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China's Ping An to take $2.3 bln loss on Fortis

SHANGHAI (Reuters) - Ping An Insurance 601318.SS said on Sunday that it would report a loss of about 15.7 billion yuan ($2.3 billion) on its investment in troubled European financial group Fortis FOR.AS.

China's second largest life insurer said it would include the impairment loss in its earnings statement for the July-September quarter, as a result of marking down the market value of its 5 percent stake in Fortis FOR.BR.

The loss would be one of the largest suffered by a Chinese financial institution so far in the turmoil gripping global markets. Ping An originally invested a total of 23.9 billion yuan in Fortis.

Ping An’s alliance with Fortis was a key part of its drive to become a full-service financial giant. But this hope began to unravel last month as Fortis’s share price halved; its Dutch units were eventually sold to the Netherlands government.

Last week, Ping An 2318.HK said it had scrapped a $3 billion deal to buy half of Fortis's asset management arm.

The Chinese company said on Sunday that the investment loss would have a material impact on its net profit, which it would reveal after preparing its books for the third quarter. But it added that it expected the loss only to hit profit this year.

“The capital position and solvency margin of the Group remain solid and sufficient, the Group has a strong foundation and the financial condition is stable,” Ping An said.

It added that core business lines such as insurance, banking, trust and securities were enjoying “healthy and decent growth,” and that it would proceed with a planned capital injection of 20 billion yuan into its life insurance business.

Ping An said it had a net asset value of 90.4 billion yuan under international accounting standards at the end of June, a figure which already reflected a fall in Fortis’s share price up to that date.

It made a net profit of 9.5 billion yuan in the first half of this year, down 2 percent from a year earlier.

Ping An’s Hong Kong-listed shares plunged last month partly because of expectations that it would take a big loss on its Fortis investment. The shares ended at HK$50.00 on Friday, down 13 percent from the start of September.

($1 = 6.81 yuan)

Reporting by Andrew Torchia; Editing by Erica Billingham

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