Ping An Announces Interim Results for First Half of 2007

 

Net profit increased by 139.5%  Synergy across three business pillars gradually realized

 

 

Highlights of results for the six months ended 30 June 2007 were prepared in accordance with International Financial Reporting Standards(IFRS)（The comparisons are to data of the same period of 2006 unless otherwise indicated）：

 

l         Net profit increased 139.5% to RMB9,969 million (2006 1H: RMB 4,162 million) l         Earnings per share were RMB1.39 (2006 1H: RMB0.66) l         Total assets increased 24.9% to RMB617,772 million from the end of last year (December 31, 2006: RMB494,435 million) l         Gross written premiums, policy fees and premium deposits from life insurance business increased 14.0% to RMB42,179 million (2006 1H: RMB 36,991 million) l         Gross written premiums from property and casualty business increased 31.2% to RMB11,004 million (2006 1H: RMB8,389 million) l         Total investment income increased 167.6% to RMB25,668 million (2006 1H:RMB9,593 million) l         Total investment yield rose to 9.9% (2006 1H: 5.8%) l         The shares of net profits from life insurance business, property and casualty business, banking business and securities business in the total net profit were 60.4%, 7.6%, 10.9% and 6.8% respectively

 

 

(Hong Kong, 17 August 2007) Ping An Insurance (Group) Company of China, Ltd. ( “Ping An” or the “Group” ) (Stock code: HKEx 2318; SSE 601318) announced its audited interim results for the first half of 2007. For the six months ended 30 June 2007 (“the Period”), under favorable macro environment, the Group achieved outstanding results in the first half of the year by leveraging on its solid business foundation and competitive advantages and improving profitability across various businesses. The Group saw its net profit hit a historic high. In particular, its core life insurance and property and casualty insurance businesses achieved steady growth, integration of banking business was successful, and the investment and asset management business achieved breakthroughs. The Group’s integrated financial services platform has been further refined. The synergy across the Group’s three business pillars, namely insurance, banking and asset management, has been gradually realized.

 

The Group achieved outstanding performance in its results for the first half of 2007. According to the International Financial Reporting Standards (IFRS), the Group’s net profit for the six months ended 30 June 2007 reached RMB9,969 million, a 139.5% increase over the same period in 2006. Total assets were RMB617,772 million as at 30 June 2007, a 24.9% increase as compared to the end of 2006. Total equity increased 104.3% to RMB97,573 million as compared to the end of 2006. Earnings per share were RMB1.39.

 

According to the PRC Accounting Standards, the Group’s net profit for the six months ended 30 June 2007 reached RMB8,326 million, representing a 107.8% increase over the same period of 2006. Total assets were RMB583,143 million, a 25.9% increase as compared to the end of 2006. Total shareholders’ equity rose 103.6% to RMB94,911 million from the end of 2006. Premium income reached RMB53,885 million, representing a 17.1% growth as compared to the same period in 2006. Earnings per share were RMB1.16.

 

The Board of Directors declared an interim dividend of RMB0.20 per share for the six months ended 30 June 2007.

 

 

Outstanding performance of the three business pillars

 

Commenting on the satisfactory growth in Ping An’s interim results, Chairman and CEO Ma Mingzhe said, “For the first half of 2007, the PRC economy sustained fast and steady development, and saw continued strong growth momentum in the three major demands, namely consumption, investment and export. As the reform and opening-up of the financial sector progressed, the financial and insurance industry continued its fast development. Under favorable macro environment, the Group achieved outstanding results in the first half of the year by leveraging on its solid business foundation and competitive advantages and improving profitability across various businesses. In general, the Group has delivered outstanding operating results to the shareholders in the first half of 2007. ”

 

“Our core life insurance and property and casualty insurance businesses achieved steady growth. The product mix of life insurance business has been further optimized. Thanks to the strong economy, individual life insurance business recorded robust growth unseen in the past few years. Meanwhile, the Group has been proactively seeking new business growth opportunities and has implemented the “Two Tier Market Development” strategy that focused on the balanced development of both urban and rural areas. Ping An Life initiated the pilot programs in the rural areas of Jiangsu and Zhejiang provinces. Ping An Annuity obtained business licences for all 35 branches to start operation across the nation.”

