Insurer sees 89% plunge in net profit

By Winny Wang | April 28, 2009, Tuesday |

Print Edition

CHINA Pacific Insurance Group's net profit plunged 88.8 percent in the first quarter of this year due to a drop in premiums and lower investment income.

Its net profit fell to 200 million yuan (US$29 million), or 0.03 yuan a share, in the quarter and its revenue dropped 16 percent to 28 billion yuan, it said in a statement to the Shanghai Stock Exchange yesterday.

"Its performance is worse than expected because of its lower investment income and fall in premiums," said Peng Yulong, an analyst at Guotai Jun'an Securities Co.

The country's third-largest insurer earned 24.7 billion yuan in net premiums in the quarter, a decline of 8.4 percent and its investment income dropped 53 percent to 3.27 billion yuan.

Tong Chengdun, an analyst at Ping An Securities Co, lowered his forecast of the insurer's earnings for this year to 1.58 billion yuan, or 0.20 yuan per share.

The company cut its equity holdings, including stocks and securities funds, by 80 percent last year to 13.6 billion yuan when the key Shanghai Composite Index fell 65 percent.

Analysts expect Chinese insurers' earnings to improve this year as the stock market rebounds, fueled partly by hopes that government stimulus spending will spur an early economic recovery.

Finance

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Insurer sees 89% plunge in net profit

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