Ping An 2318

[winston]

Ping An’s Chairman Ma Didn’t Take a Salary in 2008 (Update1) By Zhang Dingmin

Feb. 24 (Bloomberg) -- Ping An Insurance (Group) Co., China’s second-largest insurer, said Chief Executive Officer Peter Ma will forgo his salary for 2008 after the company lost $2.3 billion on its investment in Fortis.

Ma, who earned 66.16 million yuan ($9.7 million) in 2007, made the decision after the financial crisis “affected company performance,” Ping An’s Shenzhen-based spokesman Sheng Ruisheng said in a telephone interview today.

Ping An has forecast a “significant” drop in annual profit because of the decline in the value of its stake in Belgium’s Fortis, bailed out by three European governments last year. Ma, who earned 33 times more than his counterpart at larger China Life Insurance Co. in 2007, joins executives at companies from Citigroup Inc. to Sany Heavy Industry Co. who have taken pay cuts as the financial crisis erodes earnings.

“That was the company’s response to the public’s skepticism over its high compensation and management abilities” following the Fortis losses, said Olive Xia, an analyst at Core Pacific Yamaichi in Shanghai. “It can help restore investor confidence, but will have little effect on company profit.”

Ping An’s net income may have dropped by 30 percent from 2007 to 13 billion yuan last year, said Xia. The company, scheduled to release 2008 financial results April 10, has fallen 58 percent in Hong Kong trading since the start of last year.

Pay Cuts

Ma’s compensation compares with the 1.99 million yuan made by Yang Chao, chairman of China Life, the nation’s biggest insurer, in 2007, and 1.156 million yuan PICC Property & Casualty Co. paid Chairman Wu Yan for the same year.

Sheng declined to say whether Ma, 53, received the money and is returning it or didn’t get paid last year, as well as whether other Ping An senior executives or board members agreed to compensation cuts.

Ma, who has been with Ping An since 1988 when the company was set up and has been chairman since 1994, gave 20 million yuan from the 66.16 million yuan to Beijing-based charity China Soong Ching Ling Foundation, the company said. His income after tax and the donation was 25.794 million yuan.

Fortis Stake

Ping An in November 2007 paid 1.81 billion euros for a 4.9 percent stake in Fortis, which became a casualty of the global credit crunch after pouring 24.2 billion euros ($31 billion) into the acquisition of ABN Amro Holding NV assets in 2008 just as the U.S. subprime-mortgage market collapsed.

The Chinese insurer voted against a state-organized breakup of Fortis, once Belgium’s biggest financial services company, on Feb. 11, saying asset sales driven by the Belgian government “severely impaired” shareholders’ interests. Ping An reported a third-quarter loss after a 15.7 billion yuan impairment charge on the Fortis investment.

Ping An Chief Investment Officer John Pearce left the company two months ago.

[winston]

BTW, GS upgraded Ping An today and one of the measures was that it has an attractive New Business Multiple

[kennynah]

simi lai eh ???

New Business Multiple

[winston]

Ha Ha....New Business lah..

However, one never really value a Life Company based on New Business. That's because a traditional life policy may take up to 7 years to breakeven because of high upfront agency expenses. Thereafter, lapses and surrenders will emerge...

If a Life Company is doing alot of Bancassuance business, the margins a razor thin. In some cases, they may also lose money on those Bancassurance business...

Reminds me of when the Dot-Com companies were valued based on clicks or eye-balls etc..

A Life Company only has three sources of profit:-
1) actual mortality over assumed in the pricing
2) actual investment over assumed in pricing and
3) actual expenses over those assumed in pricing

[winston]

DJ MARKET TALK: Macq Tips Ping An As Top Asia Ex-Japan Insur Pick

1157 [Dow Jones] Macquarie says China insurance plays growth intact, valuations attractive, with year-to-date A-share market rise reduces downside risk. Upgrades China Life (2628.HK) to Outperform from Neutral, keeps target at HK$26.00, on stock's recent pullback, better-than-expected January premium growth numbers, fundamental valuation upside; but tips Ping An (2318.HK) as preferred Asia ex-Japan insurance pick on view it's better-placed to maintain growth in 2009 on ability to pay above-market universal life crediting rates, more diverse product mix, lower reliance on bancassurance sales in 2008, lower 2008 base effect, higher agent number growth.

