(Hong Kong, Shanghai, 27 October 2020) Ping An Insurance (Group) of Company of China, Ltd. (hereafter “Ping An” or the “Group” or the “Company”, HKEx:2318; SSE:601318) today announced its results for the nine months ended 30 September 2020.
In the third quarter of 2020, China achieved strong results in the prevention and containment of COVID-19. As a result, the domestic economy saw a steady recovery and Ping An’s business development through traditional offline channels gradually resumed. However, Ping An’s long-term protection business was still adversely impacted by COVID-19 as domestic consumption demand was still recovering and offline face-to-face meetings remained below pre-epidemic levels. Meanwhile, the ongoing global spread of COVID-19 sent major economies into recession and complicated the international environment.
Facing such unfavorable conditions as rising credit risk and volatile equity markets, Ping An adopted various measures, including strengthening risk management, advancing Ping An Life’s reform, and promoting online-merge-offline operations, to mitigate the adverse impact of COVID-19 on its activities and lay a solid foundation for future sustainable growth.
In the first nine months of 2020, operating profit attributable to shareholders of the parent company rose by 4.5% year on year to RMB108,692 million, culminating in a 20.9% annualized operating ROE. Net profit attributable to shareholders of the parent company decreased by 20.5% year on year to RMB103,041 million, a smaller decline compared with the first half of the year. Retail customer development continued to yield strong results. As of September 30, 2020, retail customers increased by 7.0% from the beginning of 2020 to over 214 million. In the first nine months of 2020, new customers increased by 2.5% year on year to 28.53 million. Contracts per customer grew by 2.7 % year to date to 2.71. Value contributions from corporate business cross-selling rose year on year. Ping An continued to take a segmented approach to customer development, serving nationwide strategic customers, regional large customers, and small and micro-business customers. In the first nine months of 2020, the new financing volume achieved through corporate business cross-selling climbed by 149.8% year on year, and the written premium of the corporate channel achieved through cross-selling grew by 113.4% year on year.
Ping An continued to develop its technological capabilities. As of September 30, 2020, Ping An’s technology patent applications increased by 6,654 on the year to date to 28,037, more than most other international financial institutions. In addition, Ping An won multiple international honors in AI, healthtech and other fields. Ping An’s healthtech team won the championship in the biomedical translation task of 2020 Conference on Machine Translation (WMT2020).
Financial Businesses: Operating profit after tax of the life and health insurance business rose by 9.2% year on year, Ping An Property & Casualty’s premium income grew by 11.5% year on year, and Ping An Bank maintained stable business operations.
With the epidemic under control, traditional offline operations gradually recovered, but it remained difficult to hold large-scale offline campaigns. Offline customer meetings have yet to return to pre-epidemic levels. In the first nine months of 2020, operating profit after tax of the life and health insurance business rose by 9.2% year on year to RMB75,446 million; NBV of the life and health insurance business declined by 27.1% year on year to RMB42,844 million. In response to the challenges posed by the epidemic, the Company continued to upgrade its online operating model, and took innovative measures in team management, customer development, and product promotion to accumulate momentum for business growth.
To tap into the high potential Chinese life insurance market, Ping An Life has started a series of reform projects to empower business teams through culture building, model upgrading, operations improvement, product strategies, and channel development. By doing so, Ping An Life is building long-term competitive advantages, and sustainable and healthy growth platforms for its long-term strategic development. The reform projects have been piloted and will be scaled up.
The property and casualty insurance business grew steadily, with quality under control. In the first nine months of 2020, Ping An Property & Casualty maintained steady development despite the COVID-19 epidemic. Premium income grew by 11.5% year on year to RMB219,490 million. China has contained the epidemic and maintained strong economic resilience, growth momentum, and favorable policies. In addition, Ping An Property & Casualty has improved its risk management policies, customer management, and post-underwriting management. As a result, Ping An Property & Casualty’s guarantee insurance combined ratio for the first nine months of 2020 was better than that for the first half. As market competition intensified, the overall combined ratio for the first nine months of 2020 reached 99.1%, 1.0pps higher than that for the first half. Operating profit decreased by 22.4% year on year to RMB11,055 million.
As of September 30, 2020, “Ping An Auto Owner” app, the largest automotive tool app in China, had over 117 million registered users, up by 26.5% year to date. Ping An Property & Casualty streamlined the claims process to offer more accurate claims services. As of September 30, 2020, 88% of family auto insurance claims were settled via “One-click Claim Services”, demonstrating the leading position of Ping An Property & Casualty in online claim settlement.
The Company continued to improve the asset allocation and asset-liability duration matching of its investment portfolio of insurance funds. As of September 30, 2020, the Company’s investment portfolio of insurance funds grew by 10.3% from the beginning of 2020 to RMB3.54 trillion. In the first nine months of 2020, the investment portfolio of insurance funds achieved an annualized net investment yield of 4.5% and an annualized total investment yield of 5.2%. Based on the long-term trends of China’s economic growth and financial markets, the Company optimized asset allocation and strengthened ex-ante risk management.
