China Taiping Insurance Holdings Company Limited. Investor/Analyst Open Day. 8 December, 2015

Transcription

1 China Taiping Insurance Holdings Company Limited Investor/Analyst Open Day 8 December, 2015

2 Forward-looking Statements The presentation herein contains unaudited data. While the Company has endeavored to accurate and complete data, it makes no express or implied statement or warranty regarding fairness, accuracy, completeness and correctness of such information or opinions. All data contained in this presentation are only subject to the circumstances when they were provided and the Company makes no commitment to perform any update of the presentation for any consequent change The forward-looking statements contained in the presentation herein refer to the statements of the Company on possible future business activities, events or evolutions. Such statements are assumptions formed on the basis of the Company s future operations and various factors out of the control of the Company, hence actual operation outcomes may differ greatly from such statements Data, statements or opinions contained in the presentation herein do not constitute any open offer or investment advice. The Company and its staff, whatever reason it might be, assume no responsibility for any loss or damage incurred from the use or interpretation of the presentation herein or any information in connection with it 2

3 China Taiping Group Overall Business Review 3

4 Operational Highlights Delivered Good Quality and Sustainable Overall Operational Results by the end of October 2015 Premium growth beats the market Operational performance keeps improving Quality of business remains strong and keeps improving Overall competence continues to improve 4

5 Operational Highlights (Cont d) Mainland Insurance Businesses Developed Rapidly, Quality of Business and Operating Performance Have Been Steadily Improved By the end of October, direct premium written of life insurance increased by 24.3% YoY Monthly production per agent achieved RMB17,117,resulting in a 41% increase in gross premium of new policies which ranked No.4 in the industry. Outstanding agents(regular premium RMB300,000) increase by 31% YoY Persistency ratios of agency & Banca channel continued to be stable at the forefront of the industry; The loss ratio of short-term group insurance kept in a satisfactory range TPI s direct premium written increased by 21.6% YoY. Growth of both motor & non-motor insurance outperformed the market, with non-motor insurance accelerated growth Balance of pension assets under management was over RMB100 billion Note: All data related in this material is stated in RMB 5

6 Operational Highlights (Cont d) Overseas Insurance Businesses Recorded Steady Growth, Quality of Business Stays Good Premium of CTPI(HK) increased steadily, keeping its forefront ranking in the market TP Macau s premium continued to be No.1 in the market TPRe has become a member of Lloyd s. Beijing branch of TPRe has been restructured as TPRe(China) and approved by CIRC. This was the second case in PRC that a reinsurance company was granted an independent legal license for reinsurance after China Reinsurance (Group). The premium of TPRe for life insurance realized a significant growth 6

7 Operational Highlights (Cont d) Successful Implementation of Strategic Cooperation and Cross-selling Initiatives with Large Clients China Taiping had signed Group Strategic Cooperation Agreements with large clients such as Sinopec, EIBC, CDB and ICBC etc. in By the end of Oct. 2015, China Taiping had established headquarters to headquarters strategic cooperation with 56 large clients Our cross-selling initiatives achieved RMB2.2 billion of insurance sales, including RMB1.7 billion of property insurance sales through TPL, and RMB300 million of pension sales through TPL We have made a breakthrough in the Sinopec gas station program. By the end of Oct. 2015, 4,754 outlets has been stationed with over 12,000 employees. The premiums of this program has achieved RMB660 million including RMB530 million of motor insurance during the same period 7

8 Life Insurance Business Review TPL Note: The Group holds 75.1% of the equity interest in TPL The following figures are the results of TPL from its operations, before intra-group eliminations. 8

9 Life Insurance:Strong leading indicators of value creation Agency headcount (not including agents from Sinopec project) has hit its full-year target with 199,000 by the end of October. It is increasing ahead of our expectation. Outstanding agents increased by 31% YoY during Jan-Oct 2015 The growth rate of new policies from our core business maintains rapid increase in both Agency & Banca channels. The structure of new policies keeps optimizing. The proportion of health insurance keeps increasing Persistency ratio leads the industry NBV margin remains stable and growing 9

10 Life Insurance: Premiums Growth outperformed the Industry average, with Solvency Margin kept stable Direct Premium Written +24.3% (RMB million) 68,766 Regulatory Solvency Margin Ratio 268% Over 200% 55,339 Jan-Oct 2014 Jan-Oct 2015 At 31 Dec 2014 At 31 Oct 2015 Note: The calculation of the regulatory solvency adequacy ratio is based on C-SI. Due to the sub-debt redemption, capital market volatility, as well as new business growth, the solvency adequacy ratio decreased slightly 10

