China’s Biggest Insurer Reportedly Under Investigation by CBIRC over Property Investments

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The China Banking and Insurance Regulatory Commission (CBIRC) has launched a probe into the property investments of Ping An Insurance Group, according to sources speaking to Reuters.

The sources said that CBIRC has also required Ping An to suspend the sale of alternative investment products that are oftentimes linked to the real estate market.

Ping An has since announced that its exposure to the property market falls well below the ceiling outlined by regulators. The insurer’s total real estate exposure is estimated by Citi analysts to stand at around 185.5 billion yuan, accounting for around 4.8% of 3.8 trillion yuan in investments.

This includes 54 billion yuan (approx. USD$8.4 billion) in exposure to the beleaguered China Fortune Land Development that Ping An first disclosed in February, and has had an adverse impact on earnings in 2021.

Exposure to China Fortune compelled Ping An to factor in booking impairment provisions of 35.9 billion yuan to adjustments for its first half earnings figures, contributing to a 15.5% decline in net profit for the period.

China Fortune said that it had overdue debt and interest totalling 69.2 billion yuan as of the end of June, with default and liquidity stress potentially impacting operations.

Ping An also holds sizeable equity stakes in major Chinese real estate concerns, include a 14.1% stake in China Jinmao Holdings Group, an 8% stake in Country Garden Holdings, and a 6.54% stake in CIFIC Holdings.

Ping An is China’s largest insurer in terms of assets, as well as the only insurer deemed to be a systemically important financial institution.

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