Ping An Insurance Group: the Chinese giant’s story

It’s the first Chinese language insurance coverage firm owned by personal authorized entities. From insurance coverage to new applied sciences, the conglomerate has been capable of meet the wants of a contemporary inhabitants over time.

Right this moment, Ping An is without doubt one of the world’s 20 largest teams with 227 million clients and almost 647 million Web customers.

Ping An Insurance coverage: the historic context of the group’s creation

Ping An’s historical past is carefully linked to the political and socio-economic modifications in China during the last many years.

On the finish of the Nineteen Seventies, China moved from a centralized financial mannequin based mostly on Marxism-Leninism since 1949, to a liberal market system underneath the management of the Communist Get together.

In 1978, a program of “reform and opening up” was launched by the progressive motion of the Communist Get together, headed by Deng Xiaoping. The nation then launched into a coverage of gradual modernization which led to an period of “market socialism”, described as “Chinese language-style capitalism”.

This coverage of opening up the market from the start of the Nineteen Eighties advocates:

• the institution of huge overseas firms within the nation,
• the move of overseas capital to China,
• the economic growth,
• the expansion of the GDP to greater than 10% annual common.

It’s on this context of opening, reforms and financial buoyancy that the insurance coverage firm noticed the sunshine of day in 1988 in Shekou, a small fishing village south of Shenzhen ⁽¹⁾, nicknamed just a few years later “China’s Silicon Valley”.

⁽¹⁾ Coastal area within the southern tip of Guangdong province.

Peter Ma Mingzhe, the group’s founder and Chairman

Born in 1955, Peter Ma holds a PhD in finance from Zhongnan College of Legislation and Economics (previously Zhongnan College of Economics). He served as Deputy Director of China Retailers Shekou Industrial Zone Social Insurance coverage Firm earlier than founding Ping An.

Peter Ma was absolutely concerned within the institution, administration and improvement of his firm. He had successively held the positions of Chairman, Director and CEO. In June 2020, he determined to surrender his actions as CEO and retain his place as Chairman of the Board of Administrators.

The beginning of Ping An

The thought of creating a personal insurance coverage entity dates again to 1986 when Peter Ma submitted his undertaking to Yuan Geng, mayor of Shenzhen and founding father of the Shekou industrial zone. The identical 12 months, he utilized for a license for a 100% personal non-life insurance coverage firm.

Two years later, on 27 Might 1988, Ping An was formally born with an preliminary registered capital of 42 million CNY (6 million USD), divided between the 2 first shareholders, the Shekou Social Insurance coverage Firm (51%) and China Retailers Financial institution Shenzhen Belief Firm (49%). Etymologically, this title means “peace” and “safety”.

The sprawling empire we all know in the present day, which occupies the tallest skyscraper in Shenzhen, began its actions in a 200-meter sq. workplace the place workers labored and spent their nights.

Ping An Insurance coverage Group: a troublesome begin (1988-1989)

On the time of the sharp financial turnaround within the late Nineteen Seventies, the state-owned Individuals’s Insurance coverage Firm of China (PICC), which had a market monopoly in China, had a restricted vary of merchandise that stopped wanting assembly the brand new wants of each Chinese language and overseas firms.

Because of this, the businesses, newly established within the new industrial zone of Shekou, didn’t have adequate insurance coverage ensures to cowl items and other people. Consequently, when a catastrophe occurred, the harm to property and bodily accidents have been fairly often taken care of by the businesses and the employees themselves.

To fulfill this urgent want for protection, Peter Ma, founder and Chairman of Ping An, seized the chance to create a personal insurance coverage firm. The brand new entity was to supply native and overseas firms in Shekou with extra refined and higher options and protection than that supplied by the nationwide insurer PICC.

The arrival of a personal firm in a centrally deliberate financial system was not simple. With the idea of personal insurance coverage and funding in its infancy within the late Nineteen Eighties, the corporate shortly ran into buyer reluctance and contestation of its merchandise. On the time of its institution, the turnover goal was set at CNY 5 million (1.3 million USD), which was one thousandth of the premiums achieved by PICC at the moment.

This was the backdrop in opposition to which the corporate made its debut.

Step-by-step, the direct strategy to clients allowed the agency to develop and increase its actions past the town of Shenzhen.

Between 1988 and 1992, the shareholders elevated from two to 5. China Ocean Transport (Group) Firm, Shenzhen Finance Bureau and Ping An’s worker shareholders joined the 2 unique shareholders. With these new capital injections, the enterprise is embarking on a section of speedy improvement.

