China’s Ping An Insurance Boosts Q3 Profit Through Investment and Banking Income Gains

Ping An Insurance (Group) Co., China’s largest insurer by market value, said third-quarter profit jumped 50 percent thanks to higher investment returns and banking income.

• Net income rose to 31.9 billion yuan ($4.5 billion) in the three months ended Sept. 30 from 21.3 billion yuan, the Shenzhen-based company said in a filing Thursday.
• Operating profit, which Ping An says better reflects performance because it strips out short-term investment volatility and one-off items, increased 22% in the first nine months. The gauge rose 16.3% in the third quarter, based on Bloomberg calculations.

Key Insights

• New business value — a gauge of the profitability of new life policies — grew 4.5% in the first nine months, slowing from 4.7% in the first half while the margin expanded. Ping An has been focusing more on selling high-value products to widen margins.
• Technology businesses contributed 3.9% of operating profit in the January-September period, down from 6.3% a year earlier. Spending on technology and R&D is a key part of Ping An’s strategy as it seeks to move away from being a traditional insurance and financial company. It plans to use technology to engage more with existing customers, and recruit new ones.
• Investment income jumped 40% for the quarter. Ping An’s investment performance “exceeded expectations and seems to be ahead of the market,” helping to bolster growth in net income, said Steven Lam, Hong Kong-based analyst with Bloomberg Intelligence.
• The combined ratio of the property and casualty insurance fell to 96.2% in the nine months from the first half, despite Typhoon Lekima in eastern China in the third quarter, showing “resilient” underwriting profitability, Lam said.
• Ping An acquired 9.6 million new customers in the quarter, versus 9.1 million the quarter ended June, based on Bloomberg calculations, as its cross-selling efforts begin to bear more fruit.
• Ping An shares rose 0.7% in Hong Kong trading Thursday to HK$94.55 before the results were released after market close. The stock has gained 37% this year.