CPIC's first-half profits rose 6 percent to US$6.5 billion

Shares of China Pacific Insurance (Group) Co outperformed the market today in both Shanghai and Hong Kong after the company reported first half profits rose 6 percent year on year to 6.5 billion yuan (US$978.84 million).

The results reversed a 45.6 percent decline in profits in the first six months of 2016.

Shares of CPIC rose 3 percent in Shanghai to close at 38.32 yuan and gained 1.5 percent in Hong Kong to HK$38.05 (US$4.86).

The insurer's gross written premiums jumped 24.5 percent year on year to 163.79 billion yuan in the first six months, the highest in seven years, CPIC said.

The life unit’s new business value — an indicator for expected profit from new premiums — surged by a record 59 percent year on year on rapid growth of long-term protection business.

The property and casualty unit’s combined ratio fell to 98.7 percent. The non-auto sector recorded profits for the first time in three years.

However, the insurer's asset management business saw annual total investment yield flat at 4.7 percent while the annual net investment yield —  comprising deposit and bond interests and stock dividends — rose 0.5 percentage points to 5.1 percent.

The company said it tapped rising market interest rates in the first half of 2017 and increased allocation into fixed income assets to stabilize portfolio yields.

Kong Qingwei, who became chairman of CPIC in June, attributed the company's solid business results to improved quality and profitability. He said CPIC will continue to focus on long-term and value-oriented businesses.

CITIC Securities said in a report that weak investment returns in the property and casualty unit hurt profit growth in the first half, and the unit will have to seek a balance between expanding premium size and pursuit of profits.

The brokerage, however, said CPI  may see an acceleration in the overall profit growth in the second half driven by the life unit.

Kong also said the insurer will develop talent and digitalization, enhance cooperation among group subsidiaries, improve centralized strategic control, and increase investment in health and pension business.

Earlier, Ping An Insurance (Group) Co, China's second largest insurer by market value, said net profit rose 6.5 percent year on year in the first half to 43.43 billion yuan.