11 Life Insurance: Structure of Gross Premiums By Distribution Channels Rising Proportion of Agency Channel Business (RMB million,%) 2% 51% 2% 47% Telemarketing and Group Jan-Oct 2014 Jan-Oct ,204 1,400 Banca Channel 28,243 32,153 47% 51% Agency Channel 25,892 35,213 Jan-Oct 2014 Jan-Oct

12 Life Insurance: The Proportion Of Health Premium Increased Premium Composition In Agency Channel:11.7% Premium Composition In Banca Channel:3.7% 7.7% 11.7% 0.8% 3.7% 90.2% 85.8% 99.1% 96.2% 2.1% 2.5% 0.1% 0.0% Jan-Oct 2014 Jan-Oct 2015 Jan-Oct 2014 Jan-Oct2015 Accident Life Health Accident Life Health 12

13 Life Insurance : Per capita productivity kept stable while number of agents increased, with a increase of high performance agents Number of Agents +49% 199,000 Monthly Productivity Per Agent 17,682 17,117 Number of Outstanding Agents Regular Premium 5,248 6, ,700 2,780 3,420 1,179 1,315 At 31 Dec 2014 At 31 Oct 2015 At 31 Dec 2014 At 31 Oct 2015 Jan-Oct 2014 Agent with RMB300K Premium Agent with RMB1M Premium Jan-Oct 2015 Agent with RMB500K Premium 13

14 Life Insurance: Persistency Ratios stood at the forefront of the industry - No.1 in both Agency and Banca Channel in terms of 13 th month persistency ratio Agency Channel Banca Channel Persistency ratio 13 th month 第 13 个月之保费继续率 Persistency ratio 25 th month 第 25 个月之保费继续率 93% 93% 93% 92% 第 13 个月之保费继续率 Persistency ratio 13 th month Persistency ratio 25 th month 第 25 个月之保费继续率 91% 92% 88% 89% 87% 90% 89% 87% At 31 Dec 2013 At 31 Dec 2014 At 31 Oct 2015 At 31 Dec 2013 At 31 Dec 2014 At 31 Oct 年底 2014 年底 2015 年 10 月底 2013 年底 2014 年底 2015 年 10 月底 14

15 Mainland P&C Insurance Business Review TPI Note:The Group holds the 100% equity interest of TPI The following figures are the results of TPI from its operations, before intra-group eliminations. 15

16 Mainland P&C Insurance: Premiums Growth outperformed the Industry average Direct Premium Written (RMB million) 13, % Regulatory Solvency Ratio 192% +18PP 174% 10,697 Jan-Oct 2014 Jan-Oct 2015 At 31 Dec 2014 At 31 Oct 2015 The regulatory solvency ratio of TPI rises 18 pp due to its capital increase in Q

17 Overseas P&C Insurance and Reinsurance Businesses Review HK & Macau CTPI (HK) TP Macau Overseas TP Singapore TP UK TP Indonesia Reinsurance TPRe The following figures are the results of the respective companies from their respective operations, before intra-group eliminations. 17

18 Overseas P&C Insurance and Reinsurance: Overseas P&C premiums increased steadily, TPRe life reinsurance achieved sustainable and rapid growth +14.2% Overseas P&C Insurance 1,842 2, ,682 Reinsurance ( RMB million ) ( RMB million ) +8.8% 3, % 5,696 2,979 1,025 2,717 HK & Macau Overseas Jan-Oct 2014 Jan-Oct 2015 Jan-Oct 2014 Jan-Oct 2015 Life Non-Life 18

19 Pension and Group Life Insurance Businesses Review TPP Note: The Group holds 100% of the equity interest in TPP The following figures are the results of TPP from its operations, before intra-group eliminations. 19

20 Pension and Group Life Insurance Businesses Direct Premium Written (RMB million) Annuity Entrusted Assets (RMB million) Annuity Invested Assets (RMB million) 2, % 2, , % 43,756 42, % 48, , ,108 Jan-Oct 2014 Jan-Oct 2015 At 31 Dec 2014 At 31 Oct 2015 At 31 Dec 2014 At 31 Oct 2015 Long Term Short Term Health Short Term Non-health 20

21 Industry Outlook Life Industry The C-ROSS is expected to be formally implemented in 2016 after 3-quarters test running. Under the risk oriented solvency management framework, those companies focus on business quality will take advantage of it After participating insurance reform policy lands, the three steps of life insurance premium rate market reform will be successfully ended. Participating insurance will be facing new opportunities and challenges As interest rates continued to decline, it ll promote demand for insurance products With personal tax preferential health insurance policy lands, the relevant product guidelines and provisions will be officially released, the health insurance market will witness a new growth point Personal tax deferred pension insurance is expected to land within this year, then the pension insurance market will have great potential Occupational pension policy is expected to implement in the first half of 2016, and there will be development opportunities in the annuity market 21

