Net rises to 3.1b yuan as insurer turns focus on more profitable product mix Ping An Insurance Group last year sacrificed short-term revenue growth in exchange for a more profitable product mix, operating results show. The strategy appeared to have paid off with a 34.3 per cent surge in net profit last year to 3.11 billion yuan from a year earlier. Net profit at its life insurance arm rose 38.7 per cent, overcoming a fall in premium revenue and slower investment income growth. The Shenzhen-based insurer booked revenue of 63.25 billion yuan in the 12 months to December last year, down 5.1 per cent from 2003. Ping An, the second-largest mainland life insurer behind China Life Insurance, reported gross written premiums, policy fees and premium deposits of 54.72 billion yuan from its life insurance operations, down 7 per cent from 2003. The decline was triggered by an enhanced focus on more profitable regular-premium individual life insurance policies and reduced sales of low-margin bancassurance and group life products, said Dominic Leung Ka-kui, the chief executive of Ping An Life Insurance. Premium income and deposits from individual life policies grew 6.9 per cent to 40.16 billion yuan last year, contributing 73.4 per cent of life premium revenue, compared with 63.8 per cent the previous year. In its individual life business, a 10.7 per cent increase in renewal premiums and policy fees to 28.32 billion yuan more than offset the 0.7 per cent decrease in first-year premiums, policy fees and deposits. By contrast, bancassurance premium income plummeted 44 per cent and accounted for 10.8 per cent of life premium income, down 7.2 percentage points. Group life insurance premium income dropped 19.4 per cent during the year, cutting its contribution to life premium revenue 2.4 percentage points to 15.8 per cent. 'These results are in line with our plan,' Mr Leung said. 'Our individual life (product line) is expected to grow this year after falling flat last year, and this trend has already manifested in the first quarter.' Ping An said its 13-month and 25-month persistency ratios - the percentage of policies remaining in force from year to year - edged up to 87.5 per cent and 80.3 per cent, from 85.7 per cent and 79.6 per cent respectively, on improved after-sale services. The company's smaller non-life insurance business posted 25.4 per cent premium income growth and 126 per cent profit surge last year. Ping An's embedded value - an estimate of the economic value of existing policies used widely for the valuation of life insurers - almost doubled to 37.24 billion yuan from 19.07 billion yuan in 2003. Earnings per share rose 19 per cent to 56 fen. The company declared a final dividend of 14 fen.