Ping An Insurance (Group) Co, China's second-biggest life insurer, said first-half profit rose 49 percent as it sold more profitable policies.

Net income rose to 2.24 billion yuan (US$276 million), or 0.36 yuan per share, in the six months to June 30, from 1.5 billion yuan (US$185.16 million), or 0.30 yuan per share, a year earlier, the Shenzhen-based company said in a statement yesterday. That result beat analysts' estimates.

Ping An has been selling more individual life products and fewer investment products to improve profitability and meet increasing demand for protection as the nation reduces welfare benefits. China's total insurance premiums grew 14.2 percent to 271 billion yuan (US$33.46 billion) in the first half, according to the China Insurance Regulatory Commission.

"Ping An sold more products, especially high-margin long- term life policies," Ken Yeung, an analyst at Sun Hung Kai Research in Hong Kong, said before the announcement. "The shift to more profitable products is helping drive earnings up."

Ping An's net earned premiums in the first half fell to 26.9 billion yuan (US$3.32 billion) from 29.2 billion yuan (US$3.6 billion) a year earlier as the company focused selling more profitable policies. Net investment income rose 32 percent to 4.5 billion yuan (US$555.56 million).

Ping An, which sells both life and non-life policies, has 13.4 percent of China's total insurance market.

The company, which holds about 95 percent of its investments in bonds and deposits, is buying more debt and cutting down on deposits, said Yeung.

Ping An held 62.3 percent of its investments in bonds as of June 30, up from 56 percent at the end of last year. Deposit holdings fell to 33 percent from 40 percent.

The Shanghai Stock Exchange T-Bond Index, which tracks the performance of government bonds, rose 10.2 percent in the year's first half, compared with a decline of 5.2 percent in the same period last year.

(China Daily August 23, 2005)