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Ping An to make impairment provisions on Fortis investment

(Xinhua)
Updated: 2008-10-06 14:04

Ping An Insurance (Group) Company of China Ltd said on Sunday evening that it plans to make provisions for impairment in its investment in Fortis shares.

Sheng Ruisheng, spokesman for Ping An, said that the losses of 15.7 billion yuan ($2.31 billion) in book value as of the end of September will be reflected in its third quarter report, which will have significant impact on the company's profit for the first three quarters.

Sheng said that the company has invested 23.87 billion yuan in Fortis shares since last November. After making of the impairment provisions, the company still maintains sufficient capital adequacy and solid financial position, with payment ability of over 300 percent.

He said that this accounting treatment will impact this year's profit only, and it is predicted to recover to normal profit level next year.

The accounting treatment will not have any impact on Ping An's net asset and cash flow of per share. The Group will provide sufficient capital support to all of its controlled subsidiary companies, and it is planning to launch procedures on an increased investment of 20 billion yuan in Ping An Life, he added.

In addition, Ping An of China has earlier announced to terminate its planned purchase of 50 percent of the shares of Fortis' asset management company. In April this year, Ping An and Fortis signed an agreement to buy the Fortis asset management company at a price of 2.15 billion euros ($2.93 billion).

Sheng blamed the global financial crisis for the dramatic drop of Fortis share price, saying the company will draw lesson from Fortis investment and will re-examine its strategies, procedures and risk-control measures in overseas investment.