Banking business maintained stable business operations and strengthened provisions. Ping An Bank proactively strengthened provisions for impairment losses on loans and advances as well as non-credit assets according to economic trends and predictions regarding domestic and international environment. Meanwhile, Ping An Bank increased the write-off of non-performing assets and raised the provision coverage ratio. In the first nine months of 2020, revenue grew by 13.2% year on year to RMB116,564 million and pre-provision operating profit grew by 16.2% year on year to RMB83,313 million. Net profit decreased by 5.2% year on year to RMB22,398 million, but it declined at a slower pace compared with the first half of the year. As of September 30, 2020, Ping An Bank’s retail assets under management (AUM) rose by 25.5% from the beginning of 2020 to RMB2,488,171 million. Retail customers increased by 6.8% from the beginning of 2020 to 103.64 million. The provision coverage ratio was 218.29%, up by 35.17pps from the beginning of 2020.
Technology Businesses：Ping An continues to further its technology strategies to empower core financial businesses and strengthen external expansion. Total revenue of the technology businesses increased by 8.3% year on year.
Ping An continues to further its technology strategies and develop its technology businesses rapidly. In the first nine months of 2020, total revenue of the technology businesses increased by 8.3% year on year to RMB65,028 million.
In respect of financial services ecosystem, Lufax Holding maintained steady growth. As of September 30, 2020, Lufax Holding’s client assets rose by 9.1% from the beginning of 2020 to RMB378,278 million. The balance of retail credit facilitated by Lufax Holding increased by 15.9% from the beginning of 2020 to RMB535,788 million. The ratio of loans more than 30 days overdue in loan portfolios facilitated by Lufax Holding has fallen significantly from the peak seen in the second quarter and has returned to pre-epidemic levels.
OneConnect (NYSE: OCFT) is a leading technology-as-a-service platform for financial institutions, serving over 3700 financial institutions in more than 18 countries or regions. OneConnect technological empowerment has achieved good results and recognition. In August 2020, OneConnect was included in the 2020 IDC China Fintech Top 50. In September 2020, OneConnect won the Platinum Award for Digital Banking at the IFTA FinTech Achievement Awards 2019.
In respect of health care ecosystem, Ping An Good Doctor (HKSE: 01833.HK) provides users with online and offline medical services, by integrating offline health care networks. In mid-2020, Ping An Good Doctor launched an across-the-board “strategic upgrade”. Through the strategic upgrade, Ping An Good Doctor is committed to facilitating communication between doctors and patients and strives to become China’s largest online healthcare service platform with the most advanced business models and the strongest barriers to competition. In September 2020, Ping An Good Doctor launched a sub-brand “Ping An Doctor Home” and upgraded its services, including the Private Doctor and the Doctor Virtual Office, to serve both users and doctors.
In the government and medical service providers sector, Ping An Smart Healthcare launched the “Nationwide COVID-19 Real Time Dashboard”, with key authoritative organizations of the State. The dashboard went live on over 300 official platforms in 21 provinces and 31 cities across China, keeping the public updated on the latest development of the epidemic. Ping An Smart Healthcare also provided AI-based image reading services for over 1,500 medical institutions across China to identify COVID-19. The service takes only 15 seconds on average to issue a single smart analysis. More than 40 million images were analyzed. With respect to payers, Ping An HealthKonnect launched a Smart Social Health Insurance (SHI) Integrated Platform. As of September 30, 2020, Ping An HealthKonnect had won bids to construct SHI platforms for nine provinces, including Qinghai, Hainan, Guangdong and other regions.
In respect of auto services ecosystem, Autohome (NYSE: ATHM) is China’s leading online auto services platform, providing auto consumers with diverse products and services across the entire auto lifecycle. A data-driven business, Autohome is committed to empowering automakers and dealers in terms of research and development and marketing and sales. Autohome successfully held the 818 Global Super Auto Show 2020, which was attended by over 70 brands and over 2,400 auto dealers, receiving wide attention from consumers.
In respect of smart city ecosystem, Ping An’s smart city business empowers city development with technologies in government services, business development, and citizen services. Ping An has developed a portfolio of integrated smart city solutions to fulfill the Company’s mission of serving the country, society, and public. Ping An’s smart city business covers sectors, including government affairs, lifestyle, transportation, health care, and education, with a presence in 143 domestic cities and multiple countries and regions involved in the Belt and Road Initiative. In citizen services, Ping An built an integrated smart citizen service platform to improve the service experience of citizens. As of September 30, 2020, the citizen service platform had attracted nearly 23 million registered users and over 1.5 billion visits since its ‘go-live’.
Looking forward, Ping An said: “Consumer demand for insurance and other financial services have recovered in the short run, but demand was still weaker compared to before the COVID-19 epidemic. Meanwhile, credit risk is rising and the asset management business remains under pressure in terms of quality. However, in the long run, profound changes in the domestic and foreign environment will also bring new opportunities, and further economic growth will be driven by rising potential domestic demand. People’s health awareness will be stronger after the epidemic, and their demand for insurance and other financial services will grow. Moreover, driven by policies and technologies, the health care industry will develop rapidly, bringing increasing upstream and downstream industry growth opportunities. In response to the State’s call, the Company will pursue steady progress, by executing our “finance + technology” and “finance + ecosystem” transformation strategies. By accelerating technological empowerment, the Company will seize new opportunities in industries, including financial services and health care to create greater value for shareholders, customers, and society.”