Ping An Q3 Profit Jumps 50% on Higher Investment Returns, Bank Income

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Ping An Insurance (Group) Co., China’s largest insurer by market value, said third-quarter profit jumped 50% thanks to higher investment returns and banking income.

Net income rose to 31.9 billion yuan ($4.5 billion) in the three months ended Sept. 30 from 21.3 billion yuan, the Shenzhen-based company said in a filing Thursday.
Operating profit, which Ping An says better reflects performance because it strips out short-term investment volatility and one-off items, increased 22% in the first nine months. The gauge rose 16.3% in the third quarter, based on Bloomberg calculations.

Key Insights

New business value — a gauge of the profitability of new life policies — grew 4.5% in the first nine months, slowing from 4.7% in the first half while the margin expanded. Ping An has been focusing more on selling high-value products to widen margins.
Technology businesses contributed 3.9% of operating profit in the January-September period, down from 6.3% a year earlier. Spending on technology and R&D is a key part of Ping An’s strategy as it seeks to move away from being a traditional insurance and financial company. It plans to use technology to engage more with existing customers, and recruit new ones.

Investment income jumped 40% for the quarter. Ping An’s investment performance “exceeded expectations and seems to be ahead of the market,” helping to bolster growth in net income, said Steven Lam, Hong Kong-based analyst with Bloomberg Intelligence.
The combined ratio of the property and casualty insurance fell to 96.2% in the nine months from the first half, despite Typhoon Lekima in eastern China in the third quarter, showing “resilient” underwriting profitability, Lam said.
Ping An acquired 9.6 million new customers in the quarter, versus 9.1 million the quarter ended June, based on Bloomberg calculations, as its cross-selling efforts begin to bear more fruit.

Market Reaction

Ping An shares rose 0.7% in Hong Kong trading Thursday to HK$94.55 before the results were released after market close. The stock has gained 37% this year.

Photograph: A pedestrian walks past a branch of Piegan Bank in Shanghai, China, on Saturday, Aug. 13, 2017. Photographer: Qilai Shen/Bloomberg