Fortis drags down Ping An as net profits fall 99%
Ping An, the world’s second largest insurer by market capitalisation, has reported a 99% fall in net profits, due largely to an impairment charge of 22.79bn yuan (£2.2bn) on the company’s stake in Fortis NV. Despite strong growth in premiums, losses in equity investments, among them a 4.8% stake in Fortis, almost completely offset any gains.
Ping An’s earnings per share fell from 2.61 yuan in 2007 to 0.04 yuan in 2008. The company has decided not to pay a dividend. The Chinese insurer paid a total of 23.87bn yuan in instalments, making it Fortis’ biggest shareholder. Ping An’s holding has lost more than 90% of its value since the insurer first bought a stake in October 2007.
The Belgian government, which had to partially nationalise Fortis last September to avert its collapse, has recently tried to broker a deal in which French bank BNP Paribas would take a 75% share in Fortis Bank and 10% of its insurance operations. Ping An and other shareholders blocked the sale. A revised deal in which BNP would buy 75% of Fortis Bank from the Belgian government (which would retain a 25% interest) alongside 25% of Fortis’ Belgian insurance operations was agreed by shareholders in late April. The new deal will give Fortis more cash and less exposure to a portfolio of toxic assets.
Fortis chief executive officer Karel De Boeck said: “We are pleased that shareholders have voted in favour of the proposed transaction, which is the best possible solution for the company and one that will allow us to move forward with confidence and certainty for the future. This has been a long process and we are grateful to all stakeholders for their patience and loyalty to the company during this protracted period of uncertainty.” Ping An, which is 16.8% owned by HSBC Holdings plc, has not yet commented on the deal.
Fortis' CEO Karel De Boeck
