PICC Group and PICC P&C Earnings: Net Profit Hit by Weak Investment Return, Auto Combined Ratio Deteriorated

PICC Group and PICC P&C’s cumulative nine-month net profits unexpectedly contracted 15.5% and 26% year on year to CNY 20.5 billion and CNY 19.4 billion, respectively, in contrast to their 8.7% and 5.4% growth in the first half. Similar to peers that reported double-digit declines in investment return, both companies’ weaker-than-expected investment returns were attributable to fair value losses in bond and equity fund investments. In addition, the first-nine-month combined ratio, or CR, an indicator for P&C insurers’ underwriting cost, also reported a larger-than-expected increase of 1.7 percentage points year on year to 97.9%, owing to an about CNY 3.4 billion year-on-year increase in catastrophe claims related to typhoons and heavy rains in the third quarter. Despite the unfavorable seasonality, management remains confident about achieving the 2023 CR targets of below 97% for auto insurance and below 100% for nonauto insurance.