Ping An denies rumors of tax irregularities

By Winny Wang  |   2008-7-3  |     ONLINE EDITION

PING An Insurance (Group) Co said today that speculation regarding tax irregularities with the firm didn't accord with facts.

The State Administration of Taxation is conducting a regular investigation of the company about payments from 2004 to 2006 and the company has no information to disclose so far, the insurer said in a statement to the Shanghai Stock Exchange today.

The company extended yesterday's 10-percent plunge, dropping 5.79 percent to close at 40.55 yuan today.

"The decline was mainly due to speculation about tax irregularities and investors' worries about possible provisions due to its investment in Fortis," said Wang Xiaogang, an analyst at Orient Securities Co.

The Shenzhen-based insurer became the biggest shareholder of Amsterdam- and Brussels-based Fortis after acquiring a 4.2-percent stake for 1.81 billion euros (US$2.87 billion) in November.

Fortis, Belgium's biggest financial services company, has lost more than half its market value since agreeing to spend 24 billion euros to buy part of ABN Amro about the same time as the United States subprime-mortgage market collapsed.

"Fortis' decline has caused about 10-billion yuan in paper losses for Ping An so far compared with a 3-billion-yuan loss by the first quarter of this year," Wang said.