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PING AN (02318.HK) Company Profile
 
Ping An Insurance (Group) Co. of China Ltd. - H Shares   02318.HK
Company Profile
ChairmanMA Mingzhe
Share Issued (share)3,130M
Par CurrencyRMB
Par Value1
IndustryInsurance
 
 
Corporate ProfileBusiness Summary:
The principal activities of the Group comprise the provision of a wide range of financial products and services with a focus on the three core businesses namely, insurance, banking and investment.

Performance for the year:
In 2013, the Company’s net profit attributable to shareholders of the parent company reached RMB28,154 million, up 40.4% over the previous year. As at December 31, 2013, equity attributable to shareholders of the parent company stood at RMB182,709 million, 14.5% higher over the start of the year. The Company had total assets of RMB3,360,312 million, up 18.1% over the start of the year.

Business Review:
Insurance Business
In 2013, The Group’s insurance business continued its steady and healthy growth. Ping An Life continued to focus on value creation under the core strategy of “Reaching New Heights” and “Two-Tier Development”, its written premiums amounted to RMB210,125 million, among which, written premiums from individual life insurance business was RMB197,010 million, recording an increase of 11.9%. Ping An Property & Casualty continued to implement its business strategy of “professional operations and leading services”, which led to a significant increase of 16.8% in premium income to RMB115,365 million, with the market share reaching 17.8%. Of that amount, a premium income of RMB33,553 million came from telesales and internet marketing, representing a 17.6% growth, while RMB23,584 million came from the car dealer channel, representing a 18.6% growth. Its combined ratio was 97.3%, demonstrating good and stable profitability. Ping An Annuity’s asset management service continued to make sound investments and reaped returns higher than the industry average. It also actively expanded the employee benefits schemes, participated in the government’s medical services for the social security, which increased market coverage and accumulated customer resources. Ping An Health honed its competitive edge with product innovation under the “Vitality” program, leaping to first place in the high-end medical insurance market.

In 2013, macroeconomic conditions remained stable while growth rates slowed, but the economy continued with its structural transition. The Third Plenary Session of the Eighteenth Central Committee completed overall planning for the comprehensive implementation of reforms, which would further enhance the efficiency and quality of economic growth in the future. The life insurance industry maintained a positive trend as overall premiums grew steadily. The constant implementation of reforms to liberalize the market and rates, combined with policies to liberalize the use of insurance funds, continued to promote the industry’s development. Based on its principles of risk prevention and compliance, in 2013, the Company steadily developed its individual life business, which offers better profitability and persistently built up a scalable and efficient sales network. Steady and valuable business growth was achieved as a result and The Group’s market competitiveness increased as the year progressed.

Ping An Life
Ping An Life, through its nationwide service network of 35 branches and over 2,700 business outlets, provides individual customers and institutional clients with life insurance products. As at December 31, 2013, Ping An Life had a registered capital of RMB33.8 billion, net assets of RMB53,180 million and total assets of RMB1,164,267 million.

Of the total premium income generated by all life insurance companies in 2013, Ping An Life captured a market share of 13.6%, as calculated in accordance with the PRC life insurance industry data published by the CIRC. In terms of premium income, Ping An Life is the second largest life insurance company in China.

The Group’s life insurance products are primarily distributed through a network that includes a sales force of approximately 557 thousand individual life insurance sales agents, 3,475 group insurance sales representatives, and over 65 thousand commercial bank outlets that have made bancassurance arrangements with Ping An Life.

In 2013, Ping An Life continued to uphold its two core strategies of “Reaching New Heights” and “Two-Tier Development”, thus enhanced its business structure. Meanwhile, Ping An Life is committed to building a team of highly productive sales agents with strong cross-selling capabilities. Ping An Life has embraced value-driven operations to reinforce customer relationships, as well as to continuously improve its operation workflow and service quality. In 2013, written premiums from individual life insurance segment increased 11.9% as compared with the previous year. Ping An Life continued to step up the value transformation of its bancassurance business and carried out on-going structural adjustments to its business. The year-on-year growth of bancassurance regular premiums business led the industry by a substantial margin. Meanwhile, Ping An Life invested heavily in the development of new channels such as telemarketing and internet marketing, as part of its plan for the balanced development of existing channels. Ping An Life realized written premiums of RMB6,610 million in 2013 from telemarketing sales, up 72.5% compared with last year. This was a high rate of growth compared with traditional sales channels, which enabled Ping An Life to maintain the first place in the telemarket.