22 Industry Outlook (Cont d) P&C Insurance New car sales growth will be slower, resulting in the significant slow down of P&C insurance premium growth With the advancing of Commercial motor insurance rate reform, there will be high insuring rate, high insurance amount, low accident frequency, rapid decline of premium rate and slow decline of cost rate in motor insurance market As national economy development strategies such as the 13 th Five-year Plan, One belt, one road, and the new State Council Ten Guidelines lands, there will be a golden opportunity for insurance industry and new demands of professional services and management abilities for insurance company 22

23 Industry Outlook (Cont d) Reinsurance As C-Ross is taking into effect, it will have different risk reserve requirements between domestic and foreign reinsurance company, which is beneficial for TPRe s business development and performance There is an upward trend of non-proportional reinsurance, which is beneficial for TPRe s further expansion Under supervision of C-Ross, reinsurance proportion of non-motor and life insurance will increase, and benefit TPRe in the way of further improving profitability and new business value 23

24 TPL Agency Channel Development Introduction 24

25 Agency Channel Development Introduction Business Development 25

26 Business Development Regarding agency channel, the Company, based on actual market situation, formulated and implemented short-term wealth management insurance products supplemented by high-value health products to focus on business volume and improve market share in the first half of 2015 while priorities were given to marketing of high-value health insurance and 10 years and above wealth management insurance products to raise business value and optimize product structure for the whole year. As of October, NBV margin of agency channel has improved on a YoY basis In the context of a 62% growth of the number of agents compared to the year beginning, key indicators including activation ratio and per capita policy maintained stable and high performance agents increased by 52% on a YoY basis, achieving personnel and profitability improvement Regarding the Sinopec project, a 2-year pilot program has led to phased breakthrough up till now. As of Oct 2015, a total of 12,000 agents are in service, attracting over 300,000 clients, establishing itself as a potential development channel 26

27 Business Development(Cont d) Number of agents and insurance premium rise steadily At October, 2015, number of agents has reached 199,000. As of November 25, the number of agents has reached 217,000 FYP ranked No. 5 in the market in 2013, and No. 4 in Remains No. 4 by the end of October, 2015 Total Number of Agents Jan-Oct 2014 Jan-Oct 2015 Year-on-Year Growth 127, , % 27

28 Business Development(Cont d) 2015 Trend Chart for Agency Force In March and July 2015, company-wide recruitment has been conducted, by the end of August, the number of agents has exceeded 200,000 From September, agent consolidation and retention for new recruits has been carried out. In November when the annual business goal has been basically accomplished, another agent recruitment has been executed in the whole company. By November 25, the number of on-the-job agents is 217,000, up 62% since the beginning of the year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Unit:10,000 Agent 28

29 Agency Channel Development Introduction Key Agent and Performance Indicators 29

30 Key Agent and Performance Indicators Retention Ratio H Jul-Oct th Month Retention Rate 83.9% 82.2% 13 th Month Retention Rate 52.7% 51.8% 18 th Month Retention Rate 31.4% 36.7% Agency Force per Group, Agency Force per Department H Oct 2015 Agency Force per Group Agency Force per Department

31 Key Agent and Performance Indicators (Cont d) 2015 Agent Development With the policy adjustment on agent qualification management by China Insurance Regulatory Commission, the number of agent has grown substantially in July and August. The new agent number in that period is 71,000. New health insurance (Fu Li Jian Kang+) was adopted to lower the sales difficulty, and to improve productivity of new recruits. By the end of August, the number of agency channel exceeded 200,000 From September, the sale of protection and non-participating financing insurance are adopted to ensure the accomplishment of the annual business goal ahead of schedule. In the condition that the initial premium plan has been basically completed, more agents were recruited in November. At November 25, agents number has reached 217,000 31

32 Key Agent and Performance Indicators (Cont d) Key Performance Indicator 2014 Jan-Oct 2015 Policy Per Month Per Capita Productivity Per Month Per Capita 17,682 17,117 Monthly Overall Activation Ratio 54.3% 53.1% Three Month Formalization Ratio 39.6% 41.5% Cumulative Activation Ration In Three Months 77.1% 78.5% Jan-Oct 2014 Jan-Oct 2015 Monthly Agents With RMB10K Sales In The Period(regular Premium ) Annual Agents With RMB1 MM Sales In The Period(regular Premium ) 23,861 36,763 1,179 1,315 32

