CHINA TAIPING INSURANCE HOLDINGS COMPANY LIMITED 2014 ANNUAL RESULTS PRESENTATION

Transcription

1 CHINA TAIPING INSURANCE HOLDINGS COMPANY LIMITED 2014 ANNUAL RESULTS PRESENTATION 26 March 2015

2 Forward-Looking Statements This presentation and subsequent discussions may contain certain forward-looking statements with respect to the financial condition, results of operations and businesses of the CTIH Group. These forward-looking statements represent the CTIH Group s expectations or beliefs concerning future events and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements 2

3 TPG Ownership Structure As of 31 December, % TPG (HK) The Public 68.96% 31.04% CTIH Life Insurance Property and Casualty Insurance Reinsurance Pension E Commerce Asset Management Reinsurance Brokering and Insurance Agency General Management of Non Financial Investments Real Estate Investment Financial Support Service 75.1% Note(1) 100% 100% 100% 80% Note(1) 80% Note(1) 100% 100% 75.1% Note(3) 100% TPL TPI TPRe TPP TPeC TPAM TPRB TPIH TPR (BJ) TPFSC 100% 100% 100% 100% 90.3% Note(4) 100% CTPI (HK) TPFH TP Japan SZTPI TPR (SH) TPFAS 100% 50% Note(7) 75.1% Note(3) 85.1% Note(5) TP Macau TSFL TPSI TPR (Suzhou) 100% 80.1% Note(6) TP Singapore TPR (Nanning) 100% TP UK 55% Note(2) TP Indonesia Note (1): Ageas owns the remaining 24.9%, 20% and 20% equity interests in TPL, TPeC and TPAM, respectively Note (2): PT Megah Putra Manunggal owns the remaining 45% equity interest in TP Indonesia Note (3):TPSI and TPR (BJ) are wholly-owned subsidiaries of TPL. CTIH s effective interest in TPSI and TPR (BJ) is 75.1% Note (4):TPIH and TPL own 61% and 39% of the equity interests of TPR (SH), respectively. CTIH s effective interest in TPR (SH) is 90.3% Note (5):TPL, TPI and SZTPI own 60%, 20% and 20% of the equity interests in TPR (Suzhou), respectively. CTIH s effective interest in TPR (Suzhou) is 85.1% Note (6):TPL and TPI own 80% and 20% of the equity interests in TPR (Nanning), respectively. CTIH s effective interest in TPR (Nanning) is 80.1% Note (7):Sinopec Group Company owns the remaining 50% equity interests in TSFL 3

4 Highlights and Consolidated Results of Operations The Strategic Goal of "Building a New Taiping in Three Years" Has Been Comprehensively and Excellently Achieved The goal of doubling total premium, net profit, and total assets (three important indicators) over 2011 has been achieved All subsidiaries and business lines have obtained considerable developments Synergetic development has been achieved in scale, quality, and efficiency in general Overall strength continues to improve and industry influence has been enhanced substantially 4

5 Highlights and Consolidated Results of Operations (Cont d) Significant Enhancements in Operational Efficiency Total premium was over HK$100 billion, increasing by 29.3% over the Last Year Total assets was HK$443.5 billion, increasing by 39.2% over the end of Last Year Profit attributable to shareholders was HK$4.04 billion, increasing by 1.4 times over the Last Year Return on shareholders' equity was 14.1%, reaching a new high in recent years New business values was HK$4.33 billion, increasing by 37.4% over the Last Year Group embedded value per share attributable to shareholders was HK$20.1, increasing by 30.5% over the last year-end figure of HK$15.4, while TPL s embedded value increased by 44.4% over the Last Year The combined ratio of property and casualty insurance and reinsurance business continued to be kept in a satisfactory range 5