In 2013, Ping An Life diversified its product lines, advocated the protection function of insurance, promoted the sales of traditional insurance products portfolios and policies with higher insured amount. This allowed its sales team to become more knowledgeable in insurance products with protection function and provide insurance services to a wider range of customers, raising the margin of embedded value for new business. The margin of embedded value for new business was 30.8% in 2013, up 2.9 percentage points compared with the ratio in 2012.

Ping An Life remained customer-oriented to provide a “simple, convenient, friendly and safe” service experience for customers. It introduced three key measures to upgrade its services and introduced 20 comprehensive service commitments covering eight service sections. Ping An Life met its commitment to “48-hour settlement for standard cases with full documentation” for 97% of all cases handled. Following the introduction of service of “house call to claim, without leaving your home”, Ping An Life conducted settlement visits for a total of 1.17 million customers. The “multi-channel services to offer simplicity, convenience and peace of mind” commitment led to the introduction of channels such as mobile phone applications, mobile remote counters, remote service terminals, Ping An Bank ATMs and WeChat as well as online self-serve settlement service, and new payment methods including renewal premium payment application and QR code payment platform. As at December 31, 2013, Ping An Life had approximately 57.85 million individual customers and 998 thousand corporate clients. For The Group’s individual life insurance customers, The Group managed to maintain the 13-month persistency ratio of 91.7%. Ping An Life will continue to utilize modern technology, reinforce service innovation and build an industry leading service experience.

Ping An Health
In 2013, Ping An Health made rapid progress in its business development, with an increase of 46.4% in premium income. Ping An Health focused on the mid-to-high-end medical insurance business, continuously introduced new products and service innovations and expanded the market influence of products under the “Vitality” program. It introduced the “Top Service” core concept which focused on customer experience and aimed to enhance operational service standards. It utilized internationally leading medical insurance settlement and risk management technology to enhance risk control and improve operational quality. Ping An Health has gradually established an advantage in the mid-tohigh- end medical insurance market.

BUSINESS
Business Overview
The Group conduct property and casualty insurance business mainly through Ping An Property & Casualty, while Ping An Hong Kong also offers this insurance service in the Hong Kong market. As at December 31, 2013, Ping An Property & Casualty had a registered capital of RMB17 billion, net assets of RMB30,531 million and total assets of RMB159,003 million.

In 2013, the overall macro economy remained stable. The recovery of automobile sales growth has driven the steady increase in premiums of the industry. Ping An Property & Casualty continued to focus on business quality and implemented a customer-oriented sales and service system. It continued to upgrade its service pledge and improve its customer service experience. In 2013, the premium income of Ping An Property & Casualty increased by 16.8% to RMB115,365 million compared to the previous year. Ping An Property & Casualty accounted for approximately 17.8% of the total premium income received by property and casualty insurance companies in China, as calculated in accordance with the PRC insurance industry data published by the CIRC. Ping An Property & Casualty is the second largest property and casualty insurance company in China in terms of premium income.

Reinsurance arrangement
In 2013, Ping An Property & Casualty’s outward reinsurance premiums amounted to RMB16,503 million in total, of which, RMB10,679 million and RMB5,783 million were from the automobile and non-automobile insurance businesses, respectively, while RMB41 million came from the accident and health insurance division. Ping An Property & Casualty’s gross inward reinsurance premiums amounted to RMB47 million, all of which were from the non-automobile insurance business.

Ping An Property & Casualty continued to be actively engaged in reinsurance arrangements that helped to enhance its underwriting capabilities, diversify its operational risks and ensure its long-term healthy and steady growth. It has endeavoured to widen the scope of collaboration by stepping up efforts to work with reinsurers to expand reinsurance channels. Ping An Property & Casualty has gained strong support from the world’s major reinsurance markets including Europe, the United States, Bermuda and Asia and so on. Currently, it has established extensive and close partnerships with nearly 100 reinsurance companies and reinsurance brokers worldwide. Its major reinsurance partners include China Property & Casualty Reinsurance Company Ltd., Swiss Re, Munich Re and Hannover Re Group.

Banking Business
The Company runs its banking business through Ping An Bank, which is a national joint-stock commercial bank headquartered in Shenzhen and listed on Shenzhen Stock Exchange under the stock name “Ping An Bank” and stock code “000001”. As at December 31, 2013, Ping An Bank had total assets of RMB1.89 trillion, net assets of RMB112,081 million and paid-up capital of RMB9,521 million. It provides a broad range of financial services to corporate, retail, and government customers, through a network of 528 branches and sub-branches in 38 major cities across the country. As at December 31, 2013, the Company and its connected subsidiary jointly held 5,617 million shares, representing approximately 59.0% of the total shares of Ping An Bank.

