Ping An Insurance Posts Modest Results

Ping An Insurance Group Co., China’s second-largest insurer by premium income, reported a modest increase of first-half net profit on Thursday, as robust premium growth was largely offset by higher claim payouts and expenses.

Ping An Insurance — whose core businesses are life and property insurance and has expanded into traditional banking, online lending and securities broking — is among the first batch of financial companies to report first-half earnings. Its bigger rival, China Life Insurance, is due to report on Aug. 25, while major banking conglomerates such as Industrial & Commercial Bank of China, China Construction Bank and Bank of China will be reporting their results on Aug. 31.

Net profit rose 6.5% to 43.43 billion yuan ($6.49 billion) in the six months ended June 30, up from 40.78 billion yuan a year earlier, Ping An said in a statement.

New business value, a closely watched metric that measures future profitability of new policies, surged 46.2% to 38.6 billion yuan in the first half. Premium income rose 32.9% to 341.4 billion yuan during the reporting period, the company said.

Interim dividend per share jumped 150% to 0.5 yuan from 0.2 yuan a year earlier.

As of the end of June, the embedded value of the company, a measure to assess life insurers’ economic worth, rose to 739.14 billion yuan, up 16% from 637.70 billion yuan from the end of December 2016.

“As insurance products become increasingly consumption-oriented, demand for insurance is growing due to preferential industry policies, an aging population, and rising personal income,” Ping An Chairman Ma Mingzhe said in the statement.

However, during the first half, claim payouts also jumped 36% to 241.5 billion yuan, while commissions and expenses for agents surged 49% to 57.80 billion yuan, the statement added. During the first half, Ping An had 19% more sales agents than at the same time last year.

Chinese life insurers earned 1.79 trillion yuan of new premiums combined during the first half of this year, up 25.98% from a year ago, according to the China Insurance Regulatory Commission (CIRC). Meanwhile, property and casualty insurers signed 527.6 billion yuan of new premiums during the first six months of this year, up 14% year-on-year.

Ping An said its total investment income — including interest income from deposits and bonds, dividend income from equity investments, and rents from investment properties — grew 55.8% in the first six months from a year earlier to 53.1 billion yuan.

The annualized net investment yield was 4.9%, down 0.8 percentage points, largely due to lower dividend income from equity investment.

As of the end of June, outstanding investment held by Chinese insurers totaled 14.5 trillion yuan combined, up 8.28% from the beginning of 2017, the regulator said earlier. The growth in value was in part due to higher valuation of blue-chip stocks.

Lufax Holding, one of Ping An’s affiliates that focuses on internet finance, reported a 65% increase in the trading volume of wealth management in the first half.

Lufax was given a green light on July 17to launch China’s first offshore wealth management platform by the Monetary Authority of Singapore, offering online services to retail investors with offshore assets from the third quarter.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)