6 Highlights and Consolidated Results of Operations (Cont d) PRC Insurance Businesses Developed Rapidly, Quality of Business and Operating Efficiency Have Been Steadily Improved Gross premiums of life insurance increased by 27.9% over the Last Year, faster than market average by 9.8 percentage points, with its market share reaching 5.4% Monthly per capita production of life insurance agents was RMB16,331, resulting in a total premium of over RMB10 billion from new policies which ranked 4 th in the industry Persistency ratios of the individual agents and bancassurance lines continued to be stable at the forefront of the industry; loss ratio of short-term group insurance was kept in a satisfactory range Premium of PRC property and casualty insurance increased by 22.9% over the Last Year, faster than market average by 6.5 percentage points, continuing to making underwriting profit Balance of pension assets under management was over RMB80 billion Note: The above figures were measured in RMB 6

7 Highlights and Consolidated Results of Operations (Cont d) Overseas Insurance Businesses Recorded Steady Growth, Continued to Increase in Profit Contribution The premium of CTPI (HK) increased by 10.6% over the Last Year, ranking No.4 in the market, and the underwriting profit increased by 39.6% over the Last Year TP Macau continued to be No.1 in the market and the underwriting profit increased by 63.8% over the Last Year The premium of TP UK increased by 60.4% over the Last Year Property and Casualty Reinsurance business of TPRe continued to rank No.1 in the Hong Kong Market and that of long-term life insurance had breakthroughs, leading to an increase by 63.4% in total premium over the Last Year; underwriting profit of non-life-insurance businesses increased by 2.2 times 7

8 Highlights and Consolidated Results of Operations (Cont d) Investment Income Increased Significantly with All Kinds of Investments Outperformed The total investment return of the Group was 5.8% overall, reaching a new high in recent years The investment assets within the Group amounted to HK$357.3 billion. Besides, the third-party entrusted investment assets also increased rapidly to HK$168.2 billion at the year end Allocation scale of alternative investment has developed steadily with a return of 7.75% Rental income from real estate properties increased substantially and the "Wutong Renjia" senior housing community commenced operation Taiping & Sinopec Financial Leasing Co., Ltd. was officially put into operation, achieving profitability in the first year 8

9 Highlights and Consolidated Results of Operations (Cont d) Successful Implementation of Strategic Cooperation and Crossselling Initiatives with Large Clients In 2014, China Taiping signed Group Strategic Cooperation Agreements with 13 large clients, including China Tobacco, China Mobile, China Datang and China Merchants Bank. As at the end of 2014, China Taiping had established strategic cooperation relationships with 48 large clients Our cross-selling initiatives achieved HK$2.43 billion of insurance sales, including HK$1.96 billion of property insurance sales through TPL, HK$320 million of pension sales through TPL, and HK$80 million of property insurance sales through TPP The Sinopec gas station pilot project realized significant breakthroughs. By the end of 2014, over a thousand of outlets had been stationed, with insurance sales of nearly HK$90 million 9

10 Highlights and Consolidated Results of Operations (Cont d) Brand Influence and Brand Value have been Significantly Improved In 2014, the ranking of China Taiping in the "Fortune" China 500 list increased substantially After it was included in the list of the Best China Brands 2014 and the 2014 Hurun Most Valuable Chinese Brands List, China Taiping was awarded by Xinhua News Agency the "Most Trustworthy Insurance Institution" in the 5th Brand and Lifestyle Ranking 2015 A total of 9 companies of the Group received an A grade rating by international credit-rating agencies, which made the Group rank top among its domestic counterparts 10

11 Status of Restructuring All target assets have already been transferred to CTIH in 2014, with all settlement procedures completed. The 2014 financial results of CTIH have consolidated all target assets. The restructuring process has been completed successfully 11

12 Net Profit by Business Segment HK$ million (Restated) Change Life Insurance 3,409 1, times PRC Property and Casualty Insurance % Overseas Property and Casualty Insurance and Reinsurance % Pension and Group Life Insurance times Others 1 28 (152) - Profit from operations 4,874 2, times Non-controlling interests (832) (687) +21.1% Net profit attributable to the shareholders 4,042 1, times 1 Others mainly include the operating results of the holding company, asset management, TPeC, TPIH, TPFH and consolidation adjustments 12

13 Life Insurance Business Review TPL Note: In November 2013, the equity interest at TPL owned by the Group increased to 75.1% from 50.05%. The following figures are the results of TPL from its operations, before intra-group eliminations. 13

