Ping An Insurance adopts new bookkeeping to highlight policyholders, saying it should be valued as an internet financial services provider
Ping An publishes data showing profit per customer, illustrating its focus on rapid growth and online reach
Ping An Insurance (Group) Company of China, the country’s largest insurer by market value, has adjusted its disclosure method to focus on earnings generated by an individual customer, as it endeavours to be valued as an internet financial services provider rather than a traditional insurer.
“We are a 7-Eleven for financial and life products,” Lee Yuan Siong, executive vice president and chief insurance business officer said in a conference in Xiamen.
The company recorded 195 yuan interim profit from every financial customer, compared with 280 yuan for the whole year in 2015, Lee said, adding that it will continue to disclose the number in its financial reporting.
Return on equity at its retail business reached 13.4 per cent in the first half, compared with 19.6 per cent for the whole year last year.
Ping An, with 27 subsidiaries offering services such as life insurance, banking, investment planning and online medical consultation, had 342 million individual customers as of the end of June, among whom nearly 122 million are financial customers and 298 million are internet users, according to its filing to the Hong Kong stock exchange on Thursday.
Customer numbers had been growing at 20 per cent a year, which Lee describes as “four times Singapore’s population”.
Meanwhile average consumption per capita also maintained stable growth, he said. Every customer had 1.81 services and 2.16 product contracts in the first half, comparing with 1.67 services and 2.03 contracts for the whole year in 2015, according to its filing.
Feng Lihui, deputy manager at Beijing-based Gelei Investment, said: “This is a model usually adopted to value an internet firm. People evaluate how the customer base translates to potential profit and give a valuation on internet firms, even though some of them haven’t made a profit yet.”
“So far investors only evaluate Ping An based on its insurance business, because the remaining part, especially the internet related business, is too complicated to comprehend,” Feng said, adding that it is still uncertain whether investors will accept its new valuation model.
The adjustment marks Ping An’s effort to shift its image as a traditional insurer to a financial and internet corporation, after Lee said in October that Ping An’s share price was undervalued as much as 45 per cent, due to the “conglomerate discount” on the aggregate value of its business lines.
“[Analysts and investors] gave us a discount due to risk concerns on China’s economy or our management, making one plus one less than two. But in our case,one plus one should be bigger than two,” Lee said.
Among life insurance clients, 14 per cent bought wealth management and credit card services in the first half. Meanwhile, 12,400 users of its medical service app Ping An Good Doctor have become life insurance buyers.
Life insurance continues to be the biggest profit engine for the company, Yao Bo, chief financial officer said, adding that the impact of a low interest rate environment on long-term protection products is small, which accounts for 70 per cent of its overall new business value and makes the company less sensitive to interest rate declines compared with its peers.