Ping An Insurance Faces Challenges from New Accounting Policy

Strategic Insights -

Ping An Insurance (Group) Company of China, the southern boomtown's leading insurance group, is facing difficulties due to the new accounting policy. The policy is expected to have a significant impact on the company's financial statement, particularly in regard to the high-interest-rate policies held by Ping An Life Insurance Co. As a result, the company's net assets are likely to be affected, with some market analysts predicting a more-than-10% effect on the net assets.

Key Takeaways:

  • Ping An Insurance faces challenges from the new accounting policy, which will impact the company's financial statement.
  • The policy will particularly affect the high-interest-rate policies held by Ping An Life Insurance Co.
  • Market analysts predict a more-than-10% effect on the net assets of Ping An Insurance.
  • The company's net assets are expected to exceed CNY 30 billion by the end of 2009.
  • Ping An Insurance holds 22 stocks with a combined market value of CNY 5.71 billion as of September 2009.
  • China Pacific Insurance (Group) Company, another insurer, holds 52 stocks with a combined market value of CNY 7.06 billion as of September 2009.
  • China Life Insurance Company Limited, China Life Insurance (Group) Company, and China Life Reinsurance Company Ltd. hold 154 stocks with a combined market value of CNY 64.6 billion as of September 2009.
  • The three insurers have invested in medicine, petrochemical, and power-related stocks, including Sanjiu Medical & Pharmaceutical Co., Beijing Double-Crane Pharmaceutical Co., and Yabao Pharmaceutical Group.

Statistics:

  • The Yuan-denominated A-shares of Ping An Insurance declined 3.79% on Monday to close at CNY 52.48 per share.
  • Ping An Insurance is expected to put aside CNY 15.2 billion to CNY 22.6 billion more insurance reserves for high-interest-rate policies.
  • China Life Insurance bought 202 million additional shares of China Minsheng Banking Corp., 190 million additional shares of China Petroleum & Chemical Co., and 39.999 million additional shares of PetroChina in the three months ended September 30, 2009.
  • The combined market value of the stocks held by China Life, Ping An, and CPIC stands at CNY 34.97 billion as of September 2009.

Sources:

  • SinoCast Daily Business Beat
  • COMTEX
  • Ping An Insurance (Group) Company of China
  • China Pacific Insurance (Group) Company
  • China Life Insurance Company Limited
  • China Life Reinsurance Company Ltd.
  • Sanjiu Medical & Pharmaceutical Co.
  • Beijing Double-Crane Pharmaceutical Co.
  • Yabao Pharmaceutical Group
  • Sinochem International Corporation
  • Sichuan Chuantou Energy Co.
  • GD Power Development Co.