Ping An will provide for the impairment loss on its investment in Fortis Group

Hong Kong, Oct. 5, 2008 -- Ping An Insurance (Group) Company of China, Ltd. (“Ping An” or the “Group”, HKEx: 2318) announced on 5th October that the Group intended to make an impairment accounting adjustment on its investment in Fortis Group in the 2008 third quarter results, under prudent principles and pursuant to relevant accounting policies. As a result, the marked-to-market losses of approximately RMB15.7 billion, which had been reflected in the equity of the Group on 30th September 2008, will be removed from the balance sheet but recognized in the income statement. Such accounting treatment will exert material impact on the first nine months’ profit of the Group.

The Group’s aggregate cost of investment in Fortis amounted to RMB23.87 billion, however, its solvency margin is expected to remain above 300% and the net asset value per share and the cash flow position of the Group will not be impacted after taking consideration of such provision. The Group will sustain sufficient capital adequacy and a solid financial basis, which will ensure healthy growth of all subsidiaries. In addition, rights and entitlement of clients will be adequately protected. The Group expects that earnings will be restored to normal levels in the next fiscal year and the aforementioned accounting treatment will affect the annual net profit of 2008 only.

The Group has sufficient capital and will inject capital to its subsidiaries according to the needs for business expansion and overall strategies. This will ensure that their solvency margin and capital adequacy level will comply with regulatory requirements and provide sufficient capital support for their rapid business growth in the future. Rights and entitlements of the clients from all subsidiaries will not be impacted. The Group plans to proceed with the relevant procedures relating to capital injection of RMB20 billion into Ping An Life Insurance Company of China, Ltd.

The Group started venturing out and exploring investment in the overseas market last year. By deploying its capital globally, the Group aims to improve the asset and liability mix of its insurance capital and avoid the cyclical risks of a single business model.

The rationale behind the investment in Fortis was well considered and thoroughly studied. Fortis was a leading financial group in Europe, with good corporate governance, a good track record of performance, a dividend policy that suited the Group, and was consistent with the Group’s insurance fund duration. Based on Fortis’ historical performance, and financial models run by the Group and its financial councils, it was expected that such investment would bring stable and long-term return to the Group, and would be an ideal match for the long-term liability of the Group’s life insurance business. At the same time, the investment in Fortis could also further optimize the global deployment of the Group’s capital. Besides benefiting from financial investment, the Group intended to increase its competitiveness in the domestic market by introducing and learning from Fortis’ advanced experience and technology in its comprehensive financial and asset management businesses, as well as its cross-selling strategy.

Due to the current global financial turmoil, Fortis' share price, as in part of the global capital market, has seen large revisions. In the Group’s interim report, such change in fair value was reflected in the Balance Sheet.

The Group will further review its overseas investment strategy, procedures and risk control management from the experiences and lessons learnt from the incident. The Group will continuously focus on delivering long-term and stable growth and returns, and provide better financial services to clients.

As at September 30, 2008, apart from the investments in Fortis, the carrying value of the Group’s foreign investment portfolio mainly comprised of investment in shares and funds listed on The Stock Exchange of Hong Kong Limited, of approximately RMB7.594 billion and cash and bank deposits of approximately RMB1.58 billion.

The Group’s unaudited cumulative insurance premium in the first eight months was RMB88.508 billion, up 30.8% compared with the same period last year.