Ping An Continuously Improves Shareholder Returns with Final Cash Dividend Rising at a CAGR of 40.1% Over the Past 5 Years
(Hong Kong, Shanghai, 20 February 2020) Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An”, the “Company” or the “Group”, HKEX: 02318; SSE: 601318) announced today its financial results for the year ended 31 December 2019.
Ping An achieved sustained and steady overall and core business growth for the year 2019, as the Group further pursued its “finance + technology” and “finance + ecosystem” transformation strategies, and continued to enhance its data-driven operational capabilities. As technological empowerment has achieved significant results and ecosystem empowerment has started to reveal its effects, the number of users, number of customers, contracts per customer and profit per customer of integrated financial services all recorded significant growth. In 2019, operating profit attributable to shareholders of the parent company rose 18.1% year on year to RMB132,955 million. Net profit grew 36.5% year on year to RMB164,365 million. Net profit attributable to shareholders of the parent company rose 39.1% year on year to RMB149,407 million.
Ping An continued to raise its dividend in light of the steady operating profit growth and healthy solvency position. The cash dividend per share for 2019 rose by 19.2% year on year to RMB2.05. Over the past five years, the Group has grown its annual dividend at a 40.1% CAGR. In addition, the Group implemented its first A share repurchase plan, which is worth RMB5 billion, to maximize shareholder value and motivate employees. In 2019, the Group’s revenue amounted to RMB1,168,867 million, up 19.7% year on year. As of 31 December 2019, total assets amounted to over RMB8.22 trillion, up 15.1% from the beginning of 2019. Equity attributable to shareholders of the parent company amounted to RMB673,161 million, up 21% from the beginning of 2019. The number of retail customers exceeded 200 million for the first time.
Ping An furthered its technology-powered business transformation, and applied its leading technologies to financial, health care and smart city services to support the development of its five ecosystems, namely financial services, health care, auto services, real estate services, and smart city services. By offering innovative products and services to the market, the Group’s technology business achieved robust growth with total revenue surging 27.1% year on year to RMB82,109 million.
Ten business highlights in 2019:
1. Operating profit attributable to shareholders of the parent company grew 18.1% year on year to RMB132,955 million, equating to an operating return on equity (“Operating ROE”) of 21.7%. Net profit attributable to shareholders of the parent company rose 39.1% year on year to RMB149,407 million.
2. Driven by the 11.2% growth in retail customers compared with the beginning of 2019, contracts per customer increased 3.9% from the beginning of 2019 to 2.64, and operating profit per customer increased 13.0% year on year to nearly RMB613. Operating profit of the retail business increased by 25.7% year on year to RMB122,802 million, accounting for 92.4% of the Group’s operating profit attributable to shareholders of the parent company. As of 31 December 2019, 73.71 million retail customers held multiple contracts with different subsidiaries, up 19.3% from the beginning of 2019, accounting for 36.8% of total customers. In 2019, the Group acquired 36.57 million new customers, of which 40.7% were sourced from internet users within the Group’s five ecosystems. The Group’s internet uses increased by 16.2% from the beginning of 2019 to 516 million. Corporate premiums achieved through cross-selling reached RMB12,649 million, in which the written premium of the corporate channel rose by 115.5% year on year.
3. The life & health insurance business recorded an operating profit of RMB88,950 million, up 24.7% year on year, and delivered an operating return on embedded value (“Operating ROEV”) of 25.0%. Embedded value rose by 23.5% from the beginning of 2019 under a conservative risk discount rate assumption. New business value (“NBV”) margin rose by 3.6 pps year on year to an all-time high of 47.3%.
4. Ping An Property & Casualty once again achieved a better-than-industry combined ratio of 96.4%, with operating profit up by 70.7% to RMB20,952 million.
5. Revenues and net profit of Ping An Bank’s retail business rose by 29.2% and 13.8% year on year respectively. The non-performing loan ratio dropped by 0.10 pps and the provision coverage ratio grew by 27.88 pps from the beginning of the year.
6. Total revenue of the technology business grew by 27.1% year on year to RMB82,109 million. Ping An has built a first-class technology team of nearly 110,000 technology business employees, 35,000 R&D employees, and 2,600 scientists. As of 31 December 2019, Ping An’s technology patent applications reached 21,383. Globally, Ping An ranked first in fintech and second in healthtech by published patent applications.
