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Ping An's 2006 profit almost doubles on investments

(Bloomberg)
Updated: 2007-04-12 10:44

Ping An Insurance(Group) Co., China's second-biggest insurer, said its 2006 net income almost doubled because of investment gains in the country's stock market.

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Profit jumped to 7.84 billion yuan ($1.01 billion) from 4.23 billion yuan in 2005, based on international accounting standards, the insurer said inHong KongStock Exchange statement today. Using Chinese accounting rules, Ping An's 2006 profit rose 80 percent to 5.98 billion yuan, the insurer said in a separate statement through theShanghaiexchange.

Life insurance premiums rose 17 percent last year at Ping An, giving the firm more money to buy equities, which paid off when Shanghai's key stock index more than doubled in the strongest rally in at least a decade. Investment gains may shield insurers from a 2007 decline in premium income as more people take money out of insurance policies to put into stocks.

"Investment gains have driven Ping An's earnings," said Bill Stacey, a Hong Kong-based analyst at Credit Suisse. "Ping An should weather the industry's slowdown better than its rivals since it offers more sophisticated, attractive products."

Ping An's 2006 investments income more than doubled to 21.9 billion yuan, from 9.7 billion in 2005. The annual total investment yield, which includes dividends, coupon income, realized and unrealized capital gains, rose to 8.3 percent from 4.3 percent, buoyed by higher returns from equities and mutual funds, Ping An said.