33 Key Agent and Performance Indicators (Cont d) Agent Force with Superior Performance Grew with an Optimized Structure From Jan-Oct, 2015, there are 36,763 agents whose regular premium exeeded RMB10k per month, with year-on-year growth of 52.1%. Among these agents, the 2015 new recruits makes up 43% Agents recruited before 2013 with high performance grows from 9,703 to 9,765 in 2015, up 0.6% Start working Year Agents with High Performance* Percentage Comparison with 2014 Number Percentage Note ,814 43% 10,248 42% Recruited in ,344 20% 4,223 17% Recruited in ,840 10% 1,695 7% Before ,765 27% 8,008 33% Total 36,763 24,174 Recruited in 2012 and 2011 Recruited 2 years before Note: *Agents with high performance refers to agents with over RMB10k regular premium per month 33

34 Agency Channel Development Introduction Development Strategy of

35 Development Strategy of 2016: Opportunities The agent team grows very fast. In 2015, the cumulative recruits is 164,000. As of November 25, the agent number is 217,000. The performance growth based on the number of agents increase has been achieved New Recruit Premium Gross Premium Percentage RMB2.56 Billion RMB8.74 Billion 30% The statistics is based on the premium contribution made by 2015 new recruits during April 1 to October 31, After the good start, the 2015 new recruits contributes 30% of the annual gross premium The huge expansion of the agent team does not result in obvious decline in management indicators, on the contrary, various kinds of training and team leader self-management have been greatly improved, which pushes the expansion H Jul-Oct 2015 Monthly Overall Activation Ratio 53.6% 52.3% 13 th Month Retention Ratio 52.7% 51.8% 35

36 Development Strategy of 2016: Challenges The new recruits with entry time shortly than 6 months makes up 49%; recruits with entry times within 12 months makes up 71%. New recruits accounts for a large proportion. As a result, the basic management is under pressure for the production improvement and effective retention of the new recruits need time and constant training The duty exemption policy for Annuities Insurance products are still pending, which affects the design of new products The implementation of health insurance tax preferential policy will affect the design and profit of critical illness products 36

37 Development Strategy of 2016: Continuously adhering to Sales Performance Appraisal and Remuneration Measures to lead the growth of the agent team Effective growth of agent team is the guarantee for the healthy, stable and sustainable development of personal insurance Continue to promote the effective growth of agent team Special training is designed for the 2015 new recruits to ensure the stability and formalization, and to improve the retention ratio with promotion. Three-month formalization rate and employee performance indicators for business manager growth rate are set Continue to promote large unit, large department large unit, large department will be continuously carried out in personal life insurance. Under the condition that the total cost of Sales Performance Appraisal and Remuneration Measures remains the same, the cost input of high productivity team will be increased, and the input of low productivity team will be decreased. Average agent number of department and unit will be increased under direct of supervisor to improve the performance of the team 37

38 Working Idea on New Recruits Retention One focus, four key points Carrying out the standard training for new recruits and lay a solid foundation for the new recruits, cultivating seeded lecturer and head teacher to improve training quality, fully implementing the 90 days training for sales unit new recruits to improve their skills, the 135 growing days for new recruits will help them build confidence and pave the way for future development to improve retention rate and consolidate the foundation of the team New recruits cultivation project 135 growing days for new recruits Training class The implementation of standard training for new recruits 1 4 Three month Formalization rate 2 The cultivation of 3 seeded lecturer and head teacher 90 days training for sales unit new recruits 38

39 Development Strategy of 2016: Multi-dimension customer accumulation to enlarge customer basis Integrated with Internet+, efforts should be made to develop simple and costeffective product with great appeal and to develop personal agent products in internet channel. Quick customer accumulation can be achieved with simple and cost-effective products Adhering to the relevant tax preferential policy requirement of China Insurance Regulatory Commission, different models should be used to match different groups for sales to maintain regular customers and develop new customers With marketing strategic projects such as Health Cabin to improve customer experience and to push the transformation from customer accumulation to the sales of health insurance 39

40 Development Strategy of 2016: Improve institution operation system, push the institution to keep growing and become stronger Formulate development policy with differentiation for institutions and push the institution with star performance to keep growing and become stronger By the end of October, compared with same period last year, third tier institutions with over 50% new policy premium growth rate reaches 93 and the number of fourth tier institutions amounts to 457. we will continuously promote the development of third tier and fourth tier institutions to improve the branch productivity and market ranking Further improve the institution management system and the operation management of third tier and fourth tier institutions Promote Operation Manual for China Taiping Personal Life Insurance Fourth Tier Institutions to establish person in charge file of personal life insurance for third tier and fourth tier institutions Improve leader training system to cultivate good leader in large-batch for Taiping personal life insurance Establish hierarchical institutional head training system 40