14 Life Insurance: Premiums Grew Faster than Industry Averages, Market Share Increased, Sufficient Solvency Margin Gross Premiums Written HK$ million 82,209 64, Market Share 5.1% 4.8% At 31 Dec 2013 At 31 Dec 2014 Regulatory Solvency Margin Ratio 166% 275% At 31 Dec 2013 At 31 Dec

15 Life Insurance: Structure of Gross Premiums By Distribution Channels Rising Proportion of Individual Agency Business HK$ million 64,908 82, % 2.2% 0.2% 2.2% 43.9% 47.2% Group Other Channels * Individual Bancassurance ,429 1,831 28,524 38,813 34,901 41, % 50.4% * Other Channels comprise mainly telemarketing products 15

16 Life Insurance: Individual Premium - First Year Regular Premium Increased Significantly, New Business Value Margin Remains Stable First Year Regular Premium HK$ million Profit Margin 12,745 34% 33% 7,

17 Life Insurance: Individual First Year Regular Premium Middle/Long Duration Products Over 80% By Payment Term 31.0% 16.1% 69.0% 83.9% Below 10 Years 10 Years and above

18 Life Insurance: Bancassurance First Year Regular Premium Grew Faster than Industry Averages, New Business Profit Margin Increased Significantly First Year Regular Premium Profit Margin HK$ million 2,038 3,003 29% 33%

19 Life Insurance : Individual Agent Size Target Achieved, Per Capita Productivity Significantly Improved, Increasing Numbers of High Producing Agents Number of Individual Agents Monthly Productivity Per Agent 112,796 More than 130,000 RMB 16, ,734 10,600 At 31 Dec 2013 At 31 Dec 2014 At 31 Dec 2013 At 31 Dec 2014 Number of Outstanding Agents Standardized Premium At 31 Dec 2013 At 31 Dec , ,257 1,148 2,472 6,070 RMB1 Million Elite RMB500,000 Elite RMB300,000 Elite 19

20 Life Insurance: Persistency Ratios at the Forefront of the Industry Individual Persistency ratio 13th month Persistency ratio 25th month Bancassurance Persistency ratio 13th month Persistency ratio 25th month 92.3% 92.9% 92.6% 92.9% 92.3% 91.1% 88.5% 88.4% 88.7% 90.2% 89.6% 88.5% At 31 Dec 2012 At 31 Dec 2013 At 31 Dec 2014 At 31 Dec 2012 At 31 Dec 2013 At 31 Dec

21 TPL Embedded Value HK$ million Embedded Value 65,553 At 31 Dec 2014 HK$ million Key Components ,390 40,194 65,553 24,819 At 31 Dec 2013 At 31 Dec 2014 Adjusted Net Worth 1 Value of In Force Business Fair value adjustments to HTM assets 2 Embedded Value 1 Adjusted net worth is mainly the shareholders net assets of TPL as calculated on a PRC statutory basis 2 Fair value adjustments to HTM assets and its impact on profit/loss sharing with policyholders for participating business 21

22 TPL Embedded Value Movement Analysis of Embedded Value HK$ million 7,360 65,553 45,390 4,326 4,215 4,262 Embedded Value as at 1 Jan 2014 New Business Value Expected Return on Embedded Value HTM Fair Value Adjustment Investment Return, Other Experience Variance and Others Embedded Value as at 31 December 2014 * * mainly include investment return, dividend, mortality, morbidity, lapses, expenses, income tax and business taxes, as well as the effect from reinsurance contracts 22

23 TPL New Business Value Tendency New Business Value Grow Faster Than Peers HK$ million 3,148 4,

24 PRC Property and Casualty Insurance Business Review TPI Note: In November 2013, the equity interest at TPI owned by the Group increased to 100% from 61.21%. The following figures are the results of TPI from its operations, before intra-group eliminations. 24

25 PRC P&C Insurance: Premiums Grew Faster than Industry Averages Gross Premiums Written Regulatory Solvency Margin Ratio HK$ million 13,519 16, % 174% At 31 Dec 2013 At 31 Dec