 

“The integration of the banking business progressed smoothly. As approved by the China Banking Regulatory Commission (“CBRC”), Shenzhen Commercial Bank merged with and took in Ping An Bank and was renamed as Shenzhen Ping An Bank Co., Ltd. (“Shenzhen Ping An Bank”). Shenzhen Ping An Bank has branches and sub-branches in Shenzhen, Shanghai and Fuzhou, providing corporate and individual customers with comprehensive financial services and products. The merger of the two banks further integrated the banking resources within the Group and helped strengthen the banking business by creating a single banking brand name and laying a strong banking business platform for nationwide expansion. ”

 

“As for the investment and asset management business, benefiting from the rapid development of the domestic equity market and the surge in trading volume, the Group recorded strong growth in its securities brokerage, investment banking and derivative products businesses; total investment return on its insurance funds increased significantly; non-capital market investment of our trust business generated encouraging results and third-party asset management business achieved breakthrough development. Ping An Asset Management (Hong Kong) obtained its asset management licence and a global investment platform has been gradually established. In the period under review, four analysts from Ping An Securities were ranked among the “Top Analysts of 2006 for Earnings Estimates and Stockpickers” in Asia by StarMine, a world renowned professional evaluation agency of securities analysts. Ping An Securities as a whole was ranked No. 8 among a large number of prestigious research institutions.”

 

“In the first half of 2007, the Group’s integrated financial services platform has been further refined. Along with the smooth integration of various back-office functions, the performance of cross-selling various financial products within the Group exceeded targets. The synergy across our three business pillars, namely insurance, banking and asset management, has been gradually realized, and the Group is steadily progressing toward its “One Customer, Multiple Products” strategic goal.”

 

 

 

Operating Highlights

 

Financial Data under IFRS:

 

 ( in RMB million )

 

Under IFRS, Ping An’s total income for the first half of 2007 was RMB69,021 million, a 56.9% increase over the same period of 2006. As compared to the same period in 2006, gross written premiums and policy fees increased 15.1% to RMB43,138 million, while total investment income increased 167.6% to RMB25,668 million. Total investment yield increased to 9.9% in the period from 5.8% in the same period of 2006, and net investment yield rose to 4.9% from 4.2%. Benefiting from the better performance across our portfolio of businesses and the strong total investment returns, the Group’s consolidated net profit increased 139.5% to RMB9,969 million from RMB4,162 million in the same period in 2006.

 

 

Financial Data under PRC Accounting Standards:

 

 (in RMB million)

 

Under PRC accounting standards, premium income of Ping An for the first half of 2007 were RMB53,885 million, a 17.1% increase over the same period in 2006. During the period, consolidated net profit of the Group increased 107.8% to RMB8,326 million from RMB4,006 million in the same period in 2006.

 

As at June 30, 2007, the embedded value of the Group was RMB120,799 million，up 84.2% from the end of 2006.

 

 

 

 

Overview of major businesses

 

Steady growth in life insurance

 

The following table highlights key financial and operating data in Ping An’s life insurance business under IFRS:

 

（in RMB million, except percentages）                                  

For six months ended 30 June	2007	2006
Gross written premiums and policy fees	32,134	29,097
Individual life insurance	27,680	24,686
Bancassurance	347	479
Group insurance	4,107	3,932
Premium deposits	10,045	7,894
Individual life insurance	6,528	4,824
Bancassurance	3,517	3,070
Gross written premiums, policy fees and premium deposits	42,179	36,991
National market share of gross written premiums, policy fees and premium deposits	16.3%	17.0%

 

For the six months ended 30 June 2007, net profit from Ping An’s life insurance business was RMB6,018 million, up 70.5% over the same period in 2006. Gross written premiums, policy fees and premium deposits were RMB42,179 million, up 14.0% from the same period in 2006. National market share of gross written premiums, policy fees and premium deposits for life insurance business was 16.3%.

