Sept. 25 (Bloomberg) -- Ping An Insurance (Group) Co., China’s second-biggest insurer, said it’s seeking international arbitration after negotiations with the Belgian government for compensation on its investment losses in Fortis failed.
“We have no alternative but to defend Ping An’s rights through legal action,” the Shenzhen-based company said in an e-mailed statement today. “The Belgian government’s misconduct towards Fortis back in 2008 violated the legitimate rights and undermined interests of Fortis investors.”
Ping An wrote off 22.8 billion yuan ($3.6 billion) in 2008 on its investment in Brussels- and Amsterdam-based Fortis, bailed out by three European governments after what was once Belgium’s biggest financial-services firm became a casualty of the global credit crunch. Fortis shareholders in 2009 approved the sale of banking units to BNP Paribas SA, a move the Chinese insurer opposed at the time saying it destroyed the company’s value and impaired shareholders’ interests.
“The chances are slim that Ping An can recover the losses,” Olive Xia, a Shanghai-based analyst at Core Pacific Yamaichi International Ltd., said by phone. “It’s hard to say if that should be called misconduct, as the Belgian government had to consider not just individual companies, but the entire financial market.”
Ping An’s net income rose 9.4 percent in the first half of this year as premiums expanded and its banking unit contributed more revenue. The insurer in 2008 posted its first annual profit decline since it listed in 2004 on losses from Fortis.
“We have been trying very hard to negotiate with the Belgian government through different channels on compensation for our investment losses in Fortis,” the company said in today’s statement. “Regretfully, these negotiations have not been successful.”
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