26 PRC P&C Insurance Combined Ratio Loss ratio Expense ratio 102.1% Trend of Combined Ratio 99.8% 99.8% 47.0% 45.4% 99.9% 99.8% 99.8% 99.8% 52.8% 54.4%

27 Overseas Property and Casualty 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. 27

28 Overseas P&C Insurance and Reinsurance: Premium Income Steadily Increased Overseas P&C Insurance Reinsurance Achieved Breakthroughs in Long Term Life Insurance Business 6,108 1,704 1, , ,693 2,101 4,007 HK & Macau HK$ million Overseas HK$ million Non Life Life 28

29 Overseas P&C Insurance and Reinsurance Satisfactory Combined Ratios, Continued to Maintain Underwriting Profitability 95.7% 93.9% 91.3% 96.5% 89.3% 87.8% HK & Macau Overseas Reinsurance* * Non-Life 29

30 Pension and Group Life Businesses Review TPP Note: In November 2013, the equity interest at TPP owned by the Group increased to 100% from 96%. The following figures are the results of TPP from its operations, before intra-group eliminations. 30

31 Pension and Group Life Businesses Strong Business Growth, Scale Expanding, Enterprise Annuities Continues to Grow HK$ million Gross Premium 1,662 3, Annuity Invested Assets HK$ million 38,787 53,247 HK$ million Profit from Operation Annuity Entrusted Assets HK$ million 46,243 35,

32 Investments 32

33 Group Invested Asset Allocation Invested Asset HK$ million 357, , % Fixed income 82.5% 78.6% Debt securities 49.0% 41.9% Term deposits 18.9% 15.6% Debt products 11.2% 16.9% Other fixed income investments 3.4% 4.2% Equity investments 6.6% 10.1% Equity securities 2.2% 5.7% Investment funds 2.6% 1.5% Other equity investments 1.8% 2.9% Investment properties 5.0% 4.5% Cash, cash equivalents and others 5.9% 6.8% Total 100.0% 100.0% 33

34 Investment Income HK$ million Net realized and unrealized investment gains Note 1 11,280 1,128 17,466 3,539 Net investment income Note 2 10,152 13, Total investment yield Note 3 5.1% 5.8% Note 1 Including the income from the spread of investment securities, gain or loss on changes in fair value and impairment loss Note 2 Including the interest income from deposit, interest income from bonds, dividends from equity investments, rental income from investment properties and deducting interest expense on securities sold under resale agreements Note 3 In the calculation of total investment yield, as the denominator, the average investment assets takes into account the effect of securities purchase under resale agreements and securities sold under repurchase agreements 34

35 Debt Securities: Corporate Bonds and Bond Portfolio Have High Credit Ratings 93.9% of debt securities were domestic bonds, of which 95.5% were government bonds, financial policy bonds with high credit ratings and corporate government rated AAA. Investment grade bonds with BBB ratings or higher reached 99.9% 49.4% Credit Ratings for Domestic Bonds Portfolio 22.2% 23.9% 3.8% 0.6% 0.0% 0.1% Government Bonds Financial Policy Bonds AAA AA A BB Non Rated Foreign bonds accounted for the remaining 6.1%, of which 91.4% were investment grade with international ratings 35

