Ping An Insurance Profit Rises on Investments, Banking Income

August 29, 2013

Ping An Insurance (Group) Co., China’s second-largest insurer, said first-half profit rose 28.3 percent as investment income expanded and earnings from banking operations grew.

Net income climbed to 17.91 billion yuan ($2.93 billion), or 2.26 yuan a share, from 13.96 billion yuan, or 1.76 yuan a share, a year earlier, the Shenzhen-based company said in a statement to the Shanghai stock exchange today.

Ping An joins peers including China Life Insurance Co. in improving investment returns from a bull run in the benchmark Shanghai Composite Index early this year. An 11.4 percent profit increase at its banking unit amid the nation’s economic slowdown also helped China’s most diversified major insurer bolster earnings.

“Ping An’s profit should increase from the relatively low basis a year earlier, benefiting mainly from higher investment returns and banking profit,” Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd., said before the results. “The second half should also see a profit increase year on year although underwriting profitability in the non-life business faces quite some pressure.”

Investment Income almost doubled to 26.44 billion yuan, Ping An said. Net investment income, mainly comprised of interest and dividends, rose 24 percent to 25.97 billion yuan. Impairment losses from investments, which more than doubled last year, narrowed by 73 percent to 1.05 billion yuan in the first half, according to the statement.

Bull Market

After falling about 20 percent in the past two years, the Shanghai Composite entered a bull market on Jan. 29, surging 20 percent from a December low. The gauge tumbled 13 percent in the first half as the nation’s economic expansion slowed, and has rallied 5.1 percent since June 30.

China Life Insurance Co., the nation’s largest insurer, said yesterday profit jumped 68 percent in the first half as investment income rose and impairment losses dropped. China Pacific Insurance (Group) Co., the third-largest, said net income more than doubled after impairments from investments dropped 80 percent.

Ping An Bank Co., a unit, said Aug. 22 that profit rose to 7.5 billion yuan in the first half as loan margins improved and non-interest income jumped 41 percent.

New business value, which measures the profitability of new life policies sold, increased 14.2 percent, according to the statement.

The combined ratio of Ping An’s non-life insurance unit, used to measure claims and expenses as a percentage of premiums earned, was 95.5 percent, according to the statement. Bigger PICC Property & Casualty Co. on Aug. 26 reported a 1.2 percentage point increase in the gauge to 93.6 percent as competition intensified.

The solvency margin, which gauges an insurer’s ability to settle claims, was 162.7 percent, Ping An said.

The stock rose 1.2 percent to HK$53.85 in Hong Kong, trimming this year’s decline to 17 percent.

Zhang Dingmin and Feifei Shen. Editor: Tomoko Yamazaki

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