41 Comparison table of institution regular premium platform in the same period RMB 10K Type Institutions Jan-Oct 2014 Jan-Oct 2015 Growth rate Second tier institution Third tier institution Fourth tier institution Provincial branch 28,698 39,539 38% City branch 17,758 26,205 48% Provincial capital key-sub branch Prefecture-level city key- sub branch Sales office within the same city with the branch Sales office outside the same city with the branch 11,215 14,224 27% 1,982 2,740 38% 1,716 2,321 35% % 41

42 TPI P&C Insurance Business Introduction 42

43 Highlights and consolidated results of operation Outperformed the industry average By the end of October, direct premium written reached RMB13.01 billion, outperforming the industry average by over 9 percentage point Profit keeps growing: Continue to achieve underwriting profit since The total loss ratio keeps improving, decreasing by 0.3 percentage points on a YoY basis Successful implementation of Boutique strategy Sales through Strategic cooperation and cross-selling channel increased by 72.9% and 37.6% respectively. Almost 5,000 Sinopec gas stations had been stationed. Actively expanded development of third-party cooperation and online claim processing, with 350,000 Wechat followers 43

44 Premium growth outperformed industry average, with an increasing market share Direct premium written increased to RMB13.01 billion by the end of Oct 2015, 9 percentage points higher than industry average 30.0% Direct Premium Written Growth 25.0% TPI Industry 20.0% 15.0% 10.0% 5.0% 0.0%

45 Continued underwriting profitability for 5 years Combined Ratio 99.9% 99.8% 99.8% 99.8% Q1-Q3 45

46 Improvement of loss ratio resulting from strict cost control Loss Ratio Motor Insurance Loss Ratio 56.5% -0.2PP 56.3% -0.3PP Jan-Oct 2014 Jan-Oct % 54.5% Non-motor Insurance Loss Ratio 45.0% -0.4PP 44.6% Jan-Oct 2014 Jan-Oct 2015 Jan-Oct 2014 Jan-Oct

47 Improvement of business quality, with a balanced development of both motor and non-motor business Direct premium written of motor insurance increased by 20.4% to RMB10.53 billion by the end of Oct 2015 on a YoY basis. Business growth exceeds 20% in the pilot areas of commercial motor-insurance marketization reform Direct premium written of non-motor insurance increased by 26.9% to RMB2.48 billion by the end of Oct 2015 on a YoY basis, among which Liability, Credit, Accident and Health lines grew more than 35% Motor Insurance Business Non-motor Insurance Business +20.4% 10,529 (RMB million) +26.9% 2,478 (RMB million) 8,745 1,952 Jan-Oct 2014 Jan-Oct 2015 Jan-Oct 2014 Jan-Oct

48 Successfully implemented the Boutique Strategy Strategic Cooperation and Property Insurance Sales through TPL (RMB billion) +72.9% % Strategic Cooperation Property Insurance Sales through TPL Jan-Oct 2014 Jan-Oct 2015 Strategic cooperation channel business grew fast, increasing by 72.9% than the same period of last year Cross Selling channel business increased by 37.6% than the same period of last year; Almost 5000 Sinopec gas stations has been stationed, with nearly RMB530 million premium income Serving the One belt and One road "strategy, the overseas inward premium reached RMB26.3 million 48

49 Promote Internet business Explore new marketing channel, develop client-service communication platform and provide more value-added services 350,000 Wechat Followers Enriched functions in Wechat, attracted 350,000 followers Third Party Platform Cooperation with Ant Financial Services, Zuihuibao Network, etc. E-Claim Actively implemented internet claim methods, covering 27 business branches 49

50 Outlook Continue to outperform the industry, accelerate innovation, grasp opportunities of marketization reform, and improve profitability To improve strategic cooperation and cross-selling channels, and expand the development of third-party platforms To pursue steady increase of traditional channels and at the same time promote innovation. To improve agent productivity and achieve new breakthroughs of auto dealers channels in third and fourth-tier cities To grasp opportunities during motor-insurance marketization, innovate pricing model, prove profitability and pursue steady increase of market share. To continuously optimize business structure, improve product mix, embrace internet, improve business quality and pursue steady increase of persistency ratio To continue strengthening the customer relationship management by internet methods including wechat, and expend the development of third-party platforms To enhance cost controls, reduce operation fees and enhance business value by improving IT system and e-claim, utilizing e-statements, and standardized procedures 50