 

Comparisons of businesses performance in the period under review with that of the same period in 2006:

 

Gross written premiums, policy fees and premium deposits for the individual life business for the six months ended June 30, 2007 increased 15.9% to RMB34,208 million from RMB29,510 million for the same period in 2006. The increase was primarily due to the growth in first year premiums, policy fees and premium deposits, which increased 37.2% to RMB9,284 million in the six months ended June 30, 2007 from RMB6,767 million in the same period last year. In addition, renewal premiums, policy fees and premium deposits increased 9.6% to RMB24,924 million in the first half of 2007 from the same period last year. These increases were mainly due to the continued improvement in the quantity and productivity of Ping An’s agency force.

 

Gross written premiums, policy fees and premium deposits from bancassurance business increased 8.9% to RMB3,864 million in the first half of 2007. The increase was primarily driven by the growth in sales of the universal life products through the Group’s bancassurance channel.

 

With the Group’s continued efforts to manage the growth and to improve the profit margin of the group insurance business, gross written premiums, policy fees and premium deposits increased 4.5% to RMB4,107 million in the first half of this year. The Group continued to focus on selling employee welfare benefit plans. As a result, gross written premiums and policy fees for the short-term accident and health insurance business increased 30.6% to RMB1,618 million in the six months ended June 30, 2007 from RMB1,239 million in the same period of last year.

 

Claims and policyholders’ benefits increased 41.0% to RMB43,045 million in the first half of 2007. The increase was primarily due to the increased surrenders of certain single premium participating products sold through our group and bancassurance channels, and increased payments in survival benefits as a result of the product features of certain individual life insurance products.s.

 

Commission expenses, which were paid primarily to sales agents, increased 40.6% to RMB4,601 million in the first half of 2007 from the same period last year. The increase was primarily due to an increase in sales of first year premiums, policy fees and premium deposits from individual life products, which have a relatively higher level of commission.

 

General, administrative and other expenses increased 54.9% to RMB3,573 million in the first six months ended 30 June 2007 from RMB2,306 million in the same period in 2006. The increase was primarily due to an increase in sales of first year premiums, policy fees and premium deposits and the significant increase in business taxes and surcharges paid on realized investment gains.

 

The 13-month and 25-month policy persistency ratios for Ping An’s individual life insurance customers maintained at a satisfactory level of above 85% and 80% respectively in the first half of this year, as a result of continued refinement of sales agents training system, and enhanced productivity and professionalism of sales agents and customer service.

 

 

 

Property and Casualty Insurance Business maintained a leading position in the market

 

The following table highlights key financial and operating data for Ping An’s property and casualty insurance business under IFRS:

 

（in RMB million, except percentages）

For six months ended 30 June	2007	2006
Gross written premiums	11,004	8,389
Automobile insurance	7,366	5,482
Non-automobile insurance	3,084	2,490
Accident and health insurance	554	417
National market share of gross written premiums	10.2%	10.7%
Combined ratio	98.7%	95.4%

 

In the first half of 2007, Ping An’s property and casualty insurance business realized a net profit of RMB760 million, an increase of 139.7% over the same period in 2006. Gross written premiums increased 31.2% to RMB11,004 million. National market share of gross written premiums for property and casualty insurance business was 10.2%.

 

Comparisons of businesses performance in the period under review with that of the same period in 2006:

 

Gross written premiums increased 31.2% to RMB11,004 million in the first half of 2007, as a result of the significant growth in all three principal lines of Ping An’s property and casualty insurance business..

 

Total claims increased 49.8% to RMB4,804 million in the first half of this year due to the increased gross written premiums from automobile business, non-automobile business and accident and health business in the past 12 months .

 

Commission expenses of insurance operations increased 66.5% to RMB1,124 million in the first half of this year due to the increase in gross written premiums and the higher market commission rates resulting from the increased market competition in the industry.

