OREANDA-NEWS. March 27, 2012. Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An" or "the Group", HKEX: 2318; SSE: 601318) today announced its 2011 annual results. In 2011, in the face of the complicated and tough economic situation at home and abroad, Ping An was proactive in dealing with market changes and challenges to ensure the healthy and steady growth of its three pillar businesses, namely insurance, banking and investment, reported the press-centre of Ping An Insurance.

Net profit attributable to shareholders of the parent company for the year reached RMB19.475 billion, up 12.5% year on year. Moreover, the integration of the banking business progressed smoothly following the completion of the major asset restructuring to gain control of Shenzhen Development Bank Co., Ltd. (hereafter "SDB"). Profit contribution from the banking business increased substantially by 176.8% compared with last year.

As at December 31, 2011, total assets of Ping An were RMB2, 285.424 billion, representing an increase of 95.1% as compared with the beginning of the year. Equity attributable to shareholders of the parent company was RMB130.867 billion, representing an increase of 16.8% as compared with the beginning of the year; earnings per share were RMB2.50 (2010: RMB2.30). The Group was affected by a one-off accounting treatment of RMB1.952 billion as a result of the consolidation of SDB's financial statements in the third quarter.

Excluding this factor, the Group realized a net profit attributable to shareholders of the parent company of RMB21.427 billion for the year, representing an increase of 23.8% as compared with last year. The Board of Directors proposed a final dividend of RMB0.25 (tax inclusive) per share. Together with an interim dividend of RMB0.15 (tax inclusive) per share, total dividend of the year amounted to RMB0.4 (tax inclusive) per share. 

Three pillar businesses maintained steady and healthy growth, banking business was further enhanced
Mr. Ma Mingzhe, Ping An Chairman and Chief Executive Officer, said, "In 2011, we were faced with a severe and complicated macroeconomic environment. But we responded to market changes and challenges in a proactive manner, and persevered with the belief that the bedrock of our existence is professionalism, value and innovation. We strived to provide one stop integrated financial services to our customers, with an emphasis on offering them a more convenient and valuable consumer experience.

At the same time, we further strengthened our integrated financial platform. As a result, our three pillar businesses, namely insurance, banking and investment, all delivered steady and healthy growth. The Group's total assets exceeded RMB2 trillion. The standards of our corporate governance and risk management continued to improve, along with our growing competitive strength. The Group also pressed ahead with the integration of its banking business by successfully completing the acquisition of a controlling stake in SDB. Our banking business was further enhanced, which not only complements our integrated financial services but also provides us with added protection against the cyclical impacts inherent in the financial industry."

Life insurance business: achieved stable growth in both scale and the number of agents, the market share of Ping An Life increased by 1.3 percentage points

As of December 31, 2011, despite the impact brought by a combination of factors such as the growth in life insurance business, volatilities in the capital market and changes in assumptions of the benchmark yield curve for the measurement of insurance contract liabilities, net profit of Ping An's life insurance business increased by 18.5% to RMB9.974 billion. Life insurance achieved written premiums of RMB187.256 billion, representing an increase of 13.9% compared to the previous year. Among which, written premiums from the more profitable individual life insurance business amounted to RMB159.990 billion, representing an increase of 22.9% compared to the previous year. In terms of written premiums, Ping An Life is the second largest life insurance company in China. Besides, the market share of Ping An Life increased by 1.3 percentage points to 16.4% as compared with 2010. 

In 2011, Ping An Life continued to promote and establish its electronic sales platform and innovated its marketing strategies. Through the continued expansion of sales channels, the number of sales agents of individual life insurance grew steadily to 487 thousand, representing an increase of 7.4% compared with the end of last year. Following the successful launch of the Mobile Integrated Terminal (MIT) in 2010, the second generation of MIT was put into operation in 2011, further enhancing efficiency and service quality and providing customers with more convenient premium payment channels and comprehensive financial services. It has secured a leading position domestically and internationally. As at December 31, 2011, more than 400 thousand agents had used MIT, and over 3.50 million customers were insured through MIT. New policies sold through MIT accounted for 62.9% of the whole year and exceeded 90% on a monthly basis in December, contributed to the continued increase of per capita productivity.

Owing to changes in the industry environment and adjustment in the sales strategy of Ping An's bancassurance business, written premiums from Ping An's bancassurance business in 2011 decreased by 30.1% from RMB27.098 billion in 2010.

2011 witnessed the continuous and rapid development of Ping An Annuity with accumulated annuity payments received amounted to RMB9.575 billion. As at December 31, 2011, assets entrusted amounted to RMB37.400 billion, and assets under investment management reached RMB53.930 billion. These figures firmly cemented Ping An's market leading position amongst domestic professional annuity companies.