51 China Taiping Group Overall Investment Business 51

52 Investment Business Introduction Investment Profile from January to October

53 Investment yields: Group investment yields reached a relatively high level, and will surpass the yearly budget goal As of the end of October, both the book yield and market value yield were higher than those on a YoY basis In terms of comparison within the industry, as of the end of October, the yield is higher than the average yield of 6.5% in the insurance industry YoY Comparison of Investment Yields 8% 7% 6% 5% 4.9% 6.3% 4% 3% 2% 1% October 2014 October % Book Yield(unannualized) Market Value Yield(unannualized) 53

54 Asset size: Own and third-party entrusted investment assets grow strongly As of the end of October, insurance assets under management within the Group was RMB billion, increased by 15% compared to the beginning of the year; and third-party entrusted assets was over RMB billion, increased by 33% compared to the beginning of the year Rapid growth of third-party entrusted investment assets led to an increase in management fees. For example, the management fee income from January to October 2015 of our subsidiary Taiping Asset was RMB 470 million, with 67% derived from third-party entrusted assets Insurance AuM of the Company Third-Party Entrusted Assets 4,000 (RMB 100million) 2,000 (RMB 100million) 1,754 3,000 2,507 2,881 1,500 1,320 2,000 1,602 1,917 1, , Oct Oct

55 Performances of various assets: Stock and bond investment performances surpass the market TPAM s overall return on equity portfolio at the end of October is higher than that of the Shanghai and Shenzhen 300 index as well as the equity funds TPAM s overall return on bond asset realized a return higher than China Bond index as well as bond fund index Performance of Taiping Asset s Equity Portfolio 21.4% Performance of Taiping Asset s Debt Portfolio 9.2% 3.0% 1.5% TPAM Overall Index for equity funds Shanghai and Shenzhen 300 index TPAM Bond fund index China Bond index 55

56 Introduction to Investment Business Stick to Risk Management Standards and Constantly Innovate Alternative Investments 56

57 Overall: Alternative investments proportion of the Group is slightly lower than industry average As of the end of October, the Group s total alternative investments amounted to RMB billion, accounted for 22.3% of total assets, 3 percentage points lower than industry average or 18.5%, if the South-to-North Water Diversion debt investment of RMB 14.7 billion(the central government credit) is excluded, which was 6.7 percentage points lower than industry level October 2015 Book value (RMB 100m) Percentage of total assets Investment in equity financial products % Equity investment programs and equity investment funds % 100% equity asset management products % Investment in debt financial products % Domestic debt financial products % Oversea debt financial products % 100% bond asset management products % Investment in other four types of new products % Investment properties % Total % 57

58 Debt financial products: Rating of most of the projects were above cnbbb+ As of the end of October 2015, AAA level products accounted for 88%, AA+ and AA products accounted for 6% Based on credit rating classification application in Greater China, projects rated cnbbb+ or above accounted for 90% Ratings of Group s debt financial products 1% 6% 5% AAA AA+ 88% AA Not Applicable Greater China credit ratings 0% 3% 2% 5% 4% 2% 1% 52% 10% 1% 20% cnaaa cnaa+ cnaa cnaa- CnA+ cnacnbbb+ cnbbb cnbbbcnb+ Not Applicable 58

59 Debt financial products: Most of them were Quasi-central government bonds, or guaranteed by banks, large-scale enterprises Credit Enhancements In terms of credit enhancements, as of October, 75% investments were quasi-central government debt or guaranteed by banks major SOEs and enterprises 8% had credit enhancements in the form of collateral/pledge. As of October, there are 4 projects exempted by CIRC from having credit enhancements, which accounted for 6% of total investments Other credit enhancement include: requirement for debts to repurchase assets under securities brokerage business at a premium, and liquidity guarantee by parent as credit enhancement for Oversea assets management products 9% 6% 6% 3% 8% 34% 35% Quasi-central Government Bonds/Bank Guarantee Large-scale Enterprise Guarantee Collateral/Pledge Superior/Inferior Credit Enhancement Free Others Non-bank Guarantee and Collateral/Pledge 59

