(Bloomberg) — Ping An Insurance (Group) Co., China’s largest insurer by market value, posted a 31% drop in third-quarter profit as stock-market declines weighed on investment returns and slower economic growth sapped premium income.
Net income dropped to 23.6 billion yuan ($3.7 billion) in the three months ended Sept. 30, from 34.4 billion yuan a year earlier, the Shenzhen-based company said Wednesday. That compares with a 16% decline in first-half profit.
Operating profit, which Ping An says better reflects performance because it strips out short-term volatility, rose 9.2% in the first nine months of the year, in line with a 10% first-half gain.
Ping An’s shares trading in China have slumped 40% this year, weighed down by investor concerns about property investments and the performance of its backbone life business. The company is turning to technology to bolster the productivity of its shrinking sales force at a time when demand for policies is weakening.
Impairments on its exposure to China Fortune Land Development Co., which became the first local developer to default since Beijing tightened controls on the sector last year, erased 20.8 billion yuan in profit in the first half, although management has said the situation is more likely to improve than worsen.
Nine-month net income decreased 21% from a year earlier, mainly because of impairment provisions related to China Fortune Land, the insurer said, adding that it made no major adjustment tied to the developer in the third quarter.
The benchmark Shanghai Shenzhen CSI 300 Index dropped 7% in the third quarter, erasing a 0.2% gain in the first half of the year.
New business value, which gauges the profitability of new life policies, fell 18% for the nine months, widening from a 12% decline in the first half. The firm is trying to boost long-term growth prospects by concentrating on higher-value products and reducing less-productive agents.
©2021 Bloomberg L.P.
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