Property and casualty insurance business:net profit surged by 28.8% while combined ratio remained at an excellent level

For the year ended December 31, 2011, property and casualty insurance business achieved premium income of RMB83.708 billion, representing an increase of 33.9% compared to the previous year. Net profit surged by 28.8% to RMB4.979 billion from RMB3.865 billion in the previous year. The market share of Ping An Property & Casualty increased by 2.0 percentage points from 2010 to 17.4%, further consolidating its position as the second largest provider in the market. Ping An Property & Casualty is the second largest property and casualty insurance company in China in terms of premium income.

Ping An Property & Casualty has deepened the construction of its sales channels, and vigorously promoted the development of products that were closely correlated with national economic growth. The automobile insurance telesales business grew rapidly by 76.1% to RMB22.190 billion, with the proportion of premiums raised by 6.3 percentage points to 26.6%; through specialization of channel operations, premium income from cross-selling and telemarketing increased by 61.6%, with the proportion of sales through channels increased to 41.2%. In 2011, the market conditions for property and casualty insurance in China continued to improve and profitability of the industry as a whole was enhanced. Ping An Property & Casualty was able to seize the opportunity to turn in higher profits at a combined ratio of 93.5% while maintaining rapid business growth through continuously enhancing its risk screening and cost control capabilities.

Banking business:net profit jumped 176.8% year-on-year, with total assets exceeding RMB 1.2 trillion after consolidation

Ping An's major asset restructuring through transactions to gain control of SDB was completed in July 2011. The Group holds 52.38% of the total shares of SDB, and the latter has become a subsidiary of the Group. Meanwhile, Ping An Bank has become a subsidiary of SDB.

The financial statements of SDB were consolidated into that of the Group's along with its operating results for the second half of 2011. This led to a substantial increase in profit contribution from the banking business by 176.8% to RMB7.977 billion, of which RMB5.620 billion was from SDB while RMB2.357 billion was from Ping An Bank.

SDB steadily pushed ahead with its operational strategy and adjusted its assets and liability structure after the merger with Ping An Bank, resulting in satisfactory performance during the period. Its asset scale increased steadily and healthily, achieving a breakthrough of RMB1.2 trillion in total assets, which further enhanced the integrated capability. Business structure continued to improve; income structure was further enhanced, leading to improved profitability. Net profit of SDB itself increased by 47.0% from the year ago to RMB9.181 billion. SDB contributed a profit of RMB5.620 billion to the Group in 2011. Driven by its philosophy of "Control, Growth and Service" and leveraging the Group's integrated financial platform, Ping An Bank continued to move ahead to explore the fee-based business, while focusing on pricing management and reinforcing cost control, which led to an increase in net interest spread and net fee income and a decrease in cost/income ratio, as a result, net profit was up by 35.7% to RMB2.357 billion. 

Meanwhile, asset quality remained stable while capital adequacy ratio strengthened further. As at December 31, 2011, following the consolidation of SDB and Ping An Bank, non-performing loan ratio and provision coverage ratio of the banking business were 0.53% and 320.66%, respectively, among the best in the industry. CAR and Core CAR of the Group's banking business strengthened further to 11.51% and 8.46%, respectively, laying a solid foundation for the sustainable and healthy development of our banking business going forward.

During the transition period of the integration of SDB and Ping An Bank, the momentum and quality of the banking business remained good. As at December 31, 2011, total deposits amounted to RMB850.845 billion while total loans amounted to RMB620.642 billion, representing significant increases from the end of 2010 as a result of the merger with SDB. If based on the merger of the two banks in the same terms, total deposits and total loans would have maintained steady growth rates of 14.2% and 15.3%, respectively. The number of trade finance customers exceeded 10,000. Trade finance facilities balance amounted to RMB233.356 billion, representing an increase of 28.3% compared with the end of 2010. The total number of circulated credit cards issued by SDB and Ping An Bank reached 9.04 million, with over one million new cards issued coming from cross-selling, marking a new phase in the development of the banking business.

Investment business: Ping An Trust achieved rapid and stable growth in its private wealth management business, Ping An Securities' investment banking maintained its leading position

In 2011, Ping An Trust continued to explore new business and maintained stable operation, with emphasis on products, channels and supporting platforms. Ping An Trust also devoted great efforts to its private wealth management business, the number of high net-worth customers grew to more than 13,000 cumulatively; while monthly average fund raised RMB6 billion, representing an increase year-on-year 200.0%. Due to an increase in fixed management fees income from trust products as a result of the enlarged scale of assets held in trust, as well as the increase in variable management fees income derived from trust schemes profits, management fees income of trust products increased significantly by 152.4% to RMB1.802 billion in 2011 from RMB0.714 billion in 2010.