Says Ping An at 1.5X FY09E EV, 6X VNB, cheap vs China Life's 1.9X FY09E EV, 17X VNB; expects valuation gap to gradually close. Rates Ping An at Outperform, target HK$63.50. Ping An up 1.4% at HK$35.95, China Life up 2.4% at HK$21.20. HSI down 1.6%.

[winston]

From Reuters:-

Ping An Insurance (2318.HK) jumped 7.7 percent to HK$43.9 after Merrill Lynch raised its target price on the stock to HK$47.97 from HK$45.25 on expectations China's second-largest insurer would continue to outperform the industry in both profit and premium growth.

Ping An reported 31 percent growth in premiums for February. UBS upgraded the stock to buy from neutral on Thursday.

[winston]

DJ MARKET TALK: CS Tips Ping An To Post FY08 Loss Of CNY5.1 Bln

0955 [Dow Jones] STOCK CALL: Credit Suisse expects Ping An (2318.HK) to report FY08 loss of CNY5.1 billion with no final dividend, but says weak result widely expected. Tips pressure on headline profit, solvency ratios, EV progression due to investment losses in Fortis, equity markets; results due April 8.

Tips healthier 2009 outlook; "The rebound in the equity market, stabilization of bond yields, solid premium growth and regulatory announcements all support a positive view." Says P&C underwriting may improve further on easing competition, with securities unit profitability recovering with equity-market rebound.

Says shares trading at 2.5X P/EV, 19X VNB 2009E; views as "fair rather than compelling," but adds macro factors offering tailwind. Rates at Outperform, target HK$53.00. Shares up 2.3% at HK$53.00 pre-open.

[winston]

UPDATE 1-China's Ping An Q4 bleeds on Fortis-linked losses

* Posts second straight quarterly loss due to Fortis
* Net profit for full year slumps 99 pct
* Takes a 22.79 bln yuan impairment loss on Fortis

By Samuel Shen

SHANGHAI, April 8 (Reuters) - Ping An Insurance (Group) Co of China Ltd, the world's second-biggest insurer by market value, posted a second straight quarterly loss, hit by its investment in troubled European financial group Fortis (FOR.AS)(FOR.BR).

Many analysts, however, expect Ping An's (601318.SS) (2318.HK) prospects to improve in the next few years as the domestic stock market stabilises and demand for insurance services in China remains strong.

Ping An posted a 1.34 billion yuan ($196 million) loss for the October-December period, following its third-quarter loss of 7.88 billion yuan, Ping An said in an exchange filing in Hong Kong. That compares with a 3.72 billion yuan fourth-quarter profit a year earlier.

For the full year, Ping An's profit slumped 99 percent to 268 million yuan, after taking a combined 22.79 billion yuan impairment loss on its 5 percent stake in Fortis. That contrasts with a 138 percent jump in Ping An's 2007 profit.

"The worst days for insurers are over and their main risks have been exposed," said Zhang Xi, analyst at Galaxy Securities Co. "Ping An and other insurers will benefit from a stabilising stock market this year and wider investment channels."

China has let insurers, including Ping An and bigger rival China Life (2628.HK) invest in infrastructure projects in a pilot scheme. On Wednesday, the government issued new rules to allow insurers to invest in corporate bonds without bank guarantees and smaller players to trade stocks directly.

Despite sharp falls in net profit, "the company remains fundamentally sound, with our core businesses growing steadily and healthily, and we maintain a solid financial position," Ping An said in Wednesday's statement.

Ping An's solvency ratio is above 300 percent and capital adequacy ratio of its banking unit is above 10 percent, paving the way for long-term stable development, the company said.

