Ping An says profit drops as pandemic deals blow to business

PING AN Insurance (Group), China's largest insurer by market value, said profit fell 24 per cent and warned that outbreaks of Covid in the world's second-biggest economy pose a threat to near-term growth.

Net income dropped to 20.7 billion yuan (S$4.3 billion) in the 3 months ended Mar 31, from 27.2 billion yuan a year earlier, the Shenzhen-based company said in a filing to the Hong Kong stock exchange on Friday (Apr 29).

"Sporadic Covid-19 breakouts will weigh on domestic economic recovery in the short run, posing challenges to Ping An's business growth," the company said.

China's economic slowdown has dented consumer confidence, weighing on the business of the nation's insurers just as lockdowns and rising cases of the virus hinder sales meetings. That adds to challenges for Ping An as it seeks to boost the productivity of its life insurance agents and move on from a troubled property investment which wiped out 24.3 billion yuan in profit last year.

Operating profit, which the company says better reflects performance by stripping out short-term investment volatility and one-time items, rose 10 per cent.

The firm joins insurers with business in China that are feeling the slowdown. Rival China Life Insurance reported a 47 per cent slump in profit for the period this week, while New China Life Insurance's net income also plunged and AIA Group reported a decline in new business value.

The firm booked 22.2 billion yuan in investment losses, reversing a 14.8 billion yuan gain a year earlier, according to the filing.

Widening credit spreads and significant declines in stock markets put Ping An's investment portfolio "under pressure," the company said.

New business value, which gauges the future profitability of new life policies sold, fell 34 per cent in the quarter. That compares to a 24 per cent decline last year.

Ping An rose 2.9 per cent to HK$51.40 in Hong Kong trading amid a broad market rally, trimming this year's loss to 8.5 per cent. BLOOMBERG