China's Ping An Insurance profits jump 38% in 2015
Ping An Insurance, Asia’s second-largest insurer by market value, posted a 38% rise in annual net profit last year. Life insurance generated 35% of earnings and protecting homes and drivers a further 23%. The group’s robust performance reflects the wider insurance sector; according to China’s insurance regulator, Chinese insurers pulled in ¥2.4tn ($370bn) of premiums in 2015, up 20% YoY and listed groups have reported a 43% YoY jump in premium income in January. This trend looks set to continue as China’s growing middle class demands more protection insurance. 

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The $85-billion group's performance reflects the wider sector. Chinese insurers pulled in 2.4 trillion yuan ($370 billion) of premiums last year, up 20 per cent on 2014, according to the China Insurance Regulatory Commission. The bonanza has continued into the new year, with listed groups reporting a 43 per cent year-on-year jump in premium income in January, CLSA says.Well-to-do Chinese know they can't rely on the government's threadbare social safety net to provide them with a comfortable old age, so private insurance is set to grow. Customers are also attracted by the promise of returns better than the interest they can get on bank deposits.This growth presents Ping An and its rivals with a fresh challenge: finding good assets to invest in. Chinese stocks have plunged over 40 per cent since their summer peak, while looser monetary policy has pressured bond yields. Shadow banking products offer more attractive returns but also bring extra risks.China's listed insurers could withstand a further 30 per cent drop in the the country's stock market. But if equities tumbled by 50 per cent, CLSA estimates that Ping An and industry peers PICC Group, Tai Ping, and New China Life would be forced to issue equity to keep their solvency ratios - the amount of capital they have relative to the risks they have underwritten - above the required 150 per cent.This helps explain why insurers are increasingly shopping for assets overseas. Anbang Insurance has captured the headlines by leading a possible $13-billion bid for Starwood Hotels. But Chinese insurers have generally been slow to diversify their assets outside China. That looks set to change.