Ping An Securities seized every opportunity arising from this reform to actively explore new business and expand the profit base of the Group. During 2011 category classification of securities brokers, Ping An Securities was rated as AA Grade among the Category A securities firms for the first time, putting Ping An Securities among the highest rated domestic securities companies. Ping An Securities maintained leading position in the SMEs and GEM underwriting markets through successfully sponsored 34 IPOs and 7 refinancing projects as the lead underwriter, ranking first in the number of deals and underwriting revenue for IPO transactions; the fixed income business developed rapidly as Ping An Securities acted as the lead underwriter and completed 17 corporate bond issuances, marking a new record in its history, while the development of innovative products also progressed well; for the brokerage business, Ping An Securities expanded its sales channels and achieved steady increase in the market share of newly opened customer accounts. It actively expanded its sales network and opened 5 new sales offices.

In 2011, building on its effective risk management, Ping An Asset Management actively responded to an adverse environment caused by a depressed stock market and generated stable investment income by optimizing its asset allocation and seizing opportunities to invest in the domestic bond market while strengthening fixed asset investment. Due to the increase in investible assets generated by a steady growth of the insurance business, as at December 31, 2011, assets under the management of Ping An Asset Management amounted to RMB809.797 billion, representing an increase of 15.1% compared with the end of 2010; net investment income of insurance funds for the whole year reached RMB33.148 billion in 2011, representing an increase of 30.8% from RMB25.343 billion in 2010; net investment yield increased to 4.5% in 2011 from 4.2% in 2010. As a result of the substantial adjustments in the domestic and international stock markets, total investment yield fell in 2011.

Continuous enhancement in cross-selling synergy, smooth completion of the back-office centralization project, constant improvement in service standard

In 2011, Ping An Property & Casualty generated 51.0% of its premium income from automobile insurance through cross-selling and telemarketing. Cross-selling also accounted for 42.9% of the new credit cards issued by SDB and Ping An Bank, 42.9% of new retail deposits at Ping An Bank and 63.3% of the funds raised by the first fund of Ping An-UOB Fund. The Group's back office centralization project was completed as scheduled, thus establishing two distinct back office operating models: centralized and decentralized. In 2011, by implementing optimizing measures such as operation sharing and increased automation, claims processing time for life insurance and automobile insurance was shortened to 7.25 hours and 10 hours respectively, a direct result of continued improvement in the insurance claims service. Ping An Life's commitment of "72-hour settlement for standard cases with full documentation" was fulfilled 99.7% of the time, while Ping An Property & Casualty's commitment of "24-hour settlement for claims below RMB10, 000 with full documentation" was fulfilled 99.9% of the time.

Outlook
Mr. Ma Mingzhe said, "The rise of integrated finance is inevitable in the course of the development of the financial industry in the long run. Ping An is, and has always been, devoted to the pursuit of becoming an internationally leading integrated financial services group. The term ‘integrated finance' signifies the best customer experience that one can come to expect from a company like ours. It begins with one customer and one account, through which a multitude of products and one-stop services are readily available to the customer. The path to becoming a top tier financial group internationally begins with our being professional in everything we do, and setting higher benchmarks in the different sectors of the financial industry. Professionalism is the key to become an internationally leading provider of integrated financial services.

We believe ‘expertise creates value' and integrated financial services will help make life simpler for our customers by saving their time, their worries and efforts. In 2012, Ping An will continue to maintain effective, sustainable, healthy and stable development in its various businesses and further enhance its core competitive advantages. Meanwhile, we will constantly improve the management of platform to facilitate our cross-selling strategy through the merger and integration in the banking business. We will strive to deepen the reform of back-office centralization and actively explore an innovative development model that combines modern technology with financial services. We will also build a solid platform for integrated financial services, aiming at improving service quality and optimizing customer experience. Relying on our one-stop integrated financial services, customers can enjoy comprehensive, outstanding, convenient and professional financial service. We are confident that we can create long term value for our shareholders, customers, employees and society in a sustainable manner."

"Looking ahead, China's economy is expected to maintain its upward trend in the long run. With the continued increases in residents' income and in the demand for financial services, as well as further reforms in China's financial system, the room for growth for China's insurance companies remains substantial. It has also created a good environment for innovation in the integrated financial services industry. Meanwhile, under the current fluid internal and external economic environment and with accelerating reforms in China's financial regime, the Company faces a multitude of challenges, such as rising operating cost, uncertainties in the investment markets, and the need to improve the competiveness of our products and services. However, we are fully confident that Ping An will be able to move with the times, seize every opportunity and meet with the challenges along the way as we forge ahead towards our goal of being an internationally leading integrated financial services provider. This journey begins with each and every one of our employees, every team and every project. Every step we make we make it together, and we shall advance in unison towards our grandiose goal of becoming an internationally leading integrated financial services group!".