 

General, administrative and other expenses increased 43.8% to RMB1,917 million in the six months ended 30 June 2007 from RMB1,333 million in the same period in 2006. This increase was primarily due to the increase in gross written premiums and increased competition in the property and casualty insurance industry.

 

Smooth integration of the banking business

 

The Group’s banking business consisted of two subsidiaries namely: Ping An Bank Limited (“Ping An Bank”) and Shenzhen Commercial Bank Co., Ltd. (“SZCB”). On 16 June 2007, the CBRC approved the merger of SZCB and Ping An Bank by pooling of interest. After the merger, SZCB was renamed as Shenzhen Ping An Bank and the existing headquaters of Ping An Bank in Shanghai and branch in Fuzhou are reorganized as Shenzhen Ping An Bank Shanghai Branch and Fuzhou Branch respectively. After the merger, Shenzhen Ping An Bank has 49 sub-branches and 157 ATMs network all across Shenzhen, Shanghai and Fuzhou.

 

As at 30 June 2007, total assets of Shenzhen Ping An Bank amounted to RMB124,788 million, the capital adequacy ratio was 10.6%. The non-performing loan ratio was reduced to 1.1% .

 

In the first half of 2007, net profit from banking business increased significantly to RMB1,086 million from RMB1 million in the same period in 2006. This increase was primarily due to the profit contribution from SZCB after the acquisition.

 

The integration and transformation of SZCB into the Group has been progressing smoothly. The organization structure has been reorganized; the segregation of duties and responsibilities has been refined and the IT capability has been significantly enhanced. On business development, the wealth management business kicks off with the launch of three “Anchor Wealth Management Centers” in Shenzhen. On 21 May 2007, it successfully launched the Wanlitong Affinity Credit Card, a China UnionPay standard credit card. This is one of the best affinity credit cards which offers comprehensive insurance protection in the PRC by leveraging the combined strength of Ping An’s insurance and banking platform.

 

 

 

Investment and asset management business posted significant growth in profit

 

Benefiting from the significant increase in trading volume of China’s stock markets, Ping An Securities’ brokerage business fees income increased to RMB790 million in the first half of 2007 from RMB150 million in the same period in 2006. Fees and commissions from investment banking also recorded significant growth. The securities business’ investment income increased to RMB396 million in the first half of 2007 from RMB116 million in the first half of 2006.

 

The securities business’s net profit increased significantly to RMB676 million in the first half of 2007 from RMB174 million in the same period in 2006.

 

Total income from the trust business substantially increased to RMB448 million in the first half of 2007 from the same period of 2006. Net profit soared to RMB275 million in the first half of 2007 from RMB 61 million of the same period of 2006. The increase was primarily due to the significant increase in assets held under its management and better investment results.

 

 

 

Fulfillment of corporate citizenship responsibilities

 

Apart from the outstanding business performance, the Group is continuously and actively fulfilling its corporate citizenship responsibilities to contribute to the cause of public welfare. The Group issued its “Corporate Citizenship Report of 2007” in the first half of the year and initiated a series of large-scale public welfare programs, including the “Little Orange Lamp Program”, aimed at establishing libraries for elementary schools in rural areas; “Ping An Education Support Program for Hope Primary Schools”, “Chinese Youth Safety Program”, and “Ping An Scholarship for Elite University Students”. In addition, the Group raised millions of yuan to help the regions swamped in flood to rebuild schools. Such moves were widely recognized in society.

 

In the first half of the year, Ping An won accolades from various sectors of the society. In April 2007, the Group was ranked 440 among the top 500 of Forbes Global 2000 top public companies. In the same month, the Group was ranked first and accredited with the “Best Company in China in Corporate Governance” by The Asset Magazine, an internationally renowned financial publication in its 2007 Corporate Governance Awards. In June 2007, Ping An became the first financial and insurance company from the PRC to be granted the “Best of Asia Class in Corporate Governance Asia Recognition Awards 2007” by Corporate Governance Asia, a prominent magazine in the Asia- Pacific Region. Ping An was the only company from the insurance sector to be named as one of the “Most Respected Enterprises in China 2006” for six consecutive years since the commencement of this award in 2001.