Pushed by China’s financial revival and the dynamism of its leaders, the corporate was given the title “Ping An of China” in 1992. The State Council of the Individuals’s Republic of China granted Ping An the standing of a nationwide insurance coverage firm, regardless of its standing as a personal enterprise.

Ping An Insurance coverage Group: the rocky years (1990-1999)

Within the early Nineteen Nineties, the Chinese language market had 4 main non-life insurers, specifically China Pacific, PICC, Ping An and Tian An, and one life insurer, American Worldwide Assurance (AIA).

In 1992, AIA, initially a subsidiary of American Worldwide Group (AIG), obtained a license to determine a life and medical health insurance firm in Shanghai. AIA was the primary and solely insurer to conduct life insurance coverage enterprise in China.

A non-life insurance coverage firm specialised in property harm and marine hull insurance coverage, Ping An shortly turned to life insurance coverage, which exhibited robust improvement potential.

China within the Nineteen Nineties was a fertile floor for all times insurance coverage attributable to:

• a big and getting old inhabitants,
• a quickly rising lifestyle,
• a really low life insurance coverage penetration fee,
• a gradual disengagement from social safety on the expense of the State (well being bills, pensions),
• important financial savings, primarily invested in financial institution deposits.

To familiarize himself with this life enterprise, which he didn’t follow originally, Peter Ma initially relied on partnerships with AIA and different Japanese and Hong Kong insurers, with all his makes an attempt at rapprochement ending in failure.

Peter Ma’s technique was profitable in 1993, when Ping An entered right into a partnership with Guohua Life Insurance coverage, a Taiwanese life insurer.

It was not till 1994 that Ping An’s first life insurance coverage coverage was underwritten for a capital of 160 000 CNY (18 900 USD). At the moment, the Chinese language life insurance coverage market was confronted with the cultural taboo of loss of life, and insurers working on this discipline have been discovering it very troublesome to develop their portfolio.

To beat the cultural difficulties associated to loss of life, a brand new vary of merchandise have been created. These are extra centered on the idea of financial savings than loss of life. Along with financial savings and life merchandise, the group’s focus can also be on monetary companies, wealth administration and banking.

Between 1992 and 1994, the insurer expanded its operations to 14 new coastal cities and 5 particular financial zones, accelerating its improvement.

To help its robust development, the corporate not solely wanted funds and expertise but additionally worldwide finest practices, which it sought from Western buyers.

In 1994, two American monetary giants, Morgan Stanley and Goldman Sachs, injected 50 million USD in Ping An, for a 5% stake every within the capital. The corporate then grew to become the primary Chinese language insurer with overseas buyers in its shareholding. It additionally turns into the primary personal fairness investments firm within the nation.

The insurer instantly took benefit of the perfect practices in company administration, funding and worldwide governance introduced by its overseas companions, the know-how that proved to be important in shaping the long run success of the corporate.

In October 1995, the corporate made its first headway into the monetary sector by establishing Ping An Securities Firm, a subsidiary specialised in securities and wealth administration.

In December 1996, Peter Ma employed McKinsey to modernize the corporate and its working system. A brand new centralized administration construction was launched and designed to enhance efficiency and help the speedy improvement of the life and non-life companies.

In the identical 12 months, the group acquired ICBC Pearl River Delta Monetary Belief Joint Firm, renamed Ping An Belief and Funding Firm whose capital elevated from 50 million CNY to 150 million CNY (6 million USD to 18 million USD).

On the finish of 1997, the life enterprise accounted for the majority of the corporate’s operations.

In 1999, the life gross sales manpower reached 120 000 workers, working by means of 1 000 branches on the native degree and attaining 600 million USD in life premiums.

In the identical 12 months, because of a cooperation settlement with the American insurer Prudential, Ping An launched investment-linked merchandise in the marketplace. This initiative, the primary of its variety within the Chinese language market, remodeled the corporate, enabling it to realize 90% of life premiums 5 years after its implementation.

Within the late Nineteen Nineties, the corporate succeeded in increasing its enterprise to a large number of non-insurance actions. This diversification technique was consolidated within the following decade.

Ping An Insurance coverage Group: sustained development (2000-2009)

In 2000, after 12 years of operation, the group grew to become one of the crucial worthwhile insurers in China. The desk beneath illustrates the corporate’s staggering development over the 1988-2000 interval.

In 2001, it grew to become the pioneer of bancassurance in China, with greater than 10% of the group’s life premiums accounted for by this enterprise solely three years after its launch.