In 2013, the world economy recovered at a moderate pace. China’s macro-economic control followed the underlying principle of “making progress while maintaining stability”. China continued to implement a proactive fiscal policy and a prudent monetary policy, and the overall economy maintained stable. In terms of the financial environment, the PBOC has completely liberalized lending interest rates, the pace of interest rate liberalization has picked up, the degree of financial disintermediation has become more pronounced, payments disintermediation gradually became a trend, market competition intensified, internet finance emerged quickly, consumer demand for improved financial services has increased, range for interest margin has been limited, pressure continued in the demand to increase deposits and capital demand.

Faced with a complicated and ever-changing external environment, Ping An Bank set out the guiding principle “Reform, Innovation and Development” and made steady progress in its strategic transformation, achieving healthy growth in its respective businesses. As at December 31, 2013, the total assets of Ping An Bank amounted to RMB1.89 trillion, representing an increase of 17.8% as compared with the end of 2012, total deposits amounted to RMB1,217,002 million, representing an increase of 19.2%, total loans amounted to RMB847,289 million, representing an increase of 17.6%.

The strategic transformation was strengthened, while strategic businesses achieved healthy growth. Ping An Bank continuously put efforts in developing the areas of investment banking business, retail, microfinance, credit card, automobile finance and trade finance. The Group’s innovations in business model, products and services all achieved great breakthroughs. As at December 31 2013, trade finance facilities balance amounted to RMB370,556 million, representing an increase of 29.0% as compared with the end of 2012; the micro-loans balance was RMB87,128 million, up by 56.0% over the end of 2012; the automobile consumption loan balance reached RMB48,747 million, representing an increase of 130.8% compared with the beginning of the year, whose market share kept leading the industry; while credit cards in force (CIF) reached 13.81 million, up 25.6% over the beginning of the year. The brand of “Golden Orange” from The Group’s investment banking business has seen results marked by growing contributions to product lines. Meanwhile, 26 financial companies, 11 securities companies and 31 fund companies have become members of Golden Orange Club. Other membership platforms are still under construction. Ping An Bank introduced its “Daidai Ping An Commercial Card”, which provides one-stop solution for small enterprises to enjoy comprehensive integrated financial services including deposit, borrowing, settlement and wealth management. Leveraging on the opportunity in internet and big data era, Ping An Bank upgraded its trade finance services and realized “four streams come into one”, namely commercial stream, fund stream, information stream and logistic stream. Meanwhile, Ping An Bank upgraded “Ping An Pocket Bank” which enhanced customer’s mobile payment experience and established a platform called Inter-bank E Express to provide products and services for large number of medium and small commercial banks.

By actively adjusting business structure with effective cost management, in 2013, the key performance indicators of Ping An Bank continued to be favorable, while quality and efficiency continued to rise. The banking business realized a net profit of RMB14,904 million, up by 12.6% as compared with last year, and profit contribution to the Group reached RMB7,807 million. Non-interest net income kept a stable growth rate, by reaching RMB11,500 million, growing 68.8% as compared with last year. The non-interest net income contributed to 21.9% of the net operating income, up by 4.9 percentage points compared with last year, which further improved the income structure. In 2013, the cost/income ratio was 41.75%. Strategies such as operational transition and expansion of outlets were implemented while maintaining reasonable growth in costs.

Ping An Bank ramped up its network expansion, with the number of business outlets growing rapidly. In 2013, five branches, namely the Xian branch, Suzhou branch, Linyi branch, Leshan branch and Xiangyang branch, and 73 sub-branches were officially opened. As at the end of 2013, the number of Ping An Bank’s outlets reached 528, up by 78 compared to the end of 2012. The strategic allocation of banking institutions became complete, and The Group is well-equipped to meet the requirement to serve the group’s integrated financial strategy and customer demand, promoting the development of banking business.

