SINGAPORE/HONG KONG (Reuters) - Financial giant Ping An Insurance Group Co of China Ltd announced on Tuesday its first-ever share buy-back plan worth up to 10 billion yuan ($1.5 billion) after posting a forecast-beating jump in annual profit.
Ping An, China’s largest insurer by market value and the only insurer in Asia deemed globally systemically important, said full-year profit rose 20.6 percent to 107.4 billion yuan in 2018, boosted by strong growth in its life and health insurance business, according to a Hong Kong stock exchange filing.
That was above the 101 billion yuan Refinitiv-compiled SmartEstimate, which is weighted in favour of more accurate analysts.
Ping An also said in a separate filing it planned to use 5-10 billion yuan of its own funds to repurchase its Shanghai-listed A-shares through centralized bidding transactions.
The results and buyback plan highlight Ping An’s strength compared with smaller players at a time of increased scrutiny of insurers’ use of leverage, which has seen some being punished for risky practices.
Buybacks are often seen as a sign managers believe company shares are currently undervalued and can help boost the stock. Ping An’s executives have repeatedly said its stock has been undervalued by investors over the past few years.
The repurchase price for Ping An’s A-shares will not exceed 101.24 yuan per share, the company said. That is up to 46 percent higher than the shares’ closing price at 69.25 yuan on Tuesday, before the results and buyback were announced.
Ping An will also seek to issue up to an equivalent of 100 billion yuan in debt financing instruments, it said in another filing to the Shanghai Stock Exchange, without giving a time frame.
The buyback and bond issuance plans are subject to approval by shareholders, who will hold an annual general meeting in April.
China Life Insurance Co, Ping An’s main competitor in the domestic insurance market, warned in January its 2018 net profit would fall 50-70 percent.
Boosting Ping An’s bottom line in 2018 was its life and health insurance business, where net profit jumped 62 percent to 57.9 billion yuan from a year earlier.
The company’s gross written premiums grew 19 percent to 719.6 billion yuan.
The number of retail customers rose 11 percent, hitting 184 million, with each customer holding 2.53 contracts on average, up 9 percent.
Ping An is the controlling shareholder of Ping An Bank Co Ltd, which last week reported a 7 percent rise in annual net profit to 24.8 billion yuan.
Ping An Insurance’s Hong Kong shares closed up 2.1 percent before the results were announced, in a broader market that ended 1.46 percent higher.
($1 = 6.7109 Chinese yuan renminbi)
Reporting by Shu Zhang in Singapore and Julie Zhu in Hong Kong; Additional reporting by Kane Wu; Editing by Gopakumar Warrier and Mark Potter