exceed 20 billion yuan, which is bound to impact Financial Holdings made an overall profit in February.

The property insurance industry originally expected that after the Lunar New Year, the epidemic prevention command center could downgrade COVID-19, which is currently defined as a "fifth statutory infectious disease". Note, but the Epidemic Prevention Command Center recently stated that from April to June, it is considering reducing the new crown epidemic from the fifth category of legal infectious disease to the fourth category, which may delay the actual downgrading time to May and June this year.

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Since the epidemic broke out again last year, and Sun Company China Trust Property & Casualty Insurance ranked among the top 6 anti-epidemic insurance policy operators, CITIC Financial has continuously conducted sensitivity tests on the development of the epidemic internally. CITIC Financial is based on the national diagnosis rate, estimated policyholder claim settlement rate and other figures , to evaluate the progress of reserve funds and capital increase.

By the end of last year (2022), CITIC had paid 14.1 billion yuan in compensation. At the same time, it is estimated that by the expiration date of the policy, the total diagnosis rate will increase to 63%, and the amount to be paid is estimated to reach 19 billion yuan.

However, CITIC Financial Chief Financial Officer Xu Minqing pointed out that the estimate at the end of last year was based on the premise that the command center could "downgrade" COVID-19 after the Lunar New Year. There is still "a small compensation" for the reduction of claims, but according to the conversation of the command center a few days ago, it is believed that there is no intention to downgrade in advance in recent days. Therefore, CITIC Financial has initiated the revaluation of claims internally, and estimated the total amount of claims on the premise of "no downgrade". , and recognized losses in February, reflected in the self-accounted profit figures for February.

Originally among the top 6 anti-epidemic insurance companies, the policy of China Trust Property & Casualty Insurance was the one that benefited the most from the downgrade of the epidemic, because the amount of claims could be greatly reduced by 95%, leaving only 5%.

That is to say, an insurance policy that originally pays 60,000 yuan, if it is downgraded to level 4, only needs to pay 3,000 yuan in compensation, but if the downgrade factor is excluded, the estimated number of claims, that is, the amount of claims must be "added back" 95%, the number may be quite staggering.

However, Xu Minqing emphasized that the estimation of the general compensation needs to be matched with the future national diagnosis rate at the same time. If the number of daily confirmed cases continues to decline, the impact on claims will also be reduced. The actuarial department still needs to adjust the estimation model as a whole. , have definite numbers.

CITIC Finance announced on the 7th that it will have a self-contained surplus in January 2023. The after-tax surplus in January was 2.511 billion yuan, a decrease of more than 60% from the 6.685 billion yuan in the same period last year, and EPS0.13 yuan.

In January, the epidemic prevention insurance paid 3.7 billion yuan, and the cumulative claim amount was 17.8 billion yuan, and the claim settlement rate has reached 58%.

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