In 2013, the Group has successfully completed the capital injection of RMB14,782 million to Ping An Bank, which significantly improved the Bank’s capital adequacy. As at the end of 2013, the capital adequacy ratio of Ping An Bank was 9.90%, with both tier one capital adequacy ratio and core tier one capital adequacy ratio of 8.56%, under the “Capital Rules for Commercial Banks (Provisional)” enforced by the CBRC. Ping An Bank continued to tighten risk regulation, improve risk management system, and maintain a stable quality of assets. As at the end of 2013, the non-performing loans ratio was 0.89%, 0.06 percentage points lower over the beginning of the year. The provision coverage ratio was 201.06% while the loan loss provision ratio was 1.79%, representing an increase of 18.74 percentage points and 0.05 percentage points respectively, over the start of the year.

Investment Business
TRUST BUSINESS
The Company provides private wealth management services to its high net worth customers through Ping An Trust. As at December 31, 2013, assets managed under trust schemes reached RMB290,320 million, up 36.9% compared with the end of 2012. In addition, Ping An Trust provides investment and asset management services to institutional customers and other subsidiaries of the Company. It directly managed alternative investment for insurance funds amounting RMB14 billion. Ping An Trust had RMB6,988 million in registered capital, RMB17,134 million in net assets and RMB18,563 million in total assets as at December 31, 2013.

In 2013, the trust industry maintained its rapid growth trajectory, with managed assets of the industry exceeding RMB10 trillion. Following the CSRC’s introduction of more liberal regulatory policies for securities and the fund asset management business, the CBRC tightened control over investments on non-standardized debt assets from non-bank capital. Hence, the trust industry would need to change its core business model. According to the “China Trust Industry Report 2013” published by Ping An Trust and McKinsey & Company, approximately 88% of current industry revenue is uncertain. The same report also stated that the channel business of trust companies is likely to vanish in five years, which raises the urgency for accelerating transformation in the trust industry. The report also pointed out that the future growth directions for the trust industry will be private wealth management, alternative asset management, private placement and investment banking.

In the face of formidable market challenges, Ping An Trust has continuously strived to achieve innovation and breakthroughs. Driven by its three main engines of product, channel and operating service, the private wealth management business reached new heights. The paid-in capital of collective trust products mainly for individual customers reached RMB175.8 billion, up 47% over the start of the year, well ahead of its peers. The number of active high net-worth customers exceeded 21,000, up by 14.5% over the start of the year, while average asset under management per customer also achieved significant growth. In terms of products, to meet customers’ demand for all-inclusive investment and financing services, Ping An Trust continuously focused on product innovation, launching new products such as pledged account receivable, stock index futures, A-share structured securities and family trust to further enrich its product line. In terms of channels, Ping An Trust steadily expanded its sales channels and raised the professionalism of its wealth management managers, while offering differentiated value-added services to deepen its business relationship with existing customers. Together with Ping An Bank, it launched the first-of-its-kind wealth management bank card “Si Cai Card”. In terms of operating service, the three-year IT plan was completed, with 130 sub-projects launched and 158 workflows revised, raising efficiency by more than 50%, while the network service of the “Ri Ju Jin” product was improved through innovations. Meanwhile, Ping An Trust also established a customer layering service system, as well as improved the service workflow and customer risk control system to further enhance customer experience.

The alternative investment business underwent further expansion, which resulted in a steady growth in income from asset management and financial consultancy service. Investment scale of property investment enlarged with continuous development. In support of Ping An Trust’s investment advisory service, Ping An Life successfully purchased the Lloyd’s building of London in 2013, which marked the Group’s first acquisition of foreign real estate with its insurance fund. In terms of infrastructure investment, Ping An Trust has actively promoted investments in infrastructure with insurance fund and trust fund. Meanwhile, it also made active investments through a number of ways, such as equity, bond and mezzanine financing, to form an infrastructure investment portfolio that combines transportation infrastructure, energy and electricity and mineral resources. In line with the nation’s 12th Five-Year Plan, Ping An Trust made PE investments in the seven emerging strategic industries. Ping An Trust has lived up to its commitments of “growing together with the best enterprises in China” and strived to achieve adequate returns for the Company and its customers. To further enhance the growth of investee companies, Ping An Trust established a strong post-investment management team, and jointly launched a number of “leadership development projects” with McKinsey & Company. It also held PE annual conferences and industry forums for investee companies, to help them enhance their strategic planning and implementation ability to expand their businesses.

Moreover, Ping An Trust has established an industry-leading risk management system based on the spirit of the Basel II Accord to identify, measure, monitor and manage various risks. It manages market risks, credit risks, liquidity risks, compliance risks, centralization risks and operation risks under various indicators such as risk limits and net capital. It also selects quality counterpart and projects through setting up a more stringent internal credit rating system. In 2013, Ping An Trust fully fulfilled its payment obligations without incurring any default risks, under which payment of the real estate trust exceeded RMB20 billion.