7. The Company applied an internally developed AI interview robot to 100% of sales agent recruitment interviews in 2019. AskBob, the agents’ exclusive smart personal assistant, has served agents 340 million times since its go-live. The AI-powered image-based loss assessment and precise customer profiling technologies provided nearly 90% of auto insurance claimants with online services, and almost 25% of the claims can be handled through smart loss assessment. The speech robots provided services 850 million times in 2019 in 83% of financial sales scenarios and 81% of customer services scenarios across the Group, cutting the annual cost of call center agents by 11%.
8. OneConnect launched its initial public offering on the New York Stock Exchange on December 13, 2019. OneConnect’s products cover all the major banks, 99% of the urban commercial banks and 52% of the insurers in China. OneConnect was granted a virtual banking license by the Hong Kong Monetary Authority.
9. Ping An’s smart health care services cover 14,000 medical institutions. AskBob, Ping An’s self-developed diagnosis and treatment assistant tool, was used 11 million times by 260,000 doctors in 2019.
10. ESG ratings of the Group have continued to improve. As of 31 December 2019, Ping An’s responsible investment, insured amount of sustainable insurance and green credit lines granted reached RMB954,449 million, RMB121.21 trillion and RMB59,056 million respectively. The Company implemented Ping An Rural Communities Support in 21 provinces and autonomous regions across China. The Company provided RMB15,745 million for poverty alleviation.
Customer development: The Company advanced the strategy of integrated financial services, with an increasing proportion of operating profit from the retail business and a significant increase in the scale of the corporate business.
Under a customer-centric philosophy, Ping An has been dedicated to the development of retail customers and corporate customers. The Group advanced the strategy of integrated financial services, upgraded customer development strategies, and steadily increased customer value.
Retail business has become a strong growth driver as its operating profit grew steadily owing to increasing retail customers, contracts per customer and product profitability. In 2019, the Group’s operating profit from retail business rose 25.7% year on year to RMB122,802 million. Retail business accounted for 92.4% of the Group’s operating profit attributable to shareholders of the parent company, up 5.6 pps year on year. Cross-selling within the Group continued to improve. Retail customers holding multiple contracts with different subsidiaries increased by 19.3% from the beginning of 2019 to 73.71 million. They accounted for 36.8% of total customers, up 2.5 pps from the beginning of 2019.
Under the integrated financial business model, the Group’s corporate business saw a significant expansion of scale and a steady increase in value contribution. In 2019, the corporate premiums achieved through cross-selling reached RMB12,649 million, in which the written premium of the corporate channel rose by 115.5% year on year. The new financing scale achieved through corporate business cross-selling increased by 142.1% year on year to RMB296,742 million. As of 31 December 2019, the balance of retail assets referred by corporate business was RMB1.23 trillion; the underlying assets invested by insurance funds sourced from corporate business was RMB494,760 million, with an annual increment that expanded by 101.3% year on year in 2019 to RMB96,616 million.
Steady growth of financial businesses: NBV margin of the life and health insurance business increased to 47.3%. Property & Casualty’s combined ratio reached 96.4%. Retail banking business’s net profit accounts for nearly 70% of Ping An Bank’s net profit.
The Group adheres to the value creation strategy. Under the strategy of empowering financial services with technologies, the core financial businesses are deeply integrated with the application of technologies. Therefore, the financial businesses are more competitive and achieved steady growth.
Life and health insurance business achieved healthier and more stable long-term value growth through the “product +” and “technology +” strategies. In 2019, as a result of our focus on high-value protection business and upgrading the agent force with technologies, the NBV margin of the life and health insurance business rose 3.6 pps year on year to 47.3%. NBV rose 5.1% year on year to RMB75,945 million. Operating profit rose 24.7% year on year to RMB88.95 billion. The residual margin was up 16.8% from the beginning of 2019 to RMB918,416 million.
Ping An Life is pursuing comprehensive data-driven operations by implementing smart processes of marketing, customer services and operations. As of 31 December 2019, 100% of the sales agent recruitment interviews were AI-based. “AskBob,” the smart personal assistant exclusively for agents served agents 340 million times since it was launched. Ping An Life provided smart customer services 50 million times in 2019; 99% of such service tasks were completed online within as short as 1 minute.
