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Fortis' stake creates loss for Ping An
By Samuel Shen |
April 9, 2009, Thursday
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Print Edition
Print Edition
PING An Insurance (Group) Co of China, the world's second-biggest insurer by market value, posted a second straight quarterly loss, hit by its investment in troubled European financial group Fortis.
Many analysts, however, expect Ping An's prospects to improve in the next few years as the domestic stock market stabilizes and demand for insurance services in China remains strong.
Ping An posted a 1.34-billion-yuan (US$196 million) loss for the October-December period, following its third-quarter loss of 7.88 billion yuan, Ping An said in an exchange filing in Hong Kong. That compares with a 3.72-billion-yuan fourth-quarter profit a year earlier.
For the full year, Ping An's profit slumped 99 percent to 268 million yuan, after taking a combined 22.79-billion-yuan impairment loss on its 5-percent stake in Fortis. That contrasts with a 138-percent jump in Ping An's 2007 profit.
"The worst days for insurers are over, and their main risks have been exposed," said Zhang Xi, an analyst at Galaxy Securities Co. "Ping An and other insurers will benefit from a stabilizing stock market this year and wider investment channels."
China has let insurers, including Ping An and bigger rival China Life invest in infrastructure projects in a pilot scheme. The government has issued new rules to allow insurers to invest in corporate bonds without bank guarantees and smaller players to trade stocks directly.
Despite sharp falls in net profit, "the company remains fundamentally sound, with our core businesses growing steadily and healthily, and we maintain a solid financial position," Ping An said in yesterday's statement.
Ping An's solvency ratio is above 300 percent and the capital adequacy ratio of its banking unit is above 10 percent, paving the way for long-term stable development, the company said.
Ping An shares fell 4.42 percent in Hong Kong yesterday ahead of its earnings. The stock has gained 29 percent this year, while the Hang Seng Index was flat. Chairman Peter Ma has ambitions to develop the insurer into a financial conglomerate.
Many analysts, however, expect Ping An's prospects to improve in the next few years as the domestic stock market stabilizes and demand for insurance services in China remains strong.
Ping An posted a 1.34-billion-yuan (US$196 million) loss for the October-December period, following its third-quarter loss of 7.88 billion yuan, Ping An said in an exchange filing in Hong Kong. That compares with a 3.72-billion-yuan fourth-quarter profit a year earlier.
For the full year, Ping An's profit slumped 99 percent to 268 million yuan, after taking a combined 22.79-billion-yuan impairment loss on its 5-percent stake in Fortis. That contrasts with a 138-percent jump in Ping An's 2007 profit.
"The worst days for insurers are over, and their main risks have been exposed," said Zhang Xi, an analyst at Galaxy Securities Co. "Ping An and other insurers will benefit from a stabilizing stock market this year and wider investment channels."
China has let insurers, including Ping An and bigger rival China Life invest in infrastructure projects in a pilot scheme. The government has issued new rules to allow insurers to invest in corporate bonds without bank guarantees and smaller players to trade stocks directly.
Despite sharp falls in net profit, "the company remains fundamentally sound, with our core businesses growing steadily and healthily, and we maintain a solid financial position," Ping An said in yesterday's statement.
Ping An's solvency ratio is above 300 percent and the capital adequacy ratio of its banking unit is above 10 percent, paving the way for long-term stable development, the company said.
Ping An shares fell 4.42 percent in Hong Kong yesterday ahead of its earnings. The stock has gained 29 percent this year, while the Hang Seng Index was flat. Chairman Peter Ma has ambitions to develop the insurer into a financial conglomerate.
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