In 2013, in recognition of its satisfactory financial performance, outstanding service standards and good reputation, Ping An Trust won numerous awards. It won the “Annual Outstanding Trust Company Award” jointly awarded by Shanghai Securities News and cnstock.com for the fourth time running; the “Most Influential Trust Company” by China Business News Daily; the “Annual Meeting of China’s Securities Market- Golden Key Award for Trust Companies” by Securities Daily; the “Best Legal Risk Governance of the Year” award and the “Comprehensive Strength Award” at the 3rd Deloitte China Risk Intelligence Recognition Awards, achieving the distinction of being the only trust company to win the award; and the “Chinese Financial Institution Gold Medal List – Golden Dragon Prize (Best Trust Company of the Year)” jointly organized by Financial News and the Institute of Finance and Banking of the Chinese Academy of Social Sciences.

SECURITIES BUSINESS
The Group conduct The Group’s securities business through Ping An Securities, providing brokerage, investment banking, asset management, financial advisory services, etc. In 1996, Ping An Securities formed a subsidiary, Ping An Futures, which conducts futures brokerage business. It became an innovative securities company in 2006. In 2008, it formed a wholly-owned subsidiary, Ping An Caizhi, which conducts direct investment. In 2009, it set up another subsidiary in Hong Kong, Ping An Securities (Hong Kong). In 2012, it formed a wholly-owned subsidiary, Ping An Pioneer Capital, to conduct alternative investment business. As at December 31, 2013, Ping An Securities had RMB5.5 billion in registered capital, RMB8,662 million in net assets and RMB37,638 million in total assets.

In 2013, with the continuous growth of internet finance and the release of the IPO reform plan, reforms in the securities market were further deepened and the securities industry struggled to find its footing amidst the reform. IPOs in the primary stock market were suspended while bond issue slowed down; income from the underwriting business in the entire industry fell significantly. In the secondary market, the CSI 300 Index fell by 7.6% while the transaction volume of stocks and funds surged 49.8% compared with 2012. Income of the brokerage business substantially increased. The industry as a whole tended to rely largely on its brokerage business, investment transactions and underwriting business. Nevertheless, industry profitability was still under threat as brokerage commission rates decreased and as various market policies were launched. Further, the development of internet finance and the impact of interest rate marketization put great pressure on the entire industry to transform.

By following the pace of reform and strengthening its competitive edge, Ping An Securities has actively explored and innovated new business. In 2013, its fixed income business completed 27 credit bond issuance projects as the lead underwriter, ranking forth in the industry. Its reform in the securities brokerage business achieved remarkable results, with margin trading and securities lending business reaching RMB3.25 billion, up 241.1% over the start of the year, further optimizing the business structure. The scale of asset management business grew 359.0% over the start of the year, reaching RMB54.03 billion. For innovative business, Ping An Securities was granted the business qualification to conduct OTC equity swaps, OTC option transaction, securities pledged by stock held under repurchase agreements at Shanghai Stock Exchange and Shenzhen Stock Exchange. It became the first batch of securities companies to obtain the business qualification for conducting remote pledged securities brokerage. Ping An Securities has actively explored fund-raising channels to supplement the capital strength, so as to support its business development. In the first half of this year, it has successfully issued the first batch of short-term financing bonds, a breakthrough in debt financing; in the second half of this year, it was granted the approval from regulatory authority to issue subordinated bonds.

At the “Best Wealth Management Institution in China Awards 2013” jointly held by Securities Times and New Fortune Magazine, Ping An Securities won in the “Asset Management Securities Broker with the Greatest Growth in China” category. The investment consulting service “An E Wealth Management” received the “Best Investment Consulting Award in China”, while “Capital Secure No. 1” was awarded “Best Mixed Asset Management Product in China”. At the 11th Best Analyst Awards by New Fortune Magazine, the electronic team of its research department ranked second in the electronic industry, and its banking team ranked fifth in the banking industry.

The securities industry is undergoing a new round of reform and transformation. Ping An Securities will continue to focus on its customers, fully explore and utilize the Group’s integrated financial competitiveness, as well as the advantages of its leading business, and seize every opportunity to innovate and make strides towards becoming the most professional securities company in China.

