Ping An profit falls 995 after Fortis impairment

By Chris Oliver, MarketWatch

Last update: 8:34 a.m. EDT April 8, 2009

HONG KONG (MarketWatch) -- Ping An Insurance reported Wednesday that its 2008 net income fell 99%, owing mainly to a 22.79 billion yuan ($3.32 billion) impairment loss on the value of its investment in Fortis.

Ping An (HK:2318: news , chart , profile ) , China's second-largest insurer by market value, reported net income of 268 million yuan, compared to 18.69 billion yuan in the prior year.

The value of Fortis' shares have fallen more than 90% since Ping An first purchased a stake in October 2007.

Ping An paid 23.87 billion yuan, in a series of investments, eventually becoming the largest shareholder in the Belgian/Dutch group. Since then, Fortis has sold off its banking divisions as part of a government rescue deal. Ping An is 16.8%-held by HSBC Holdings PLC (HK:5: news , chart , profile )

Ping An said it managed to offset part of its investment losses by growing its premium income to more than 100 billion yuan.

The insurer said it had 47 million customers at the end of 2008 and that it was able to leverage its client relationship to boost sales of other services and products.

It said just over half of new credit cards issued were as a result of cross-selling to its existing client base. About 14.3% of premium income from its property and casualty business and about 14.9% of new assets in its pension fund business were a result of promoting new services to existing clients, it said.

Chinalife conservative in 2009 investment strategy

By Xie Heng and Sui-Lee Wee

BEIJING/HONG KONG, March 26 (Reuters) - China Life Insurance Co <2628.HK>, the world's top life insurer by market value, said on Thursday it will be conservative in its investment strategy this year, after seeing its 2008 profit plunge during the global market turmoil.

China Life <601628.SS> said it will invest mostly in fixed income products this year, while taking a conservative stance toward equities, according to a written announcement handed out at a briefing to discuss its 2008 results.

Fixed income products include bonds and certificates of deposits, and are typically less volatile but offer lower rates of return over the long term compared with stocks.

Many insurance companies posted major losses from their stock investments over the last year, as major global stock markets lost about half of their value from their 2008 highs during the global financial crisis. On Wednesday, China Life posted a 42 percent drop in fourth-quarter net profit on a slump in the stock market and a large number of claims due to disasters. For a story on the company's results, click: [ID:nSHA339058].

China Life also said it will actively seek overseas acquisition and investment opportunities this year, but will take a proactive and prudent approach to such purchases. Alex Tang, research director with Core Pacific-Yamaichi International, called the company's broader investment strategy too conservative.

"As a major Chinese company with strong financial backing, it should take the opportunity and to take a more aggressive approach in looking for M&A opportunities in a bear market," he said. "The company should put more effort in reviewing its investment strategy and should put more effort in identifying market trends."

China Life and smaller rival China Ping An Insurance (Group) Co <2318.HK><601318.SS> suffered from a collapse in investment returns last year as the country's benchmark Shanghai Composite Index <.SSEC> tumbled nearly 70 percent.

Chinese stocks have rebounded 24 percent this year, fuelled by the government's 4 trillion yuan ($585.6 billion) stimulus plan, monetary easing policies and signs of an economic recovery.

However, China Life and other domestic insurers face pressure on their bond investments, after China's five rate cuts in the second half of last year pushed down fixed-income yields, analysts have said.

Combined insurance premiums at China's big three life insurers in February continued to grow, but at a slower pace compared with the previous month, the official Shanghai Securities News reported on March 10.

Total premiums at China Life Insurance <601628.SS>, the life insurance arm of Ping An Insurance (Group) Co and China Pacific Insurance (Group) Co <601601.SS> rose 5 percent on the year to 46.7 billion yuan ($6.8 billion), the paper quoted unnamed sources as saying.

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