(Bloomberg) -- Ping An Insurance (Group) Co.’s trust business delayed repayment on a property-linked investment product, showing how the financial giant’s asset-management operations are still reeling from China’s prolonged real estate downturn. 

Ping An Trust apologized on Wednesday to its customers for postponing the payment, and blamed the overall downturn in the real estate market. It said it is suing defaulted Chinese developer Zhenro Properties Group Ltd., and actively looking for ways to recoup investors’ money. 

The trust product had raised 772 million yuan ($107 million) in 2021 to fund a property project in the southern city of Xiamen and matured last month, according to a report in state-media outlet Securities Times. Sales at the development have been slow, and proceeds are going into a regulatory account following Zhenro’s default, the report said. 

While the delayed payment amount isn’t large, it adds to lingering signs of real estate related stress at Ping An, China’s largest insurer by market value. 

The Shenzhen-headquartered company previously lost billions from an ill-fated investment in property developer China Fortune Land Development Co. a few years ago. Its sprawling asset management business — which includes Ping An Trust — recently swung to a 20.7 billion yuan loss in 2023.

Ping An’s Co-Chief Executive Officer Michael Guo told Bloomberg in March that the risks — including exposure to the property sector — are “controllable,” and that company has set aside sufficient reserves to weather the downturn. 

Ping An Trust managed 663 billion yuan in assets as of Dec. 31, the insurer’s latest annual report showed. It was also China’s biggest trust company by net assets and revenue last year, according to data compiled by Yunnan International Trust Co..

The asset management business, including the trust unit, has set aside provisions “prudently” and revalued some items amid rising credit risks and capital-market volatilities, according to Ping An’s annual report. 

Trust companies were a significant source of funding for China’s housing sector before the recent downturn. Many trusts raised funds by selling high-yielding products to wealthy individuals and companies, and funneled some of the money into property projects.

The property crisis has dragged down other large players in China’s trust industry, a key part of the country’s shadow banking system. Private wealth giant Zhongzhi Enterprise Group Co. filed for bankruptcy earlier this year after its affiliate Zhongrong International Trust Co. failed to repay clients on high-yield products, and regulators approved the bankruptcy of Sichuan Trust earlier this month. 

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