Ping An shares fell 4.42 percent in Hong Kong on Wednesday ahead of its earnings. The stock has gained 29 percent this year, while the benchmark Hang Seng Index .HSI was flat during the same period.

Chairman Peter Ma, who founded Ping An 20 years ago, aims to build the insurer into a financial conglomerate that also operates banking and asset management as its core businesses.

Ping An also owns a trust unit and pension unit, and is likely to benefit from Shanghai's plan to boost the city's pension business by offering tax benefits this year.

[winston]

Diworsesification ...

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Ping An profit dives 99pc by Kathy Wang

Ping An Insurance (Group) (2318) posted its first drop in annual profit since its listing in 2004 after writing down impairment losses from its investment in the European Fortis financial group.

The insurer's earnings for last year also took a hit from the stock market slump which eroded its investment return.

Net income dropped 99 percent to 268 million yuan (HK$303 million) from 18.7 billion yuan the previous year.

Ping An made a net profit of 477 million if the impairment loss of 22.8 billion yuan for the Fortis investment is excluded, the insurer said. No final dividend was declared.

The profit fell well short of the 1.5 billion yuan estimate of eight analysts surveyed by Bloomberg.

But chairman Peter Ma Mingzhe is upbeat about the insurer's long-term development. Ping An's solvency ratio is above 180 percent and the capital adequacy ratio of Ping An Bank is above 10 percent, Ma said.

Profit of the mainland's second- largest insurer may surge more than eightfold to 17.8 billion yuan in 2009, Olive Xia, analyst at Core Pacific Yamaichi, told Bloomberg News.

The Shenzhen-based insurer lost 7.4 billion yuan on investments in 2008, compared with gains of 52.8 billion yuan in 2007.

It booked 85 million yuan in realized and unrealized investment losses, compared with a gain of 36.5 billion yuan in the previous year.

Ping An, partly owned by HSBC Holdings, wrote down an impairment charge of 22.8 billion yuan in 2008 on its stake in troubled Brussels-based insurer Fortis.

Fortis shareholders are scheduled to vote on April 28 on the planned sale of most of its banking units to BNP Paribas, as well as a 25 percent stake in Fortis Insurance Belgium to Fortis Bank.

Ping An, which holds a 5.15 percent stake in Fortis, voted against BNP's offer in February.

It said it remained open to any alternative that preserves shareholder value.

"In the coming five years, we will ... build an integrated financial services platform," Ma said.

Ping An stock fell 4.42 percent to close at HK$48.65 yesterday.

[winston]

UPDATE 1-Ping An up more than 5 pct after results

HONG KONG, April 9 (Reuters) - Shares in Ping An Insurance (2318.HK), the world's second-largest insurer by market value, rose more than 5 percent on Thursday as investors shrugged off its weak fourth quarter and instead focussed on its more upbeat 2009 outlook.

Ping An (601318.SS) posted a 1.34 billion yuan ($196 million) loss for October-December, due to losses related to its investment in failed European financial group Fortis (FOR.AS) (FOR.BR). Earnings for the full year, excluding the Fortis investment, came in more or less in line with market expectations.

But analysts see a brighter outlook for the Chinese insurer, which is expected to benefit from a stabilising stock market and rapidly growing premium incomes. [ID:nSHA207808]

"Sentiment for the full year will continue to be fuelled by a better investment and premium outlook," said Merrill Lynch analysts.

( TOL: Why would premium income increase ? )

The brokerage raised its target price on the stock by 12.5 percent to HK$54 on higher growth expectations.

Some of the overhang on the stock was also removed on relief that Fortis-related losses are now fully reflected in Ping An's books.

The stock was up 4.8 percent at HK$51 by 0255 GMT, outperforming the 1.6 percent gain on the main index. After slumping 55 percent in 2008, shares in Ping An have clawed back 36 percent so far this year partly helped by the rebound in mainland Chinese equity markets.