36 Alternative Investments: Further Reducing Risk Exposures of Alternative Investments Under the same basis, alternative investment represents 19.1% of the total assets, a further decrease of 0.4 percentage point compared to H Among them, investment properties represents 3.6% of the total assets, a further decrease of 0.7 percentage point compared to H Continuous optimization in credit ratings of debt financial products, 86% were rated AAA, an increase of 4 percentage points from H Key Risk Exposures Represented a Low Percentage of the Total Assets Local Government Debt Financing Local government debt investments of approximately HK$12 billion, represented 2.7% of the total assets In 2015, with the replacement of local government debts to platform debts, the risk exposures of investment in local government debt reduced 93% of the projects were rated AAA, with the remaining 7% were rated AA+ 67% of the projects had bank and central government-owned/large enterprises as guarantor Major projects were located in tier 1 or new tier 1 cities Real Estate Financial Investment Debt Products Real estate financial investment debt products of approximately HK$16.7 billion, represented 3.8% of the total assets Continuous optimization in credit ratings of the real estate financial investment debt products All projects had bank guarantees or large enterprises guarantees or various forms of mortgages/ pledges or hybrid credit enhancements Purchased External Trust Products Trust products of HK$7.2 billion represented about 1.6% of the total assets. Trust products related to real estate were approximately HK$4.9 billion, representing about 1.1% of the total assets 90% of the purchased external trust products had external ratings of AAA, while the remaining 10% had ratings of AA Note: Including exposures to each other, which is not directly in the total 36

37 Outlook 37

38 Outlook Implementing The Boutique Strategy to Create The Most Unique and High Potential Boutique Insurance Company The Three Year Rebuilding strategic objectives have been fully completed, which boosted the Group s overall strength, brand influence, market position as well as operation and management capabilities. Basing on its actual situation and actively adapting to the new normal of the Chinese economic development, China Taiping will develop in a market-oriented, customer-focused and innovation-driven manner, and create the most unique and high potential boutique insurance company as its strategic objective in a future period 2015 is the first year of implementing the Boutique Strategy. China Taiping will adhere to the general principles of steady growth, innovation-driven, customer first, focusing on benefit, and operating in conformity, committing concrete efforts to promote the corporate scale, benefit, management and service to a new level and achieve fast, robust and sustainable growth of the overall business 38

39 Outlook (Cont d) TPL To achieve concurrent growth of scale and value, continuously optimizing business structure, and have individual regular premium and new business value to grow faster than peers To innovate the development model of individual insurance agents to achieve sustainable growth of agents based on the consolidation and improvement of agent retention rate To improve the bancassurance operation of outlets and clients to improve per capita productivity and outlet productivity To continue to strengthen renewal management to lead the industry with quality business To strengthen differentiated management of agencies and act according to the actual situation. To implement the operational strategy and resource allocation based on the agency s development To enhance cost controls, reduce fee deficit and improve business value 39

40 Outlook (Cont d) TPI TPP To develop innovative, differentiated and refined business To pursue steady increase of market share, persistency ratio and underwriting profitability To actively respond to the market reform of premium rate of commercial motor insurance To expand and improve the development of third and fourth-tier agencies To achieve new breakthroughs in insurances for agriculture, liability, credit, accident and health, and marine To expand cooperation projects with the government, and grow the business with strategic clients To grasp policies and opportunities to boost health and pension business To further improve the asset management scale and profitability of pension 40

41 Outlook (Cont d) Overseas Property & Casualty Insurance and Reinsurance CTPI (HK) will retain and grow its pool of large clients, achieve breakthroughs in major projects, and have faster business development in accident and medical insurances, more cooperation with the mainland, a larger business market of self-insurance and continuously growing its market share TP Macau will enhance product innovation, increase new business growth points, consolidate its leading market position and stabilize its profitability TP Singapore will further explore potential business and pursue benefit-oriented business to achieve fast growth of premium TP UK will achieve breakthroughs in expanding its business with Chinese-funded companies, pursue participation in the Lloyd s business and maintain faster business growth TP Indonesia will pursue steady growth of the business with Chinese-funded companies, further boost local business, and improve benefit and scale TPRe will expedite the development of its PRC reinsurance market and life reinsurance business, improve the risk management against catastrophes, and achieve sustainable profit growth 41

42 Outlook (Cont d) Investment In respect of investment business, the Group is committed to building a leading platform for investment management Regarding the application of insurance funds investment, the Group will adopt the international practice to further improve its system of investment management. In accordance with the requirement of solvency II issued by CIRC, the Group will optimize the investment structure of alternative assets and improve the stability and return of risk asset investment In respect of third-party asset management business, the Group will improve its comprehensive financial presence, and leverage on its cross-border strength to continue to boost its third-party assets under management 42

43 Questions & Answers 43