Ping An Insurance (Group), the mainland's second-largest insurer, said it would book an impairment charge of 15.7 billion yuan (HK$17.8 billion) in the third quarter to reflect the reduced value of its stake in the troubled Dutch-Belgian financial group Fortis.
The charge far exceeds Ping An's 9.49 billion yuan net profit for the first half, suggesting the insurer is likely to book a loss for the first three quarters unless it makes with other significant gains.
Analysts say results for the rest of the year look grim for Ping An. China International Capital Corp estimates the full-year loss at 2 billion yuan.
'It is expected that after taking in accounting treatments [for the Fortis stake], there will be a material impact on the group's net profit for the first three quarters of [this year],' Ping An said yesterday.
The insurer booked a 10.5 billion yuan loss from its Fortis stake in its first-half equity account but not in its income statement. It said the decision to book the loss in its income statement would not affect its net asset value per share or cash flow.
The firm reiterated that even after impairment charges, its capital position and solvency margin remained solid and sufficient.