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China Pacific Insurance Q4 net loss 2.5billion yuan

Posted on: April 13, 2009


Reuters – Saturday, April 11

* Posts second consecutive quarter loss

* Investment returns hit by stock market slump

* Improvement expected this year as market recovers

SHANGHAI, April 11 – China Pacific Insurance Group Co <601601.SS>, the country’s third-biggest life insurer, posted a 2.54 billion yuan net loss in the fourth quarter, as a slumping domestic stock market hammered its investment returns.

That compared with a 1.14 billion yuan profit in the year-ago period and a 1.64 billion yuan loss in the third quarter.

For the full year, earnings tumbled 80.6 percent to 1.34 billion yuan from 6.89 billion yuan a year earlier, in line with an estimate the company issued in January and a sharp contrast with its nearly seven-fold surge in profit in 2007.

Reuters calculated the fourth-quarter figures by subtracting nine-month results from full-year earnings.

Pacific Insurance and bigger rivals China Life Insurance Co <2628.HK> <601628.SS> and Ping An <2318.HK> <601318.SS> were hit last year by a severe slump in the domestic equity market.

China’s benchmark Shanghai Composite Index <.SSEC> tumbled 65 percent in 2008, for the worst performance of the world’s major stock markets.

Analysts expect Chinese insurers’ earnings to improve this year as the stock market rebounds, fuelled in part by hopes that government stimulus spending will spur an early recovery in the economy.

Pacific Insurance is also sharpening its focus on traditional insurance products, which have shown steady growth in China’s developing market, while placing less emphasis on investment-linked products.

The company’s shares rose 3.89 percent to 18.17 yuan on Friday before the earnings were released in the evening. The stock has jumped 59 percent this year, outperforming a 32 percent gain in the Shanghai benchmark index.

The shares have been lifted in part by a Shanghai government plan this year to offer tax benefits for pension schemes and products, which is expected to benefit the Shanghai-based insurer’s pension business. [ID:nSHA260253]

Pacific Insurance last year postponed a plan to sell shares publicly in Hong Kong due to market sluggishness.

Competitor China Life, the world’s largest life insurer by market value, posted a 42 percent drop in fourth-quarter profit, while Ping An, the world’s second-biggest, reported a second straight quarterly loss due to its failed investment in European financial services group Fortis <FOR.AS> <FOR.BR>.

(Reporting by Samuel Shen and Edmund Klamann; Editing by Tomasz Janowski)

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