INVESTMENT MANAGEMENT BUSINESS
The Group provides investment management services primarily through two subsidiaries of the Group, Ping An Asset Management and Ping An Asset Management (Hong Kong).

Ping An Asset Management is responsible for The Group’s domestic investment management business. It is entrusted to manage the insurance funds of the Group as well as investment assets of other subsidiaries under the Group. It also provides investment products and third-party asset management services to other investors through various channels. As at December 31, 2013, Ping An Asset Management had RMB500 million in registered capital.

As at December 31, 2013, assets under management of Ping An Asset Management amounted to RMB1,275,288 million, representing an increase of 29.8% compared to the end of 2012. This was mainly attributed to the increases in investable assets and investment income resulted from the steady growth in insurance business.

In 2013, using The Group’s expertise in investment assessment and effective risk management, Ping An Asset Management responded promptly to the changes in the bond and equity markets, optimized asset allocation, steadily increased investments in fixed income assets with high interest rates, maintained the flexibility of equity assets allocation and obtained stable investment returns. Total investment income for the insurance funds in the year amounted to RMB52,652 million, and total investment yield was 5.1%, contributing positively to the Company’s profit.

The Group’s third-party asset management business achieved steady growth. By continuously making improvements to business structure, analysing environmental changes, and actively pursuing business innovation, The Group were able to achieve stable growth both in terms of the third-party asset management business scale and income while keeping risks at a manageable level.

In 2013, Ping An Asset Management saw through the construction of the investment management system platform, optimized investment transactions and operating procedures. Investment efficiency and operational stability were further enhanced. This provided effective support for investment research and facilitated decision making, establishing a solid foundation for building a competitive barrier for the Company.

Going forward, the Company will continue to strengthen its research and understanding on macroeconomic conditions, strive to unlock the full potential of its asset allocation, optimize its investment decision-making system and strengthen risk control measures. This will further stabilize investment income and make the Company less vulnerable to cyclical effects, provide more comprehensive investment management service for investors to strengthen The Group’s image as a leading industry brand.

Ping An Asset Management (Hong Kong) operates the overseas investment management business of the Group, as well as managing investments for other subsidiaries under the Group, it also provides a range of overseas investment products and third-party investment management services to clients from China and overseas. Ping An Asset Management (Hong Kong) has a professional team with ample experience in international investment, overseeing research on global macroeconomics, strategic asset allocation, investment in Hong Kong stocks, and other core functions. The team also focuses on the building of an international investment platform, introducing products from overseas to achieve innovation in service offerings. As at December 31, 2013, the assets denominated in foreign currency under management of Ping An Asset Management (Hong Kong) amounted to HK$29,476 million.

FUND BUSINESS
Ping An-UOB Fund, established on January 7, 2011 with a registered capital of RMB300 million, is the 63rd fund management company in China. Ping An-UOB Fund mainly engages in raising securities investment funds, sales, assets management business, and provides professional investment products and related services to retail and institutional investors.

The funds under Ping An-UOB Fund put in an excellent performance overall. Stock investment management achieved remarkable results with average growth of 35.42% in net value of equity funds. According to TX Investment Consulting Co., it ranked No. 2 among 70 fund companies. Among the funds under Ping An-UOB, the net value of “Ping An-UOB Industries Pioneer Equity Fund” increased by 36.35%, which ranked among the top 15%.

In 2013, the Ping An-UOB Fund focused on developing the business of asset management service for specific clients by issuing around 200 such products with the total amount being about RMB100 billion. These products had a wide scope of investment and flexible forms that diversified the wealth management and investment product lines of the Group. It was also customer-oriented in effectively meeting the investment and financing needs of high-end customers.

Integrated Finance
In 2013, the Company accelerated the progress in integrated finance by proactively promoting technological innovations to spur the business development. In terms of personal integrated finance, the Company adhered to the “customer-centric” managerial concept, carried out multifaceted analysis and research on existing customers, designed a customer value segmentation and management system and established a big data analysis platform, in order to better acquire customers, strengthen integrated financial services, promote the migration of customers, and optimize cross-selling. Meanwhile, The Company has also actively promoted innovation and technology applications as the MIT and E-integrated financial platform becomes more mature, greater synergy was generated.

CROSS-SELLING
Through years of hard work, The Group has greatly enhanced the depth and scope of The Group’s cross-selling activities. Cross-selling has produced remarkable results and the synergy of integrated financial services is increasingly visible.

