The huge impairment loss that Ping An will book in its third-quarter financial report will not have a material impact on the insurer's business, analysts said yesterday.

"It's more nominal than real (losses)," said Conita Hung, head of research at Delta Securities, after China's second-largest life insurer said on Sunday that it will include a 15.7-billion-yuan impairment loss on its 23.87-billion-yuan investment in Fortis.

The writedowns are to reflect the market value loss of Ping An's 5 percent stake in European financial house Fortis, which fell amid the ongoing financial crisis and is being bought by the governments of the Netherlands, Luxembourg and Belgium and French bank BNP Paribas.

With the impairment, Ping An, which earned 9.5 billion yuan in the first half, is almost sure to slip into the red in the third quarter.

However, "that's only a paper loss," said Kingston Lin, associate director of Prudential Brokerage. "It can be recouped once Forits shares climb up."

Both analysts said investors remained calm on the revelation of the massive loss - one of the largest a Chinese company has suffered as a result of the global financial meltdown - although Ping An's H-shares dropped 8 percent to HK$46 yesterday.

"The share-price drop was more a result of the broad market and has little to do with its Fortis loss," Lin said.

The benchmark Hang Seng Index tumbled nearly 5 percent yesterday, diving below 17,000 points for the first time in two years.

After earmarking the one-off impairment, Ping An was temporarily cleared from the Fortis woes, analysts said. Ping An last week scrapped a deal signed in March to raise its stake in Fortis by investing $3 billion.

However, Ping An's setback in Fortis will prompt investors to keep a closer eye on its acquisitions in the future, analysts said.

"Because of this, any of Ping An's investments in the near future will be viewed as negative by stock investors," Hung said.

On Ping An's share performance, Lin said: "Its share price dropped to HK$40 at one point. I don't think it will be doing well in the short term".

But Hung offered her support.

"I don't see its share price dropping significantly lower than (Monday's) in the short term. The insurer has gone through the worst," she said.

She also said that Ping An had advantages over larger rival China Life Insurance. "Ping An is more diversified and aggressive. It is a tough year for Ping An this year as competition intensifies," Hung said. "However, its fundamentals are fine."

(HK Edition 10/07/2008 page2)