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Ping An Insurance (Group) Company of China Ltd. is a holding company which provides a wide range of services, including banking, insurance, health care, and education. It is one of the few companies in the world to offer an integrated financial services platform that provides customers one-stop access to mutliple services. The Chinese word ‘Píng Ān’ means ‘safe and well’. Headquartered in Shenzhen, the company is China’s second-largest life, property and casualty insurer.
When the company first started in 1988 as China’s first joint-stock insurance company, it sold only property and casualty insurance but it quickly grew to offer banking and financial services as well. Despite having its roots in finance, the company has made significant investments in cutting-edge technology and launched several subsidiaries that function outside the confines of its core business.
Now, for the seventh year in a row, Ping An Insurance Ltd has been named the World’s Most Valuable Insurance Brand by premier brand valuation consultant Brand Finance. Ping An ranks 30th among the world’s most valuable brands and 5th among Global Financial Companies, having a brand value of $44.7 bn.
Among Chinese financial companies, Ping An stands out for its aggressive adoption of international investments. In 2002, UK-based HSBC became its single largest stakeholder. Following a change in management, HSBC sold its investment, leaving Thai giant Charoen Pokphand Group as the largest stakeholder.
Business model of Ping An Insurance
Ping An’s self-proclaimed motto is “one customer, multiple products, and one-stop services.” The business’s operating strategy is characterised by a broad spectrum of services that it offers to millions of customers while utilising up-to-date technology.
To give some examples, the company sells life and health insurance which contributes to a large part of its net profit, and through its digital medicine platform Good Doctor it also offers healthcare services.
Customers can deposit their money with Ping An’s bank or invest it through Lufax, its wealth management division. Also, once they purchase an automobile or sign up for educational services, then use Ping An’s consumer-credit division to finance the payments.
The group uses technology infrastructure to orchestrate entire service ecosystems. For example, the company’s fintech unit OneConnect. Recognizing the opportunity to export its technology and expertise to other Chinese banks and insurance companies, Ping An established OneConnect Financial Technology Co. In 2019, OneConnect was valued at $7 bn and listed on the New York Stock Exchange. By the end of 2020, OneConnect served 99% of China’s major banks.
The company invests heavily in research and development (R&D) to develop cutting-edge technological capabilities. Ping An Insurance has invested 1% of its revenues in R&D for ten years, specifically working on AI, Blockchain, and Cloud, to transform its services and support the development of its five ecosystems — financial services, healthcare, auto services, real estate services, and smart city services. Over 598 million people are linked to at least one of these ecosystems.
Ping An’s technology patent applications climbed by 6,544 in the first nine months of 2022, reaching 44,964 as of September 30, 2022, surpassing most other international financial institutions.
Ping An Insurance was ranked 17th on the Forbes Global 2000 list in 2022, and 25th on the Fortune Global 500 list. In the Global 500, Ping An was ranked 21st among the top 500 Most Valuable Brands and fourth among global financial enterprises.
Performance of Ping An Insurance
In the year 2022, Ping An Insurance Ltd. saw operating profit attributable to shareholders rise by 0.3% year on year to 148.4 bn yuan (~$21.60 bn), despite a complex and challenging international business environment.
The company saw a drop 17.6% drop in its 2022 annual net profit from 101.6 bn yuan (~14.78 bn) in 2021 to 83.8 bn yuan (~$12.14 bn) in 2022. Retail customers increased by 2.1% during the period to nearly 227 million as of December 31, 2022. Contracts per customer increased by 2.1% during the period to 2.97. As the Group’s retail cross-selling expanded, nearly 39.8% of retail customers had multiple contracts with various subsidiaries.
In 2022, the operating profit of the life and health insurance business increased 16% year-on-year to 111.2 bn yuan ( ~$16.19 bn). Operating profits of Ping An Property & Casualty Insurance increased by 45.2% year-on-year to 8.8 bn yuan( ~$1.28bn). Banking saw its operating profit rise to 26.4 bn yuan ( ~$3.83 bn) while the asset management and technology units recorded operating profits of 2.3 bn yuan (~$333m) and 5.5 bn yuan (~$794m), respectively.
Stock movement of Ping An Insurance
Ping An Insurance Ltd is listed on the Stock Exchange of Hong Kong (2318.HK) since June 24, 2004, and has a listing listed on the Shanghai Stock Exchange since March 1, 2007 (601318). The stock also has its American Depository Receipt (ADR) listed on NASDAQ in the US, which can be accessed by over-the-counter trades.
Primarily listed on the Stock Exchange of Hong Kong, Ping An has a market capitalization of HK$1.3 tn (~$165 bn). The company’s stock has fallen by 2.82% in the past year, as of March 8, 2023. It has a PE ratio of 8.57, and a forward PE ratio of 7.24. The company has a price-to-book ratio of 1.11.
Since April 2021, the stock has fallen by more than 42%, hitting an all-time high on April 1, 2021.
What is next for Ping An Insurance?
China has one of the world’s largest and fastest-growing ageing populations. This dramatic demographic shift brings both opportunities and challenges. Ping An Insurance Ltd. aims to satisfy the increasing demand for quality elderly care in China by providing integrated solutions under the guiding principle of “prime life, exclusive services and respectful care”.
“The aim is to promote and support healthy aging. Ping An is seeking to set new standards in this new sector to promote healthy and enjoyable retirement,” the company said in a blog post on its website.
While Ping An has managed to perform well in a difficult environment, the threat of inflation may pose risks to the Property & Casualty sector in the future. In January 2023, China’s annual inflation rate increased to 2.1% from 1.8% in December, as compared to the estimate of 2.2% by economists surveyed by The Wall Street Journal. Inflation is likely to raise the cost of insurance payouts in the future. Insurance firms frequently raise premiums to offset these rising costs, which has a negative effect on customers and the insured. People then may stop their coverage due to the higher premiums which then affects the profits of insurance companies.
While Ping An has been focused on China, the group sees opportunities overseas. “We see an opportunity to expand our more tech-driven models overseas because they don’t require significant, in-depth local knowledge and the buildup of local resources, channels, customer preferences,” Jessica Tan, Ping An Group Executive Director told the management consulting firm McKinsey & Company in 2020.
“We are interested in taking our technologies that have been successful in China and using them to enable others globally. Hopefully, this creates a more symbiotic relationship as opposed to the usual demonised caricature of big Chinese giants coming in to take your share. This kind of path would be more synergistic for us,” Tan added.
As of June 30, 2021. OneConnect had served 100+ customers across 20+ countries and regions, primarily in Southeast Asia. Lufax has teamed up with Schroders as a part of its push into wealth management in Singapore. Meanwhile, Ping An Good Doctor has a presence overseas.
