China’s PICC Property and Casualty Company (PICC P&C) reported a net profit of RMB19,386 million for the nine months ended September 30, representing a year-on-year decrease of 26.2%.
The decline in net profit can be attributed to three main factors: the resurgence of auto transportation, the adverse effects of severe typhoons and other natural disasters, including Typhoon Doksuri and Typhoon Haikui, and the influence of the adoption of the New Financial Instruments Accounting Standards and the volatility of the capital market, leading to fluctuations in the value of specific financial assets impacting the current-period profit or loss due to changes in fair value, the company noted.
During the period, PICC P&C achieved insurance revenue of RMB346,038 million, representing a year-on-year increase of 8.6%, and achieved underwriting profits of RMB7,379 million, representing a year-on-year decrease of 39.0%. The combined ratio was 97.9%, representing a year-on-year increase of 1.7 percentage points.
The operating profit fell to RMB21,988 million from RMB31,119 million.
For the nine months ended September 30, PICC Group posted a fall in net profit of 15.5% to RMB20,503.
Total operating income rose for the period for the group at 4.3% to RMB418,664 million.
Following the fall in net profits of PICC P&C and PICC Group, analysts at Goldman Sachs said, “As a result, 9M23 net profit now only tracks 65%/75% of FY23 GSe. If usual seasonality holds, we see risks of consensus downgrades as 4Q profit contribution over the last 4 years (FY19-22) was on average 11%/4% for PICC P&C/PICC Group.”
“We attribute the underwriting loss in 3Q23 to the impact of higher catastrophe-related losses. In particular, we note that higher typhoon-related damage in 2023 likely results in higher disruption to auto insurance underwriting result than in 2022. 9M23 COR for auto insurance reached 97.4%, and is likely to be above company FY23 guidance of below 97%,” Goldman Sachs noted.
PICC Life recorded insurance revenue of RMB13,216 million, representing a year-on-year decrease of 13.1%, and net profit was RMB1,804 million.
During the reporting period, PICC Health achieved the insurance revenue of RMB19,118 million, representing a year-on-year increase of 16.5%; and achieved net profit of RMB3,961 million.
