Brace for bad news from Chinese insurers this reporting season
Financial results among major insurers and life insurers for 2016 are expected to be downbeat, however things are looking up for 2017
Chinese insurers are set to publish disappointing earnings for 2016, weighed by depressed investment returns, reserves top-ups, and fierce competition, analysts say.
Ping An is the only major insurer likely to post profit growth for the year, but lacklustre performance is still expected, analysts with CLSA wrote in a research note issued on Sunday. They advised investors to steer clear of the sector, and reiterated their “sell” rating on shares of the major life insurers.
CLSA said that Ping An was also struggling amid weak investment income and reserve top-ups, however its 2016 profits would register growth from the prior year “largely due to a disposal gain from selling Puhui Financial to Lufax”.
To streamline the group’s online financing business, and prepare the unit for an initial public offering, Ping An Insurance in May integrated the micro-financing platform Puhui Financial, as well as institution-focused Shenzhen Qianhai Financial Asset Exchange, or QEX, into Lufax, China’s largest peer-to-peer lending platform, and booked a 9.5 billion yuan (US$1.38 billion) gain.
Lufax is controlled by Ping An Insurance, and may file to list on the Hong Kong market this year, market sources say.