 

 

Prospects

 

Chairman and CEO Ma Mingzhe said, “Looking ahead at the second half of the year, we expect that the PRC macro economy will continue to maintain its steady growth and the country will further stimulate domestic demands to proactively increase the quality and efficiency of economic growth. Meanwhile, the further escalation of market competition and the fluctuations in the capital market will also expose us to certain challenges and earnings volatility. In the second half of the year, according to its strategic targets and business plan, the Group will continue to execute balanced development of the three major businesses of insurance, banking and asset management. We will maintain our leading market position within the insurance sector and strengthen the performance of our banking and asset management businesses. With the concerted efforts from our employees, I firmly believe that the Group’s core competencies will be further strengthened to deliver more value to our shareholders and our customers.”

 

 

－End－

 

 

 

Ping An’s 2007 interim results will be released at the investor relations section of the Group’s website www.pingan.com.cn, and in designated newspapers, on 17 August 2007. The webcast of the Group’s 2007 Interim Results Announcement Presentation will be available at www.pingan.com.cn on 18 August 2007.

 

About Ping An Insurance (Group) Company of China, Ltd.

 

Ping An Insurance (Group) Company of China, Ltd.(“the Group”) was founded in 1988. It is the first integrated financial services conglomerate in China that blends its core insurance operations into securities brokerage, commercial banking, asset management and enterprise annuities to create a highly efficient and diversified business profile. It is a listed company on the main board of the Hong Kong Stock Exchange under the name “Ping An of China” and the stock code “2318”. On March 1, 2007, it began trading its A share on the Shanghai Stock Exchange with the stock code “601318”.

 

The Group is the holding company of the following subsidiary companies: Ping An Life Insurance Company of China, Ltd. ("Ping An Life"); Ping An Property & Casualty Insurance Company of China, Ltd. ("Ping An Property & Casualty"); Ping An Annuity Insurance Company of China, Ltd.; Ping An Asset Management Co., Ltd.; Ping An Health Insurance Company of China, Ltd.; China Ping An Insurance Overseas (Holdings) Limited; China Ping An Trust & Investment Co., Ltd., and Shenzhen Ping An Bank. China Ping An Trust & Investment Co., Ltd. holds Ping An Securities Company; and Ping An Overseas holds China Ping An Insurance (HK) Co., Ltd., and Ping An of China Asset Management (Hong Kong) Co., Ltd.

 

Up to date, the Group has about 244,000 life insurance sales agents and over 3,000 branch offices across the country, providing diversified financial services, including insurance and investment management to nearly 39.75 million retail customers and approximately 1.95 million corporate customers.

 

Over the last 19 years, Ping An has become one of China’s best-known financial industry brands both in the domestic and the international markets. The Group has an extensive domestic customer base and is one of the few Chinese financial institutions providing integrated insurance, banking, trust and brokerage services.

 

Please visit our website www.pingan.com.cn for more information.

 

 

 

Investor and Media Enquiries

 

Mr. Jin Shaoliang Ping An Insurance (Group) Company of China, Ltd. Tel: 86-4008866338-623487 / 86-13902952942 E-mail: jinsl@pingan.com.cn
Mr. Sheng Ruisheng Ping An Insurance (Group) Company of China, Ltd. Tel: 86-4008866338-623557 / 86-13502870175 E-mail: shengrs@pingan.com.cn	Mr. Hon Fung Christensen Tel: 852-21170861 Fax: 852-21170869 E-mail: fhon@ChristensenIR.com
Ms. Alex Xiao Ping An Insurance (Group) Company of China, Ltd. Tel: 86-4008866338-623452 / 86-13751136097 E-mail: xiaoping002@pingan.com.cn	Mr. Winston Yau Christensen Tel: 852-21170861 Fax: 852-21170869 E-mail: wyau@ChristensenIR.com