Anbang Life Insurance sees net profit surge 131 per cent to 19.66 billion yuan on asset gains

PUBLISHED : Friday, 29 April, 2016, 7:25pm
UPDATED : Friday, 29 April, 2016, 7:25pm

Anbang Life Insurance, a subsidiary of private Chinese conglomerate Anbang Group, saw its net profit surge 131 per cent to 19.66 billion yuan (HK$23.53 billion) in 2015 from the year before.

Assets increased 6.7 times to 921.6 billion yuan last year from 119.96 billion yuan in 2014, mainly due to global investments and acquisitions, including the purchase of New York’s famed Waldorf Astoria hotel by its parent Anbang Insurance. Return on equity(ROE) stood at 35 per cent, the best performer among Chinese insurers whose ROE is 15 per cent in average.

However, the company’s insurance business increased at a slower rate than its assets, with income and net profit rising 20.5 per cent and 46.94 per cent respectively.

Beijing-based Anbang Life offers personal insurance products including life, health and accident insurance, and reinsurance services.

Anbang Insurancehas continued its global expansion this year by acquiring the Dutch insurance company Vivat and South Korea’s Tongyang Life Insurance.

Brett McGonegal, chairman of Capital Link International, said Anbang Insurance’s global acquisitions were blueprints for its overseas development. “Anbang Insurance is establishing itself as a global player and now overseas investors are always talking about Anbang,” he said.

That view is echoed by Linus Yip, chief strategist at First Shanghai Securities, who said Anbang’s overseas acquisitions expanded its investment scope, which may increase its earnings if returns can be kept high.

However, he warned of risks in expanding into overseas markets. “Whether Anbang insurance has the ability to operate and integrate its overseas business is a major risk,” said Yip. “If not, the company will face big losses.”

A second concern, said Yip, is whether the insurer can maintain abundant cash flows for claimants when it is being aggressive in overseas purchases. Further, it is unavoidable to come up against some potential risks during the process of overseas acquisitions, such as the regulatory hurdles from governments, he added.

Anbang Insurance dropped its bid for Starwood Hotels & Resorts Worldwide early this month, vaguely citing “various market considerations” as its reason. However, bankers and analysts say the Chinese bidder faced formidable hurdles in its quest for Starwood.

Providing proof of financing has been a consistent problem. Starwood and its bankers repeatedly questioned whether Anbang could come up with sufficient funds for a bid. The US hotel chain denied Anbang access to private financial information typically offered to prospective bidders, according to Starwood filings.