SHANGHAI/HONG KONG : Ping An Insurance Group Co of China Ltd <601318.SS, the country's largest insurer, on Friday reported its biggest annual profit fall since 2008 as the country's property market soured, but said it expected such investment losses to ease in future.
Ping An said net profit fell 29per cent to 101.6 billion yuan ($16 billion）in 2021, down from 143.1 billion yuan the previous year, as it recorded impairment losses totalling 43.2 billion yuan linked to investments in troubled China Fortune Land Development.
The insurance group has been shaken in recent quarters by growing concerns about its investments in the highly indebted property sector, which has been hit by a string of developer defaults, credit rating downgrades and slump in shares and bonds.
"I think we've taken very conservative estimates of the impairment so I don't expect this to materially impact us going forward," Jessica Tan, the group's co-CEO told Reuters on Friday.
Tan added the company monitors on "continuous and forward-looking basis" its real estate exposure, and "so far has not come across any significant alerts" that would prompt further write-offs in China Fortune or other real estate investments.
Ping An's property investments, as of end December, stood at 216 billion yuan, or 5.5per cent of its total insurance investment assets.
Ping An said it had a total exposure of 54 billion yuan to China Fortune last year. Some analysts cautioned that the total property exposure of Ping An is much higher and still underestimated by the market.
Hong Kong-listed shares of Ping An, however, rose more than 4per cent on Friday with brokerages Citi and Nomura maintaining "buy" rating on the insurer.
Premium income from life insurance fell 4.1per cent year-on-year to 490.3 billion yuan, while property and casualty insurance premium income fell 5.5per cent to 270 billion yuan.
Tan expected a resurgence of COVID-19 cases in China to have a short-term impact on premium income, but she added that Chinese consumers now have more experience in coping with lockdowns.
Ping An said in a filing that, besides the pandemic, another factor for drop in premium income was a fall in the number of Ping An sales agents, which also resulted in new business value of life and health insurance falling 23.6per cent to 37.9 billion yuan.
Its army of insurance agents, once the jewel in Ping An's crown, is set to shrink further, putting more pressure on sales.
"In 2022, the number of agents may still fall quite a lot compared to the year before," Huatai Securities said in a note published this month, adding that this "can only have an impact on the growth of new insurance policies".
(Reporting by Engen Tham, Zhang Yan and Selena Li; Editing by Alexander Smith, Sumeet Chatterjee, and Kim Coghill)