HONG KONG/SHANGHAI (Reuters) - Ping An Insurance Group Co of China Ltd on Friday said it will be ‘extremely cautious’ in the second half of this year due to fear of another wave of novel coronavirus cases, and that it has increased provisions as a precaution.
The comment, from co-Chief Executive Jessica Tan, came after the insurer on Thursday said first-half net profit fell 29.7% from the year earlier, its steepest decline since at least 2008 as the COVID-19 pandemic hit new insurance sales.
Tan in a telephone interview said it was difficult to say when the insurance business in China would rebound.
“There’s always a risk of the second and third of wave. So we need to remain extremely cautious in the second half of the year,” Tan said.
Group lender Ping An Bank Co Ltd raised its loan-loss provision ratio 31.8 percentage points to 214.9% as at June-end from six months prior. That led to the bank booking 11.2% fall in first-half profit.
Tan said that move was partly to “store up for the winter in that sense, so we have the buffer and resilience for anything that might happen.”
Asia’s only insurer deemed globally systemically important reported group profit of 68.68 billion yuan ($9.98 billion) for January-June, its interim report showed.
“So far 2020 has been challenging, having witnessed a complex fast-changing macro-environment, the dramatic impact of COVID-19, and highly volatile global markets,” Ping An said.
Still, restrictions on movement to stem the spread of the virus had led to a reduction in auto claims, it said.
Gross written premiums fell 0.2% to 445.5 billion yuan, while the number of retail customers rose 4.6% to 210 million.
Investment income fell 16.7% to 78.21 billion yuan with a 1.1 percentage point cut in annualised yield, driven by “sharp year-on-year capital markets fluctuations”, the company said.
($1 = 6.8798 Chinese yuan renminbi)
Reporting by Julie Zhu in Hong Kong, Cheng Leng and Zhang Yan in Beijing, and Engen Tham in Shanghai; Editing by Jane Merriman and Christopher Cushing
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