Ping An Insurance (Group) Co of China Ltd, the world's No. 2 life insurer by market value, posted a 34 percent jump in second-quarter earnings as China's stock market boom boosted investment returns.

Net profit attributable to shareholders during the April-June period rose to 3.2 billion yuan ($468 million) from 2.39 billion yuan a year earlier, based on international accounting standards.

The quarterly results, calculated from half-year figures, marked a sharp turnaround from a 71 percent slump in first-quarter earnings and a 99 percent tumble in 2008 profit.

Ping An and bigger rival China Life Insurance Co have benefited from a 60 percent jump in China's stock market during the first half of the year, as the world's third-biggest economy began to bounce back with the aid of a massive raft of government stimulus spending.

In the second half of 2009, we will further refine our investment strategies, Ping An said in a statement. (We) will further expand our investment channels and extend non-capital market investments to achieve long-term and stable investment returns.

In the first half, the company increased equity investment to 9.6 percent of the total from 7.8 percent, while cutting the proportion of fixed-income investments to 74.7 percent from 80.7 percent.

For the first half, however, Ping An's net profit slumped 46 percent to 5.2 billion yuan from 9.5 billion yuan a year earlier, exceeding the 32 percent fall predicted by six analysts polled by Reuters.

Based on domestic accounting standards, first-half profit fell 38.8 percent to 4.35 billion yuan.

Ping An attributed the slump in first-half profit to a decrease in the direct profit contribution from realised equity investment gains, rising costs associated with a surge in premium income, and tax provisions.

Ping An said in June it would buy out Newbridge Capital's stake in Shenzhen Development Bank as part of Chairman Peter Ma's ambition to build the insurer into a financial conglomerate.

Ping An's shares fell 0.69 percent to HK$65.1 in Hong Kong on Friday ahead of the results. The stock has jumped 68 percent this year, compared with a 45 percent gain in the benchmark Hang Seng Index .HSI.

Ping An and other insurers are expected to benefit from potential new government policies that would allow them to make private equity and real estate investments.

They may also benefit from a potential introduction of a tax deferrable corporate pension scheme in the fourth quarter starting in Shanghai, according to Goldman Sachs.

(US$1=6.832 Yuan)

(Editing by Muralikumar Anantharaman)

China Investment HSBC Goldman sachs