Through robust corporate management and risk screening, Ping An Property & Casualty maintained high business quality. In 2019, Ping An Property & Casualty recorded a premium income of RMB270.93 billion, up 9.5% year on year. Operating profit rose 70.7% year on year to RMB20,952 million and operating ROE reached 24.6%. Combined ratio reached 96.4%, outperforming the market in business quality.
Through its leading innovative technology applications, Ping An Property & Casualty continued to improve customer service experiences. Ping An Property & Casualty developed AI-powered image-based loss assessment and precise customer profiling technologies. Ping An Property & Casualty provided end-to-end online support for claim settlement and inquiry services to approximately 90% of claimants. Approximately 25% of claims can be handled through smart loss assessment. The “Ping An Motor Insurance Trust Claim” service was launched for auto owners with safe driving behaviors. Through this service, the Group settled a claim within an annual average of 3 minutes in 2019 with no back-end manual operation involved.
Ping An maintained robust asset-liability management and optimized the asset allocation of insurance funds. In 2019, the Group supported the country’s construction of infrastructure, economy and livelihood projects, to serve the real economy with insurance funds. The total investment yield of the investment portfolio was 6.9%, up 3.2 pps year on year. This was mainly due to the year-on-year increase in investment income in recovering capital markets. The Group’s net investment yield was 5.2%, staying flat year on year. As of 31 December 2019, the Group’s investment portfolio of insurance funds grew by 14.8% from the beginning of 2019 to RMB3.21 trillion.
Using innovative technology to further the retail transformation, banking business maintained stable and healthy business growth. In 2019, Ping An Bank realized a net profit of RMB28,195 million, up 13.6% year on year, and the growth rate was the highest for the past three years. Ping An Bank made significant progress in its strategic transformation toward retail banking. Retail banking’s revenue and net profit recorded 29.2% and 13.8% growth year on year, accounting for 58.0% and 69.1% of Ping An Bank’s revenue and net profit, respectively. Corporate banking and interbank business maintained steady growth, with the overall business structure being more balanced and sustainable. The asset quality continued to improve. The non-performing loan ratio dropped by 0.10 pps from the beginning of 2019. The provision coverage ratio rose by 27.88 pps compared with the beginning of 2019. Deviation of loans more than 60 days and 90 days overdue were both below 1.
Technology business in rapid development: Promoting the empowerment of the Group’s main business and continuing to explore innovative business models. Total revenue rose 27.1% year on year to RMB82,109 million.
Ping An continues to increase investment in technological R&D and make technological breakthroughs. Ping An has established eight research institutes and 57 laboratories. Ping An had a technology team of nearly 110,000 technology employees, 35,000 R&D employees, and 2,600 scientists. As of 31 December 2019, Ping An’s technology patent applications reached 21,383. Ping An achieved global rankings of first in fintech and second in digital healthtech by published patent applications in 2019.
Ping An promotes the empowerment of the financial businesses through technology. Ping An’s self-developed speech robots provided services 850 million times in 2019 in 83% of financial sales scenarios and 81% of customer services scenarios across the Group, cutting the annual cost of call center agents by 11%. As of 31 December 2019, Ping An Life conducted over six million AI-based interviews, reducing in-person interviews by over 680,000 hours. Regarding AI-powered post-lending management, per capita loans under management amounted to RMB54 million, representing an increase of 32% from the beginning of 2019.
Ping An’s technology companies continue to explore innovative business models and empower the five ecosystems. The total revenue of the technology business for 2019 increased by 27.1% year on year to RMB82,109 million. As of 31 December 2019, the total valuation of Ping An’s technology companies was about USD69.1 billion.
Lufax Holding tackled challenges in wealth management and retail lending to seize new opportunities and maintain growth in a changing regulatory and policy environment. As of 31 December 2019, Lufax Holding’s balance of loans under management stood at RMB462,243 million, up 23.3% from the beginning of 2019. Lufax Holding’s ratio of loans more than 30 days overdue was 1.9%, significantly lower than that of its peers. As of 31 December 2019, Lufax Holding had 44.02 million registered users on its platform, up 9.1% from the beginning of the year.