CUSTOMER VALUE SEGMENTATION AND VALUE MANAGEMENT
In 2013, Ping An Group established a customer value segmentation and management system as well as a big data analysis platform, in order to better manage personal integrated financial services. Based on The Group’s mass customer data and market research data, The Group has segmented The Group’s customers by assessing their wealth and income.

The Group is committed to further apply “customer-centric” managerial concept to The Group’s personal integrated finance operations by focusing on customer value segmentation. The Group has started to align The Group’s monitoring and performance assessment system with The Group’s newly established customer value segmentation and management system. This will help us generate more insights into The Group’s customers, thus better manage and measure The Group’s operations and focus The Group’s efforts on what matters the most to The Group’s customers.

BACK OFFICE CENTRALIZATION
In 2013, the Company made progress in operating platform in the following areas:

Specialized Operations:
The Group’s business network currently covers the entire country and The Group continue to improve The Group’s service network. An operation platform for end-to-end workflow management has been established, and The Group continued to create new service models to enhance the customer service experience.

• Insurance business: based on the customer orientation concept, The Group optimized The Group’s operational workflow to support the accomplishment of the service commitments of Ping An Property & Casualty, Ping An Life and Ping An Annuity.

• Banking business: The Group support the steady growth in banking business, with fulfilment rates in service pledge achieved above target; the extent of cost optimization was higher than that of the average of the Company.

In 2013, the external market and customer needs underwent rapid changes in the internet age, the operational services, products and sales need to respond to these changes swiftly and cooperate closely. To keep pace with external market and business developments, Ping An Processing & Technology undertook the integration of end-to-end business workflows and the reform of the operation model.

Shared Operations:
The Company will continue to consolidate its operations sharing to improve customer services as well as enhance service efficiency.

• The centralization of document processing among major Ping An subsidiaries such as Ping An Property & Casualty, Ping An Life, Ping An Annuity, Ping An Health and Ping An Bank was 87.5% completed.

• 100% of accounting processes and staff services of the major subsidiaries of the Company such as Ping An Property & Casualty, Ping An Life, Ping An Annuity, Ping An Health, Ping An Bank, Ping An Trust, Ping An Securities, Ping An Asset Management, Ping An Technology and Ping An Channel Development was done on a shared-service basis.

• Centralization of call centre services for the major subsidiaries of the Company such as Ping An Property & Casualty, Ping An Life, Ping An Annuity, Ping An Health, Ping An Bank, Ping An Securities, Ping An Trust and Ping An Technology was implemented, with 74.1% of all calls taken centrally.

TECHNOLOGY-DRIVEN FINANCE
In 2013, the Company stepped up the centralization of its back-office for integrated financial services, which greatly increased the synergy and raised service levels. Utilizing the remote handling devices, all branches now have the capability to provide integrated services for customers to experience a one-stop service. Through the use of new technology, the Company promoted innovative service models and made breakthroughs, including research on intelligent voice recognition technology, establishment of a company platform on Baidu Knowledge, development of a Mobile Remote Loss Assessment System for iPad, and a risk map.

The Mobile Integrated Terminal (MIT) has been well received by customers and sales force due to its convenience and speed since its promotion in 2011. As many as 11 million customers have been offered with financial services covering insurance and security since its launch, with contribution of premium amounting to over RMB88 billion. Each year, it saved hundreds of millions of operation cost as well as nearly 900 tons of paper. As the MIT has been further improved, its use in integrated finance segment has also achieved a breakthrough. The platform has comprised product lines of Ping An Property & Casualty, Ping An Annuity and Ping An Health to form a sales platform which unified life insurance with property and casualty, annuity and health insurance products. Between products lines, customer’s information could be shared and payments were centralized. This model has simplified the processing workflow of the sales force and reinforced customer’s service experience by offering a variety of value-added services onsite. The MIT usage rate of life insurance business has stabilized at 98%, automobile insurance business has come to nearly 40%, and health insurance business exceeded 80%. Meanwhile, based on the MIT platform, E-services were extended to frontline sales through “E-Sales Access”. This involves precise and comprehensive analysis of customer needs, to help customers understand what items are not covered by insurance. As at the end of December 2013, 70% of sales agents have utilized the E-Sales Access platform.

In 2013, through the enhancement of shared operation, the elevation in automation and other optimizing measures, Ping An Processing & Technology continued to upgrade claims services for Ping An Life and Ping An Property & Casualty.

