On August 23, Caixin reported (by reporter Xia Shuyuan) that at noon on August 23, China Ping An held a mid-term performance conference for 2024, with Ma Mingzhe, Chairman of Ping An Group, and a group of high-level executives attending, responding one by one to key issues of public concern.

The mid-term performance report shows that in the first half of 2024, China Ping An achieved a net profit attributable to the mother of 74.619 billion yuan, a year-on-year increase of 6.8%; the attributable operating profit was 78.482 billion yuan, a slight decrease of 0.6% year-on-year. At the same time, Ping An of China distributed an interim dividend of RMB 0.93 per share to shareholders.

For the performance in the first half of the year, the Deputy General Manager of Ping An of China, Fu Xin, summarized it with three keywords: performance stability, quality improvement, and deepening of global strategy. Looking ahead to the second half of the year, Guo Xiaotao, Co-CEO and Deputy General Manager of Ping An of China, introduced that in the future, Ping An's product structure will focus on dividend insurance products, expected to account for over 50% of total sales. In terms of insurance fund utilization, Deng Bin, Assistant General Manager and Chief Investment Officer of Ping An Group, mentioned that in the future, Ping An will further increase the allocation of long-term interest rate bonds, and in the strategic layout of the country's new quality production capacity, build a balanced allocation of a "dumbbell combination."

Reducing the scheduled interest rates will lower the cost of Ping An Life Insurance's liabilities, and future product structure will focus on dividend insurance.

As one of the three core businesses of Ping An of China, life insurance and health insurance are the most important sources of profit for Ping An Group. Data shows that in the first half of 2024, the net profit attributable to the mother in the life insurance and health insurance sector of Ping An reached 50.6 billion yuan, a year-on-year increase of 12%, contributing nearly 70% of Ping An's operating profit.

Caixin reporters noted that in recent years, the significant reduction in the number of agents at Ping An has shown a stabilizing trend. As of the end of June 2024, the number of individual life insurance sales agents at Ping An Life Insurance was 0.34 million, a slight 2% decrease from the end of 2023.

With the gradual stabilization of the number of agents, Ping An achieved a new business value of 22.32 billion yuan in the first half of the year, an 11% year-on-year increase. Among them, the new business value of agent channels increased by 10.8%, the new business value per capita increased by 36% year-on-year, the per capita monthly income reached 0.12 billion yuan, an increase of 2149 yuan compared to the end of last year.

Regarding the recent regulatory decrease in the reserved interest rates for life insurance products and the impact on the comprehensive liability cost of Ping An Life Insurance, Guo Xiaotao stated that the recent regulatory authorities have lowered the reserved interest rates for the entire life insurance industry, which is a very positive and proactive measure, benefiting the entire industry, Ping An Life Insurance, and Ping An Group significantly.

Guo Xiaotao pointed out that future interest rates will continue to decline, and there is a problem of interest rate spread loss in the entire life insurance industry in China. Timely regulatory intervention to lower the reserved interest rates effectively prevents the continuous deterioration of the industry's interest rate spread loss.

Similarly, Ping An Life Insurance business will also benefit under major regulatory measures, especially the liability costs of new policies will be reduced, which will have a positive impact on the future profitability of life insurance.

Guo Xiaotao introduced that in the future, Ping An will further optimize and adjust its product structure. Traditionally, traditional insurance structures accounted for over 70%, but in the future, the product structure will focus on dividend products, expected to represent over 50% of the company's overall sales.

Furthermore, in the medical care service sector, Ping An will leverage its comprehensive financial advantages to provide differentiated product bundle services based on customers' varying needs, contributing to the sustainable and stable development of the life insurance business.

Ensuring the gradual elimination of insurance business risks, it is expected that the comprehensive cost ratio of property insurance will be optimized year-on-year.

In the first half of 2024, Ping An Property Insurance achieved insurance service revenue of 161.91 billion yuan, a year-on-year growth of 3.9%.

Among them, the original insurance premium income from vehicle insurance business was 104.8 billion yuan, a year-on-year increase of 3.4%, with the number of underwritten vehicles increasing by 5.9% year-on-year.

