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Ping An has no further fund-raising plans

(Agencies)
Updated: 2008-08-19 15:38

Ping An Insurance (Group) of China Ltd has no current plans to raise funds from the capital markets, chairman Ma Mingzhe said.

The company will inject funds into its subsidiaries if necessary, Ma told a media briefing.

"The company has sufficient funds to meet its subsidiaries' needs in the near term. We currently have no refinancing plans," he said.

Ping An announced in January this year plans to issue 1.2 billion new A-shares and up to 41.2 billion yuan ($6.01 billion) worth of six-year bonds with warrants. The news was partly blamed for sharp losses of China's stock markets earlier this year.

Such steep losses weighed heavily on Ping An's first-half investment performance, which pulled down the company's interim net profit by 2.06 percent year-on-year to 9.49 billion yuan.

Its investment yield for the period plunged to 3.6 percent from 8.5 percent a year earlier.

Ping An said it will continue to increase fixed-income asset allocation to help shore up its investment income amid declining equity markets, noting the uptrend in government and corporate bond yields.

"We are still cautious about the prospect for equity markets in the second half. We will continue to raise the income from fixed-income investments," said Timothy Chan, deputy chief investment officer.

But he stopped short of saying Ping An would further reduce its investments in equities.

At the end of June, Ping An's investments in bonds and other fixed-income instruments accounted for 53.1 percent of its total investment portfolio, up 12.4 percentage points from end-2007, while investments in equities accounted for 15.6 percent, down 9.1 percentages from 24.7 percent at end-2007.

Beside the drag on investment income due to steep falls of mainland equity markets, Ping An also felt the pain of an approximately 10 billion yuan unrealized loss in its investment in Belgian-Dutch banking and insurance group Fortis NV.

"We treat our shareholdings in Fortis as a long-term investment. We are still confident the investment will contribute to our earnings in terms of dividends in the long term," said Lius Cheung, executive director and group president.

Cheung said Ping An's valuation pertaining to embedded value has fully reflected the impact of falling equity markets.

"The unrealized loss has been reflected on our balance sheet," said deputy chief investment officer Chan. He did not respond clearly when asked whether Ping An will make provisions for the Fortis investment in the second half.

In November 2007, Ping An acquired 4.18 percent stake in Fortis for a total of 1.81 billion euros ($2.65 billion), equivalent to an average price of 19 eur per share. Ping An boosted the holding to 4.99 percent later, making it the largest single shareholder in Fortis.

Fortis' share price has dropped about 50 percent from the level at which Ping An initially bought the shares, amid turbulence in the global financial markets.

Asked about Ping An's investment in Fortis' global asset management arm, the company said the deal is going through the normal approval process.

Some media reports have speculated earlier that Chinese authorities have been delaying approval for the deal.

"The approval for the deal is still in normal process. The target is to close the (deal) in the second half of this year," Executive Director Cheung said.

In April, the two companies announced that Ping An will buy a 50 percent stake, or one million shares, in Fortis Investment, the global asset management arm of Fortis, for 2.15 billion euros.