BEIJING/SHANGHAI ― Ping An Insurance (Group) Co. of China reported a 6.8-percent rise in first-half net profit, driven by growth in new insurance policies and its move to secure long-term investments amid market volatility.
The Chinese insurance giant posted a net profit of 74.62 billion yuan ($10.46 billion), up from 69.84 billion yuan in the same period last year, according to a filing released on Thursday.
China’s economy continued to recover in the first half despite “lackluster domestic demand, travail in replacing old growth drivers with new ones, capital market fluctuations and mounting external uncertainties,” the company said in its filing.
New business value of life and health insurance business, which measures the profitability of new policies sold, grew 11 percent year on year to 22.32 billion yuan in the first half of this year.
Ping An’s insurance funds investment portfolio reached an annualized comprehensive investment yield of 4.2 percent in the first half of this year, compared to 4.1 percent in the same period a year ago.
The results come as Chinese insurers are grappling with declining investment yield as a bond rally has pushed yields to record lows, powered by institutional investors that seek a safe haven from a slowing economy.
Ping An “proactively responds to the risk of falling interest rates,” the company said in the filing.
The firm has lengthened asset durations and locked in long-term returns by increasing allocation to long-duration low-risk bonds, including central and local government bonds and policy bank bonds at a faster pace, it said.
Ping An’s shares rose 0.88 percent to HK$34.3 ($4.40) in Hong Kong on Thursday ahead of the results, compared with a 1.4-percent rise in the broader market.
Its banking unit, Ping An Bank, last week reported a 13-percent year-on-year decline in its revenue in the first half this year. The bank’s net profit grew 1.9 percent.
The number of the bank’s total staff fell 7.4 percent year on year to 40,830 at the end of June from a year earlier, which marks the first decline in at least five years.
The bank has asked its staff in Shanghai to move to Shenzhen and would lay off staff who reject the offer, local media reported in July.
The bank’s board secretary, Zhou Qiang, said at a post-earnings briefing last Friday that it relocated Shanghai staff to Shenzhen to “improve management and efficiency,” rather than laying off staff to reduce salary costs.
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