COVID hits profit at China’s largest insurer

(Reuters) — China’s Ping An, the country’s largest insurer by market value, on Thursday reported its biggest annual profit fall since 2008 amid pressure on its premium income.

Ping An posted a 29% fall in annual net profit to 101.6 billion yuan ($16 billion?in 2021 from 143.1 billion yuan, as premium income from life insurance fell 4.1% from 2020 to 490.3 billion yuan, while property/casualty insurance premium income fell 5.5% to 270 billion yuan.

“Complex, severe economic situations across the world and resurgences of COVID-19 increased uncertainty in resident income expectations in 2021,” Ping An said in a filing, and this “tempered consumer spending on long-term protection products.”

Another factor was a fall in the number of Ping An sales agents,  which meant that its new business value of life and health insurance sank 23.6% 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.”

Ping An has been shaken by growing concerns about its investments in a highly indebted property sector that faces a liquidity crunch amid a crackdown by Beijing on borrowing.

Ping An said it had a total exposure of 54 billion yuan ($8.4 billion) to China Fortune Land Development Co last year as the developer faced mounting default pressure.

Some analysts cautioned that the total property exposure of Ping An is much higher and still underestimated by the market, which will pose further credit risks.

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