In 2002, so as to enhance its monetary actions, Ping An joined forces with HSBC, one of many largest banking teams based mostly in London, with which it signed a strategic cooperation and technical help settlement. The multinational financial institution grew to become the enterprise’ largest shareholder in 2002 with a ten% stake and the third largest overseas shareholder after Goldman Sachs and Morgan Stanley. The online property of the Chinese language firm reached CNY 120 billion (14.5 billion USD).

Three years later, HSBC doubled its stake within the Chinese language insurer. By buying all of the shares of Goldman Sachs and Morgan Stanley for 1.1 billion USD, HSBC grew to become the holder of 19.9% of the capital.

In February 2003, 15 years after the beginning of its actions, Ping An of China Insurance coverage Firm modified its title and have become Ping An Insurance coverage (Group) Firm of China. The latter was arrange as a holding firm, a authorized entity together with an built-in monetary platform.

In the identical 12 months, the group obtained license to develop banking actions. In December 2003, it acquired Fujian Asia Financial institution, renamed Ping An Financial institution, the transaction that marked the start of its banking actions.

In 2004, so as to additional strengthen its capital, the group was listed on the Hong Kong inventory trade, a transfer that enabled it to boost 14.3 billion HKD (1.8 billion USD).

In 2007, it was listed on the Shanghai inventory trade, a transfer considered crucial itemizing of an insurance coverage firm on the planet.

Throughout the identical interval, the Chinese language large continued its acquisitions within the banking discipline with the takeover of Shenzhen Industrial Financial institution which it merges with Ping An Financial institution to create a brand new financial institution referred to as Shenzhen Ping An.

On the similar time, it started its growth overseas with the acquisition of a 4.2% stake within the Belgian financial institution Fortis.

Ping An Insurance coverage Group: the arrival of latest applied sciences (2010-2021)

The 2010s and past mark the arrival of digital actions throughout the group. From then on, Ping An centered the holding’s improvement on technological innovation, establishing monetary and healthcare know-how firms akin to Lufax Holding, OneConnect, Ping An Good Physician and Ping An HealthKonnect.

In 2011, the group acquired stakes in Shenzhen Improvement Financial institution, turning into its majority shareholder earlier than merging it with Ping An Financial institution to type a big banking group with a nationwide presence.

In 2012, Lujiazui Worldwide Monetary Asset Change (Lufax Holding) was established, a sophisticated know-how platform devoted to personalised monetary companies.

On December 5 of the identical 12 months, HSBC bought 15.6% of its shares in Ping An to Thai conglomerate Charoen Pokphand (CP Group) for 9.4 billion USD.

In 2013, the group acquired the Lloyd’s Constructing, a skyscraper that has housed the headquarters of Lloyd’s of London for 260 million GBP (430 million USD).

The 12 months 2014 noticed the institution of Ping An Good Physician, a healthcare platform also called Ping An Healthcare and Expertise.

In 2016, Ping An Life’s written premiums exceeded 300 billion CNY (43 billion USD) for the primary time.

In 2017, the group’s market capitalization reached a file degree at over 1 trillion CNY (154 billion USD). Its monetary efficiency allowed it to amass a 5.01% stake in HSBC on 17 December 2017 for 9.92 billion USD.

In 2018, the Ping An Rural Communities Assist undertaking got here as a response to the federal government’s name to struggle poverty and encourage social inclusion. This program, inaugurated on the event of the group’s 30^th anniversary, is being developed in 9 provinces and autonomous areas of China. With this initiative, the group has exhibited its dedication to help the event of healthcare and schooling in rural areas.

In 2018, Ping An Good Physician was listed on the Hong Kong inventory trade. It then grew to become the biggest on-line healthcare platform within the nation, with greater than 190 million customers, almost 1 000 healthcare professionals and a community of three 100 hospitals.

In June 2019, Ping An One Join Financial institution, a subsidiary of OneConnect Monetary Expertise formally started operations after receiving a digital license from the Hong Kong Financial Authority.

The financial institution is constructing a digital ecosystem, optimizing banking companies by means of know-how innovation.

In December 2019, OneConnect Monetary Expertise lists on the New York Inventory Change, turning into the primary listed know-how firm in america incubated by Ping An.

In October 2020, Shanghai Lujiazui Worldwide Monetary Asset Change (Lufax), one of many main on-line wealth administration platforms in China, was listed on the New York Inventory Change.

In 2021, the group’s web property reached 10 trillion CNY (1 569 billion USD).

Ping An Insurance coverage Group in 2022

In 2022, the Insurance coverage Asia Information journal awarded Ping An Property and Casualty Insurance coverage the CSR Initiative of the 12 months.

In the identical 12 months, Ping An Financial institution was ranked as the perfect nationwide financial institution for digital options (China’s finest Financial institution for digital options).