Ping An Life remains committed to upgrading its service, by committing to “settlement within 48 hours for standard cases with full documentation” and has achieved a 97.0% fulfilment rate. Ping An Property & Casualty committed to “settlement within 72 hours from reporting to receiving benefit payment for claims below RMB10,000” and has achieved a 95.2% fulfilment rate.

In the future, the Company will continue to enhance the customer service experience, endeavour to surpass customer expectations, optimize the business structure and support new business development. In addition, the Company will promote innovative technology and establish a leading management platform, to better support and drive each business’s cross-development and integrated financial strategies.

Prospects:
The Group’s business and operation plans remain consistent and stable as no major changes have been made to The Group’s long-term operating objectives as compared with those announced last year and at the time when The Group’s A shares were listed.

In 2013, the Company was committed to driving and implementing its business plans effectively. The three pillar businesses – insurance, banking and investment – all recorded steady and healthy growth. The Group steadily enhanced profitability and achieved the performance indicators of all operating plans as set out last year.

In 2014, the Company will remain resolute and continue to forge ahead with the development plans formulated by the Board of Directors to achieve reasonable growth and optimize its internal structure. The Group has actively mapped out The Group’s future to achieve growth that is valueoriented, sustainable and which outperforms the market, bringing The Group’s strategic goal of becoming “China’s leading personal integrated financial services provider” to a higher stage.

• Ping An Life places value management at its core. In particular The Group will focus on the core strategy of “Reaching New Heights” and “Two-Tier Development”, continue to abide by the principle of agency team-based operations, differentiate its business model, strengthen agency team building, further enhance the size and efficiency of agency force and develop them into a team of professional integrated financial services salespersons, to provide customers with mid- to long-term insurance services and integrated financial services. Ping An Property & Casualty will continue to hone its differentiated competitive advantages and raise its level of refined management capability, while providing better customer experience and improving customer satisfaction through matching specific products and services with customer attributes. The pension asset management business of Ping An Annuity will follow a prudent investment philosophy and maintain an investment return that exceeds the industry average. It will meanwhile develop its employee benefit scheme, participate in the government social security program as well as expand market coverage and accumulate customer resources. Ping An Health will build a health management and service platform, to meet customer demand for integrated solutions in health insurance and health management.

• Ping An Bank will continue to focus on its strategic objective to establish itself as the “Best Bank”. By taking advantage of the Group’s integrated financial platform, The Group will further promote cross-selling, to build the core strengths of integrated finance; at the same time, The Group’s focus will be on optimizing its business structure, innovation in organization model and business model. Driven by technology, The Group will increase strategic investment, put The Group’s “customer-oriented” management philosophy into practice, build a “smart bank” through projects that include the establishment of a supply chain finance platform and a big retail data mart.

• The Group will continue to promote Ping An’s investment business as a leading investment management platform. By leveraging its strength in integrated financial services, the Group offers customers a comprehensive range of services which include securities and bonds financing, securities agents, financial advisors and asset management, enhancing the customer experience. The Group will enhance the market value of The Group’s investment project by strengthening The Group’s management of the post-investment process, and by using the experience gained to guide The Group’s customers’ investment decisions. The Group will make reference to global experience in managing The Group’s insurance funds and further improving The Group’s investment management system. In compliance with CIRC policy requirements, The Group will actively explore and promote alternative asset investments, to improve the stability and returns of The Group’s insurance fund investments, and to make The Group’s insurance products more competitive.

• The Group will continue to refine the “One Customer, One Account, Multiple Products and One-Stop Services” integrated financial structure and platform, further develop the front office and overhaul the middle office, enhance The Group’s customer service model along with The Group’s customer experience, and thoroughly explore the customer value to promote customer migration and intensify synergy effect.

• The non-traditional business will focus on building up internet traffic based on service and data, and on integrating the everyday life of health, food, housing, transportation and entertainment into the web portals. It will set up an advanced internet products and service platform, support the key projects from different aspects, including Lufax, e-payment, auto market and comprehensive financial stores, as well as convert more non-financial services users into financial services customers.

The Company expects to maintain a steady growth in its performance in 2014. The insurance businesses are expected to keep sustainable and solid growth. The banking business promotes its strategic transformation steadily, and the Company also expects more diversified returns for its investment business. In light of changes in the macroeconomic environment, market competition, investment market conditions and other factors, The Group will make timely adjustments to The Group’s business development goal to further enhance The Group’s market competitiveness.
Information from the financial statements of listed companiesLast Update: 2014/03/14
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