Ping An of China's third quarter net profit fell 31% investment under pressure, agent cut 320,000 new business value decreased by 17.8%

Yangtze River Business Daily news ● Yangtze River Business Daily reporter Cai Jia

Affected by the investment in China's happiness, Ping An of China (601318. SH and 2318.HK) performance continued to be under pressure during the year.

In the first three quarters of this year, Ping An achieved operating income of 904.629 billion yuan, a year-on-year decrease of 1.4%, and net profit attributable to shareholders of the parent company (hereinafter referred to as net profit, the same below) was 81.638 billion yuan, a year-on-year decrease of 20.8%. Among them, the company's net profit in the third quarter was 23.633 billion yuan, a year-on-year decrease of 31.2%, and the decline continued to expand compared with the previous quarter.

In this regard, Ping An of China only said that it was mainly affected by the fluctuations in the capital market. In the first three quarters, Ping An's total investment income decreased by 23.8% year-on-year.

The reporter of Changjiang Business Daily noted that the pressure on Ping An's life insurance business, which is in a period of deep transformation, continues. In the first three quarters, due to the continuous compression of the scale of agents, the new business value of Ping An's life and health insurance business was 35.237 billion yuan, down 17.8% year-on-year. At the end of the period, there were only 706,200 life insurance agents left, a decrease of 317,600 from the end of the previous year.

In the first three quarters, Ping An Property & Casualty achieved an original insurance premium income of 199.343 billion yuan, down 9.2% year-on-year, but the overall comprehensive cost ratio of Ping An Property & Casualty was 97.3%, an optimization of 1.8 percentage points year-on-year.

23.8% decrease in total investment income

The investment side still affects ping an performance.

On the evening of October 27, Ping An of China disclosed its three quarterly reports. In the first three quarters of this year, Ping An of China achieved operating income of 904.629 billion yuan, a decrease of 1.4% year-on-year; net profit was 81.638 billion yuan, a decrease of 20.8% year-on-year, the company said mainly due to the impact of adjustments such as impairment charges on Huaxia Happiness-related investment assets.

Ping An of China said that in the third quarter of 2021, there were no significant changes in the company's provision for Huaxia Happiness-related investment assets (including impairment provisions, valuation adjustments and other equity adjustments).

From the perspective of single-quarter performance, affected by the volatility of the capital market, in the third quarter of this year, Ping An of China achieved operating income of 268.98 billion yuan, a year-on-year decrease of 6.32%; net profit of 23.633 billion yuan, a year-on-year decrease of 31.22%, two consecutive quarters of revenue net profit decline, and the third quarter of the decline compared with the second quarter of 27.78% further expanded, second only to the first quarter of last year's 42.74% during the epidemic period.

Judging from its investment performance, as of the end of September, the size of Ping An Insurance's capital portfolio was nearly 3.9 trillion yuan, an increase of about 3% over the beginning of the year. In the first three quarters, the annualized net investment yield of the company's insurance fund portfolio was 4.2%, and the annualized total investment yield was 3.7%, down 0.3 and 1.5 percentage points year-on-year, respectively, and the net investment income and total investment income were 122.411 billion yuan and 103.564 billion yuan, respectively, a year-on-year change of 5.7% and -23.8%.

Ping An of China said that in the first three quarters of this year, overseas capital markets rose overall, and the risk-free interest rates in major economies turned from upward to shock; due to the uneven supply of vaccines, the recovery of economic activity in developed economies was relatively better than that of emerging economies. The domestic economy is mainly affected by industrial regulation and local epidemics, and the economic recovery is still unstable and unbalanced, with market interest rate shocks, stock industry sector differentiation, and index fluctuations increasing. The investment yield of the company's insurance fund portfolio is under pressure due to factors such as capital market fluctuations and an increase in the impairment provision for investment assets.

New business value is still under pressure

Excluding short-term investment fluctuations, changes in discount rates and other one-time major projects that are not part of daily operating income and expenditure, Ping An's operating profit in the first three quarters of this year was 118.737 billion yuan, an increase of 9.2% year-on-year. Among them, the company's operating profit in the third quarter was 36.901 billion yuan, an increase of 7.3% year-on-year.

As of the end of September this year, Ping An's assets exceeded 10 trillion yuan for the first time, reaching 10.08 trillion yuan, an increase of 5.8% over the end of the previous year.

The reporter of Changjiang Business Daily noted that Ping An Life Insurance is still in the process of deep transformation, and the pressure on the company's debt side is still continuing. In the first three quarters, the new business value of Ping An's life and health insurance business was 35.237 billion yuan, down 17.8% year-on-year, and the value ratio of new business fell by 5 percentage points to 30.7%, and the first-year premium used to calculate the value of new business was 114.749 billion yuan, a decrease of 4.5% year-on-year. This is mainly due to the fact that Ping An has had a negative impact on the value of new business in order to promote the optimization of the team structure.

As of the end of September this year, the number of Sales Agents of Ping An Personal Life Insurance of China was only 706,200, a decrease of 317,600 or 31% from 1,023,800 at the end of the previous year.

At the same time, due to the decline in the growth rate of new business, the fluctuation of the policy continuation rate, and the higher compensation difference caused by the reduction of customer claims under the new crown pneumonia epidemic in the same period last year, the operating profit of Ping An Life Insurance and Health Insurance business of Ping An of China in the first three quarters was 73.684 billion yuan, down 2.3% year-on-year.

In terms of property and casualty insurance, although the scale of property and casualty insurance premiums was under pressure under the influence of the comprehensive reform of motor insurance, Ping An Property & Casualty achieved original insurance premium income of 199.343 billion yuan in the first three quarters, down 9.2% year-on-year, but the overall comprehensive cost ratio of Ping An Property & Casualty was 97.3%, which was optimized by 1.8 percentage points year-on-year; the operating profit was 13.283 billion yuan, an increase of 20.2% year-on-year.

It is worth noting that in addition to the insurance sector, Ping An's banking business continues to maintain a steady growth trend. In the first three quarters, Ping An Bank achieved operating income of 127.19 billion yuan, an increase of 9.1% year-on-year, and net profit of 29.135 billion yuan, an increase of 30.1% year-on-year. The non-performing loan ratio at the end of the period was 1.05%, down 0.13 percentage points from the beginning of the year.

However, the total revenue of the technology business sector, including Autohome, Lujin, OneConnect, Ping An Good Doctor, etc., was 73.227 billion yuan in the first three quarters, an increase of 12.6% year-on-year, but the net profit attributable to the mother turned from profit to loss of 1.355 billion yuan, compared with a profit of 4.669 billion yuan in the same period last year.

It is worth mentioning that the 10 billion repurchase plan thrown out by Ping An of China in August also has the latest implementation progress. As of the end of September, Ping An of China had repurchased a total of 56.8783 million A-share shares through centralized auction transactions, accounting for 0.31115% of the total share capital, and the total amount of funds paid was about 2.867 billion yuan, and the transaction price range was 48.38 yuan to 51.96 yuan per share.

As of the close of trading on October 28, Ping An's A-share price was 51.3 yuan per share, up 8.5% in the past month, and still fell by 40% this year.

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Editor-in-charge: ZB

This article originated from the Yangtze River Business Daily