60 Debt financial products: Proportion of local government debt is stable with adequate credit enhancements As of the end of October, local government related investments in debt financial products amounted to RMB 9.6 billion, representing 2.5% of total asset 98% of these projects were sponsored and established within the Group, with good understanding of project particulars and sound overall risk control For credit enhancements, 67% of the funds were invested in projects secured by banks and large-scale enterprises, 17% invested in projects pledged/with collateral and 16% invested in projects with seniority arrangement and repurchase commitment from substantial shareholder of counterparties to increase credit enhancements. the Group adopts a more stringent approach to calculate local government debts than that adopted by regulators, which is local government debt refers to debts with repayments to be made directly or indirectly or secured by local government. Proportion of Local Government Debts in Total Assets 2.70% 2.50% 2.50% 2.40% Quarter 2014 年第一季度 I of 2014 Quarter 2014 年第四季度 4 of Quarter 年第一季度 I of Jan.-Oct. 年 月 Credit Enhancements for Local Govt Debts Large-scale Enterprises 29% 38% Seniority Arrangement Collateral/Pledge 16% Bank Guarantee 17% 60

61 Debt financial products: Rating of debt investment in real estate is high and adequate credit enhancements As of the end of October, investments of the Group in debt financial products from property development industry amounted to RMB billion, representing 3.9% of total assets 93% of the funds were invested in AAA and AA+ products 70% of the projects were quasi-central government bonds/secured by banks or large-scale enterprises, while the remaining 25% were secured by land collateral and pledge over costs recovered from the projects and 5% are credit enhancement free projects approved by CIRC 16% of the projects were secured in a mixed way with guarantees from major enterprises plus collateral/pledge as dual credit enhancements to protect funds invested Rating of Creditor Financial Product Investment in Real Estate 14% 7% 5% Credit Enhancement for Debt Financial Products in Real Estate 16% 19% Quasi-central Government Debts/Bank Guarantee Non-bank Guarantee 79% AAA AA+ Not Applicable 25% 35% Collateral/Pledge Credit Enhancement Free Non-bank Guarantee and Collateral/Pledge 61

62 Real estate investment: Highlight our exquisite strategy focused on core cities and locations with manageable risk The Group concentrates its property investments in tier one core cities. Developed properties on lease include the Shanghai Taiping Finance Tower, China Taiping Tower in Hong Kong, The Exchange Beijing and Shenzhen Taiping Finance Tower. Bespoken projects Beijing Guang anmen Taiping Finance Tower and projects under development including Suzhou Taiping Finance Tower and Nanning Taiping Finance Tower are in good progress as planned. Projects Occupancy rate Rent (yuan/m 2 /day) Shanghai Taiping Finance Tower 100% 8.9 China Taiping Tower in Hong Kong 100% 13.1 The Exchange Beijing 91% 10.3 Shenzhen Taiping Finance Tower 92%

63 Alternative Investment Innovations: Overseas investment, innovative equity investment, senior health industry investment Traditional investments Alternative investments Financial leasing Real Estate and senior living communities Overseas investments Explore overseas investment New York Tribeca 111 Project Innovate equity investment TFDAC Aviation Assets Equity Investment Funds - with stable cash flow dividends Equity investment in emerging industries Lakala Uber Establishing senior living investment platform Establishing Joint-venture Pension Company with advanced foreign companies Reaching definite intention in establishing Senior Health Investment Fund Management Company with Poly 63

64 Introduction to Investment Business Basic Ideology for Investment and Asset Management in

65 I: The Group strengthens macro guidance and management and supports the transformation of new and old driving forces of Chinese economy In investment the Group plays the role of providing directional guidance mainly at a macro level. In 2016 the basic direction of Group investment is to limit the investment in traditional surplus productivity and strengthen the investment in new growth points of future economy Strictly control investment in traditional surplus productivity industries For traditional surplus productivity industries such as cement, steel, coal and coal chemical industry etc, two measures will be taken: one is strictly controlling new investments including increasing threshold, and the other one is strengthening risk check for exiting investment to guarantee the safety of funds by early discovery, early response and early disposing Greatly support and cultivate new growth point development of future economy Supply reform and innovation will be supported to promote the industry waking towards middle and high end, cultivate new growth point of future economy and make investment efficiently go through economy cycle Investment in the following new emerging industries will be strengthened: national strategy industries like new energy and new material etc; modern service industries like senior health medical industry and modern manufacture industries like aviation, aerospace, navigation, high-speed rail and nuclear power industries 65

66 II: Strengthen investment in the fields beneficial to national welfare and the people s livelihood or with synergy effects Continue to be adapted to national strategy, like investment in national significant construction and significant infrastructure construction and in health, medical and senior living industries which are beneficial to national welfare and the people s livelihood and have synergy effects with insurance industry The state policy measures of promoting the fast development of senior living industry, health industry, new consumption and life service industry will be put into effect; new mode of combining medical and recuperating will be explored; multi-measures will be taken like development, acquisition, reconstruction and rent; synergy of internal funds and external funds will be carried out to form national layout network. And the investment management mode of Best Quality senior housing community with Taiping characteristics will be created through effort Collaboration with foreign companies will be conducted to push the establishment of our group controlled joint-venture operational management company so that we can learn advanced experiences of foreign senior living industry. By collaborating with leading real estate venture capital companies in the country, senior living health industry equity investment fund will be established and social fund investment in senior living industry will be introduced actively 66

