Ping An Insurance shows no signs of slowing its buying of bank and insurance stocks.
Ping An Life, a core subsidiary, disclosed on September 2 that after an additional purchase of H-shares in Agricultural Bank of China on August 26, its stake in the bank had reached 15%. Earlier this year, it crossed the 5% and 10% thresholds with purchases on February 17 and May 12.
The group has also been building stakes in peers including China Pacific Insurance (CPIC) and China Life Insurance, underlining its appetite for financial shares.
At Ping An’s 2025 interim results briefing on August 27, general manager and co-CEO Xie Yonglin sought to ease market concerns, stressing that “disclosure of substantial shareholdings” is a regulatory requirement rather than evidence of aggressive expansion. He said the group will continue allocating more to equities with a focus on two themes: “new quality productive forces” and high-dividend stocks.
According to its interim report, Ping An’s equity investments, including stocks and equity funds, totaled RMB 778.42 billion (USD 108.9 billion) as of midyear, representing 12.6% of its portfolio. With the 10-year government bond yield hovering at 1.7%, the company still has room to raise equity exposure.
Yet while Ping An is actively buying, its earnings tell a different story. Net profit attributable to shareholders fell in the first half of 2025, sparking investor pessimism. The day after its results, Ping An’s share price dropped 3.02%.
This has left the market weighing two opposing signals: bullish equity bets versus a declining profit trend.
Net profit decline in focus
Ping An reported net profit attributable to shareholders of RMB 68.05 billion (USD 9.5 billion) for the H1 2025, an 8.8% year-on-year (YoY) decline.
Of its RMB 6.2 trillion (USD 871.5 billion) in investment assets, 58% are classified as “financial assets measured at fair value through other comprehensive income.” Gains and losses from these holdings are not booked as profit unless sold, masking unrealized gains.
CFO Fu Xin said about 67% of the group’s stock holdings are booked under other comprehensive income, amounting to roughly RMB 60 billion (USD 8.4 billion) in unrealized gains. These strengthen net assets and enhance solvency ratios, supporting dividends, but do not appear on the income statement.
One-off factors also weighed on net profit. These included a RMB 3.4 billion (USD 476 million) impairment from consolidating Ping An Good Doctor and valuation adjustments tied to H-share convertible bonds. Combined, these shaved about six percentage points off profit growth. Excluding these, the YoY decline narrows to 2.8%, broadly in line with the industry average.
Analysts often look to operating profit as a better gauge of insurers’ core performance. By this measure, Ping An fared better: operating profit attributable to shareholders reached RMB 77.73 billion (USD 10.9 billion), up 3.7% YoY, with growth accelerating in the second quarter.
Contractual service margin edges back to growth
The improvement in operating profit is linked to reforms in Ping An’s life insurance business.
As of June, its contractual service margin (CSM) stood at RMB 733.2 billion (USD 103.6 billion), up 0.3% from end-2024. Though modest, it marks the first return to positive growth since 2022. It reflects both a shift of deposits into life insurance amid falling interest rates and early results from reforms.
The CSM represents unearned profit from past policies, to be released over time as premiums, payouts, and services are delivered. A rising CSM signals stronger future profitability.
Previously, Ping An’s CSM had been shrinking due to industry headwinds and agent network adjustments. Its rebound was driven by growth in new business value (NBV) and margins (NBVR). NBV rose 39.8% YoY to RMB 22.34 billion (USD 3.1 billion), while NBVR increased to 38.9%, up 9 percentage points.
On the sales side, agent headcount fell another 6.3%, but NBV per agent rose 21.6%, pointing to higher productivity. Non-agent channels also made larger contributions, accounting for 33.9% of NBV versus 18.7% in 2024. Bank-insurance distribution was especially strong, with NBV from this channel jumping 168.6%.
Driving this push is Wu Jianwei, former vice president of China Zheshang Bank, who joined Ping An Life last year to lead its bancassurance business. At the interim briefing, co-CEO Guo Xiaotao said Ping An’s strategy of working with Ping An Bank while partnering with other major banks now covers over 80% of the country’s mainstream branches, reducing reliance on agents.
Can AI shift market sentiment?
Despite these gains, Ping An’s valuation remains weak. As of September 3, its A-shares traded at about 8.7 times forward earnings and 1.1 times book value. That is below peers such as AIA Group, UnitedHealth Group, and China Life. Its price-to-book ratio also trails other leading domestic insurers including New China Life, China Life, CPIC, and PICC.
One reason is structural. Unlike peers focused mainly on life insurance, Ping An spans life, property and casualty, banking, securities, trusts, and healthcare. Property insurance and banking, which together contributed over 31% of operating profit in the first half, are generally valued at lower multiples than life insurance.
Co-CEO Guo Xiaopeng argued that Ping An’s strength lies in its integrated financial and healthcare strategy, paired with investments in artificial intelligence. He pointed to synergies across insurance, banking, and healthcare as future growth drivers.
Ping An has reported progress in AI adoption, citing 818 million calls to its proprietary large language model in the first half and more than 650 applications deployed. Examples include AI-assisted fraud detection that saved RMB 6.44 billion (USD 901.6 million) in claims, and AI-driven sales assistants generating RMB 66.15 billion (USD 9.3 billion) in transactions.
Still, the revenue impact remains limited. Operating and administrative expenses rose 11% YoY to RMB 40.92 billion (USD 5.7 billion), not especially large given the scale of its AI push. By comparison, Tencent’s administrative costs rose 25%, largely due to AI spending. Other insurers such as China Life, PICC, CPIC, and New China Life are also emphasizing AI, raising questions about Ping An’s competitive edge.
Regulatory uncertainty adds another layer of risk, as tighter rules on AI use in finance and healthcare could force costly compliance upgrades.
Dividends in focus as investors seek stability
In the near term, dividends may offer Ping An’s strongest appeal. Alongside its interim results, the company declared a cash dividend of RMB 0.95 (USD 0.13) per share, up 2.2% YoY. This marks the 13th consecutive year of dividend growth.
Since listing, Ping An has raised RMB 38.87 billion (USD 5.4 billion) in equity financing while paying out RMB 346.9 billion (USD 48.6 billion) in dividends, a dividend-to-financing ratio of nearly nine to one.
In a low interest rate environment, such a profile could draw long-term investors seeking steady returns.
Looking ahead, Xie said the group’s investment strategy will follow two tracks: channeling capital into strategic industries such as advanced manufacturing, new energy, and semiconductors, and boosting allocations to blue-chip stocks with yields above 4%.
If these strategies deliver, Ping An could yet earn an upward revision in its rating.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Wang Hanyu for 36Kr.