The comprehensive cost rate of property insurance is 97.8%, a decrease of 0.2 percentage points year-on-year, mainly due to the decrease in guaranteed insurance business underwriting losses; the comprehensive cost rate of auto insurance is 98.1%, an increase of 1 percentage point year-on-year, mainly due to the increase in natural disasters such as heavy rain.

It is worth mentioning that Ping An Property Insurance's guaranteed insurance business risks have gradually been cleared. In the first half of 2024, the comprehensive cost rate of Ping An Property Insurance's guaranteed insurance business was 106.8%, an improvement of 10.9 percentage points year-on-year. Ping An Insurance stated in its financial report that it has suspended the addition of financing-guaranteed insurance business since the fourth quarter of 2023.

The management of Ping An Insurance stated that in the first half of 2024, the balance of outstanding liabilities of Ping An Property Insurance's guaranteed insurance continued to decline, the risk exposure rapidly converged, the underwriting loss decreased significantly year-on-year due to the gradual recovery of outstanding claims, and the impact on the overall business quality of the company was significantly reduced.

Looking ahead to the whole year, Guo Xiaotao stated that Ping An Property Insurance's comprehensive cost rate is expected to continue to be better than the market and continue to maintain a leading position in industry underwriting profits.

In the second half of the year, we will increase the allocation of long-term interest rate bonds and follow the national new quality production capacity strategy to build a balanced allocation dumbbell portfolio.

From the investment perspective, in the first half of 2024, the insurance asset investment portfolio of Ping An Insurance exceeded 5.2 trillion yuan, an increase of 10.2% compared to the beginning of the year.

During the reporting period, the annualized comprehensive investment yield of Ping An Insurance's investment portfolio was 4.2%, an increase of 0.1 percentage point year-on-year, mainly due to the balanced asset allocation strategy and the improved performance of equity assets compared to the same period last year; the annualized net investment yield was 3.3%, a decrease of 0.2 percentage points year-on-year, mainly due to the decrease in the return rates of matured stock assets and newly added fixed income assets.

From the investment portfolio perspective, Ping An Insurance further increased its investment in bonds in the first half of the year. In terms of investment types, bond-type financial assets accounted for 74.1% of Ping An's total investment assets, an increase of 1.4 percentage points compared to the beginning of the year; equity-type financial assets accounted for 11.8%, a decrease of 1.2 percentage points compared to the beginning of the year.

Deng Bin stated that Ping An Investment follows the investment principles of "strategic stability, overcoming cycles, tactical flexibility, preparing for the future, balanced allocation, and risk diversification". In the past three years, the A-share market has been volatile, and Ping An has adopted a dumbbell-shaped balanced allocation, bullish on value stocks with high dividends and growth. For example, in the field of technology stocks, there has been an increased allocation to new productive forces and other aspects.

In recent years, there has been considerable attention to Ping An's real estate investment. As of the end of June, the balance of real estate investments in Ping An's insurance fund portfolio was RMB 207.425 billion, accounting for 4% of total invested assets. Deng Bin believes that with the continuous introduction of policies, the real estate market is now at the bottom and the worst period for the industry has passed.

Regarding the expectation of a US interest rate cut, Deng Bin stated that an overseas interest rate cut is good news for various capital markets. He mentioned that the US may cut interest rates by 25 basis points in September, which is a positive driver for both the US stock market, Asia-Pacific stock market, and the A-share market in China. Ping An's investment risks overseas are controllable and there is potential for asset appreciation.

Looking ahead to the second half of the year, Deng Bin stated that from a macroeconomic perspective, they are confident in achieving the annual economic growth target. Currently, China's economic structure is continuously moving towards a green economy and technology services. Ping An will closely follow the country's strategic requirements for new productive forces and adhere to the five principles of asset-liability income matching, liquidity matching, risk preference matching, financial income matching, and asset-liability duration matching.

In the past 10 years, Ping An has allocated long-term interest rate bonds that exceed the budget every year, which has given Ping An a strong asset base on its balance sheet. In the future, Ping An will continue to adhere to this asset-liability matching strategy.