67 III: In debt investment, default risk of existing debts will be checked, and to ensure new allocations will be of investment grade Focus on the prevention and response against default risks during economic downturn For existing debts, risk check will be carried out comprehensively to reach the goal of early discovery, early response and early disposal. From current situation, the whole situation is sound. No risk involvement variety is found and portfolio s credit risks are managable as a whole. For new funds, will be focus on high graded debt. Within a certain future period, national debt default risks will be rising whereas currently credit risk premium is not high. From the perspective of risk prevention and from the performance of all kinds of bond type during the spread of debt default, interest rate debt and high grade credit debt are usually better than low grade credit debts. 67

68 IV: In equity investment, gradually cultivate long term investment and value investment idea and style Gradually cultivated value investment philosophy It is taken into full consideration that insurance fund has a longer investment period and lower risk tolerance. Absolute profit return character should be focused on, and longterm investment, steady investment and value investment idea and style adapting to its own characteristics should be cultivated gradually. Further optimize position structure The following stocks will be chosen: Best Quality stock with strong downturn resistance, stock with high dividend guarantee and stock with outstanding advantages of coping with adverse stock market volatility so that stable yield will be produced. 68

69 V: In terms of alternative investment, post-investment management of projects shall be strengthened. For existing alternative investment, the supervision of project s main situation and insurance fund flow will be strengthened. By fully leveraging the account custody bank as an independent supervisor, the monitor of insurance fund flows will be strengthened. A supervision bank will be established to controls special payment and ensure a fixed sum for a fixed purpose. When a project with risk signals occurs, it shall be tackled as soon as possible to ensure the safety of insurance fund practically. For new projects, relevant agreements on investment management will be strengthened. For equity investment projects, explorations on how to strengthen supervision right before returning equity investment shall be made. Controlling force of equity investment project and management methods after investment will be increased by means of contracts or agreements. 69

70 VI: In terms of overseas investment, the advantage of cross-border platform will be fully leveraged for diversified allocations The Group is endowed with the following advantages: it is the only central financial enterprise whose HQs is located overseas with cross-border investment platform and diversified asset allocation. The adverse situation of domestic shortage of investment will be relieved through allocating oversea Best Quality asset Domestic Investment Management Platform Oversea Investment Management Platform Taiping Assets Taiping Pension Taiping Investment Holdings Taiping & Sinopec Financial Leasing Oversea Investment of Domestic Funds Entrust QDII Investment within the Group QDII Investment Entrusted by Third Parties Dual-currency Insurance Policy Entrust Investment in Free Trade Area Taiping Financial Holdings Insurance Funds QDII Funds Insurance Asset Management Products Alternative Investment Projects Entrusted by Other Companies Domestic Investment of Oversea Funds RQFII Investment RQFII Publicly Offered Funds Foreign Capital Equity Investment Funds Cross-border Loan and Equity Financing Insurance Funds RQFII Funds MPF Public Funds Private Equity Funds 70

71 VII: Headquarters to headquarters strategy and comprehensive financial layout will be played fully Headquarters to headquarters strategy will be implemented with Comprehensive financial advantage Taiping Sinopec Financial leasing Securities Currently the Group has Headquarters to headquarters strategic cooperation agreements with over fifty large-scale enterprises, state-owned enterprises and some provinces and cities Alliance between giants with strategic customers and large-scale state-owned enterprises will be carried out; deep cooperation will be made; and two party will not only act as fund providers but assume risks and share profits, effectively control project quality and appropriately cover investment yields Comprehensive financial advantage will be played and a package of financial services will be provided for customers Wealth Management Center Controlled Public Fund Domestic Integrated Financial Services Asset Management Overseas Integrated Financial Services Financial Management Trust Futures Asset Management 71

72 VIII: Asset & Liability management will be strengthened, and investment and liability business will be coordinated Insurance investment needs to deeply understand the liability feature of insurance funds and keep a balance of risk and yield Benign interaction of asset & liability will be realized, acquisition cost of insurance fund will be controlled properly and loss from difference of interest rate will be avoided Carry out asset allocation On the basis of liability features Liability Overall Management of Assets & Liabilities Investment Liability business strategy will be identified according to investment market change 72

73 Q&A 73

74 Thank you! 74