Chinese insurance giant Ping An’s profit falls to 5-year low amid weakness in asset management, technology businesses

Ping An Insurance (Group), China’s largest insurer by market capitalization, said its profits for 2023 fell to their lowest level in five years as strong sales of new policies were offset by setbacks in asset management and technology investment businesses.

Its net profit fell 23 percent year-on-year to 85.67 billion yuan ($11.9 billion), according to a stock exchange filing after the market closed in Hong Kong on Thursday. These are Ping An’s lowest earnings in five years, according to revised benchmark data provided by the insurer, which has adopted new accounting standards.

Operating profit, which excludes one-off items and valuation changes in its investment portfolio, stood at 117.98 billion yuan, or 6.66 yuan per share, down 20 percent from a year earlier. Operating profit is also Ping An’s lowest in five years.

“Looking ahead to 2024, we will pursue high-quality development despite challenges and difficulties,” chairman Peter Ma Mingzhe said in the exchange’s filing.

“We strongly believe that the favorable conditions for China’s development outweigh the unfavorable factors and the long-term core growth trend of the Chinese economy has not changed,” he said, adding that Ping An will continue to develop its three core businesses: insurance , technology and health care.

A sidewalk advertisement for Ping An insurance products in Yichang, a city in central China’s Hubei province. Photo: Reuters
Mainland Chinese life insurers have benefited from lower domestic interest rates, which increased the appeal of investment-linked insurance products that offer higher potential returns than term deposits. Chinese state-controlled banks cut deposit rates three times last year to help revive a faltering economy.

Ping An’s core insurance business remained strong, but was offset by losses in asset management and a weak technology business.

The value of its new life and health insurance business on a like-for-like basis, a key measure of sales and future growth, rose 36 percent to 39.26 billion yuan.

This growth was driven by strong sales of savings products, as its agents became more active in meeting customers after the Covid-19 movement restrictions were lifted.

On the downside, the Shenzhen-based firm said its asset management business suffered a net loss of 19.52 billion yuan last year, against a profit of 3.8 billion yuan in 2022. Meanwhile, operating profit from its technology fell 56 percent to 2.98 billion yuan.

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“Ping An’s core insurance business remains solid, but its investment and asset management businesses were hit hard by the weak performance of mainland stock markets,” said Tom Chan Pak-lam, permanent honorary president of the Traders Institute. of Securities.

Chan remains positive about the outlook for the insurer. “Ping An has a diversified business model with a wide range of businesses in insurance, banking, fintech and healthcare,” he said.

“Its performance last year may have been affected by the stock market slump, but it will be able to bounce back this year as mainland investment markets have improved thanks to government policies.”

“We strongly believe that the favorable conditions for China’s development outweigh the unfavorable factors,” says Peter Ma Mingzhe of Ping An. Photo: Nora Tam

Ping An had made the right move by developing its healthcare services, Chan added. “China has an aging population, so the demand for healthcare and elderly care services will be huge, which will become its new growth engine,” he said.

Ping An’s gross premium income from life and health insurance business rose 5.8 percent last year to 498 billion yuan, while revenue from the property and casualty insurance unit rose 1.4 percent to 302.2 billion yuan, according to previous stock market filings. Revenues were flat at the first two months of this year.

Ping An said its property and casualty business posted a 6.5 percent rise in revenue to 313.46 billion yuan, but suffered an 11 percent drop in profit to 8.96 billion yuan. Its banking arm posted a 2 percent profit to 46.46 billion yuan.

Ping An’s share price rose 2 percent to HK$35.5 on Thursday. The stock, which carries a roughly 2.24 percent weighting in the city’s benchmark index, is up 0.4 percent year-to-date. The Hang Seng index, by comparison, has fallen 1 percent over the same period.

The firm will pay a final dividend of 1.5 yuan per share, bringing the total payout for the 2023 financial year to 2.43 yuan, up from 2.42 yuan per share in 2022.

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