Ping An 2318

[la papillion]

Thks lena! I think I must have made a mistake. tsk tsk

[winston]

HSBC is not selling Ping An. It is selling Ping An Bank.

HSBC actually wants to increase it's stake in Ping An. Having said that, HSBC is now trying to get their own license to sell Insurance in China thru their Bancassurance Model.

Ping An is quite well run compared to the other Domestic Life companies. Ping An's Non-LiIfe business is a worry. And Ping An is also selling alot of low margin products.

Too dangerous to short Ping An now. It has dropped alot. But I wont be going long.

[LenaHuat]

Hi la papillion and Winston
A million apologies to LaP and a million thanks to Winston.
I'm very sorry abt the slip-up. Gr.....

I've been eyeing Ping An but am wary abt a few things : it has overpaid for Fortis, HSBC's l/t plans in China without PA, PA's foray into funds management (it has sewn up a JV with UOB Asset Mgmt). On the whole, I'm not ready to re-enter the HK market's H shares. Can really wait as China has to sort very difficult issues on many fronts against a the backdrop of a global crisis.

[la papillion]

Thks winston, for informing us all, haha

No idea how to valuate insurance companies yet. Though I think the wealth management industry (which I include insurance as well) should be bullish in China in the long term. Nothing to back this up, just a hunch

[kennynah]

Thks winston, for informing us all, haha

No idea how to valuate insurance companies yet. Though I think the wealth management industry (which I include insurance as well) should be bullish in China in the long term. Nothing to back this up, just a hunch

haha lapap : how have u been?

[winston]

la pap: No idea how to valuate insurance companies yet.

Hi la pap,

A Life Insurance Company normally makes money from 3 sources:-

1) Difference between Actual Expenses and Expenses Assumed in Pricing - Normally they tend to spend more than priced though. Therefore, most life companies do not really make money from this part.

2) Difference between Actual Investment Return versus Assumed in Pricing - good source of profit if they invested well. Normally, they try to make this risk-free by matching Assets with Liabilities.

3) Difference between Actual Claims versus Assumed in Pricing - good source of profit if they have been selling high margin "Protection Products" and not low margin "Investment Products".


Take care,
Winston

[la papillion]

Hi winston, thks for the education!

I know of (2) and (3) only. Never really thought of (1) as being able to make money. But it does make sense I suppose (2) should be their main source of revenue. (3) should not be too uncertain, since I suppose the person drawing up the policy will do some statistics to ensure their expected revenue is more than the claims draw out.

[winston]

Quake will not hurt Ping An, says chairman

Ping An Insurance (Group) (2318) , China's second-biggest insurer, will not experience a significant impact on earnings from 2008 natural disaster claims, Chairman Peter Ma said.

Claims for the country's worst snowstorms in 50 years in January totaled 700 million yuan (HK$802.58 million), Ma said after a shareholders' meeting in Shenzhen.

Insured losses from the May 12 earthquake in Sichuan province were 1 billion yuan, and the insurer has paid 147 million yuan so far, he said.

Ping An has 310 million yuan insured losses related to floods.

BLOOMBERG

[winston]

Ping An Sees Bank, Asset Units on Par With Insurance (Update1)
By Josephine Lau

July 17 (Bloomberg) -- Ping An Insurance (Group) Co., China's second-largest insurer, is seeking to bring its banking and asset management businesses ``on par'' with insurance, as banks prepare to enter the industry.

The company announced in March it will buy half the asset- management arm of Belgium's Fortis for 2.15 billion euros ($3.4 billion), amid efforts to diversify its sources of revenue as Chinese banks get ready to buy stakes in insurance companies.

``Once Chinese banks start investing in insurance companies, this will exert pressure on insurers in the longer term,'' Ping An Chairman Peter Ma told shareholders today at a meeting in Shenzhen, where the company is based. ``Ping An has to tap the potential of banks, and plans to make our banking and asset- management units on par with our insurance business in five-to- eight years' time.''

China's insurance regulator said in April it has received applications from banks to invest in insurers as the nation's lenders look for higher returns for their more than $400 billion in cash. The government approved a trial allowing China's banks to buy equity stakes in insurance companies, without specifying a timeline, in January.

``Banks will eventually become a very important sales channel for insurance policies in China,'' said Ma.

Long-Term Investment

Fortis, Belgium's biggest financial-services company, has dropped 40 percent since March when the firm that is based in Brussels and the Dutch city of Utrecht agreed to sell part of its asset-management unit to Ping An.

``Fortis's share price has gone south recently, but we still have confidence in the company as a long-term investment,'' President Louis Cheung told reporters at a press briefing after today's shareholder meeting. ``The company's performance remains solid and its price drop reflects current market sentiment and skittishness.''

Ping An bought 4.2 percent of Fortis for 1.81 billion euros in November. The Chinese insurer, part-owned by HSBC Holdings Plc, is searching for new streams of revenue after earnings from investments were eroded in the first quarter by a decline in the Chinese stock market. The nation's benchmark CSI 300 Index has tumbled 49 percent this year.

Income from banking, as well as insurance premiums, at Ping An have ``exceeded expectations'' so far this year, Cheung said.

The insurer has investments in China Minsheng Banking Corp. and Shenzhen Commercial Bank.

Ping An sells less of its insurance policies through bancassurance compared with other insurers, according to Ma. Profit at its banking operations grew 22 times to 1.5 billion yuan last year, or 4.2 percent of the insurer's total income, Ping An's annual report said. The company's brokerage business income more than doubled to 1.5 billion yuan in 2007.

China's industry watchdog said yesterday the nation's first-half life insurance premiums jumped 83.7 percent.

[LenaHuat]

Thks winston, for informing us all, haha

No idea how to valuate insurance companies yet. Though I think the wealth management industry (which I include insurance as well) should be bullish in China in the long term. Nothing to back this up, just a hunch

Look at Warren Buffett's Berkshire Hathaway : 57% of earnings in 2007 came from the insurance biz. WB luv the insurance biz. He wrote in his Owner's Manual that the ins biz is good biz. It gets premiums b4 it pays out costs. Sure the premiums are liabilities but provide cost-free covenant-free funding for BH.