OneConnect, China’s leading technology-as-a-service cloud platform, empowered financial institutions to achieve digital transformation. In 2019, OneConnect grew its total revenue by 64.7% year on year to RMB2,328 million. As of 31 December 2019, OneConnect provided services to all large banks, 99% of urban commercial banks and 52% of insurers in China. The number of premium customers reached 473. As of 31 December 2019, OneConnect had provided direct services to or signed contractual agreements with 47 institutions in 14 countries or regions.
Ping An Good Doctor continued to enhance its position as China’s largest online health care services platform. Ping An Good Doctor has recorded significant operating performance through continuous improvement of its medical network. Ping An Good Doctor’s revenues for 2019 rose by 51.7% year on year to RMB5,065 million, with online health care business representing 16.9%. As of 31 December 2019, Ping An Good Doctor had over 315 million registered users, and had cooperated with over 3,000 hospitals. Annual average daily online medical consultations reached 729,000.
Autohome is committed to developing a smart auto ecosystem centering on data and technology. In the ecosystem, Autohome provides auto consumers with diverse products and services. Autohome maintained business growth despite a weak market environment. In 2019, Autohome maintained business growth with revenue totaling RMB8,421 million, up 16.4% year on year. Online marketplace business accounted for 17.7% of total revenue. Autohome’s net profit was RMB3,409 million, up 10.7% year on year.
Ping An HealthKonnect provides social health insurers, commercial health insurers, and medical service providers with an integrated smart empowerment solution. In 2019, Ping An HealthKonnect won the bids for the “macro-decision making big data application subsystem” and the “operation monitoring subsystem” of the National Healthcare Security Administration as well as provincial/municipal platform construction projects in Shandong, Hebei, and Qingdao. As of 31 December 2019, Ping An HealthKonnect provided services for over 800 million insured members in over 200 cities.
Ping An’s smart city ecosystem is committed to promoting sustainable city development. It is Ping An’s mission to fully extend the new-generation smart city services across China in government services, business development, and citizen services. As of 31 December 2019, Ping An’s smart city ecosystem benefited 115 cities, 500,000 enterprises, and 50 million citizens. In respect of government services, Ping An’s smart government service platform covered services such as urban economic analysis, risk monitoring and emergency management, and has enabled over 30 commissions, offices and bureaus to achieve precise decision making, work coordination and smart management in more than 20 cities in China. In respect of business development, smart trading service supported over 400,000 customs declarations. The customs inspection period was shortened to five days and the customs declaration cycle was reduced to five minutes. In respect of people’s livelihoods, Ping An’s smart health care services cover 14,000 medical institutions. AskBob, Ping An’s self-developed diagnosis and treatment assistant tool, was used 11 million times by 260,000 doctors in 2019.
Ping An furthered ESG-driven sustainable development. As of 31 December 2019, Ping An’s responsible investment, insured amount of sustainable insurance and green credit lines granted reached RMB954,449 million, RMB121.21 trillion and RMB59,056 million respectively. The Company implemented Ping An Rural Communities Support in 21 provinces and autonomous regions across China. The Company provided RMB15,745 million for poverty alleviation, built or upgraded 949 rural clinics and 1,054 rural schools, and trained 11,175 village doctors and 11,826 village teachers. In early 2020, the country was hit by an outbreak of Coronavirus Disease 2019 (COVID-19). The Group immediately joined the nationwide fight against the raging outbreak, protected people’s livelihoods, and fulfilled its corporate social responsibilities through various channels and by multiple means including donations, insurance protection, financial services and medical aid.
Looking ahead, Ma Mingzhe, Chairman and CEO of Ping An, said, “The year 2020 will witness the completion of China’s 13th Five-Year Plan, a critical year for building China into a moderately prosperous society and alleviating poverty across China. In the coming year, we will remain committed to developing cutting-edge technologies and planning for the future. We will promote technological innovations and smart data-driven operations. To help the country win the fight against poverty, we will spare no effort to carry out targeted poverty alleviation measures, especially in poverty-stricken areas in Tibet, Xinjiang, Sichuan, Yunnan, Gansu, and Qinghai. We will remain true to our original aspirations of serving customers, rewarding shareholders, supporting society, and contributing to the country. We will leverage our strengths to overcome the various challenges brought by the COVID-19 outbreak, serve the real economy, fulfill our corporate social responsibilities, and contribute to the Chinese nation’s great rejuvenation.”