China Taiping Insurance Holdings Company Limited 2015 Annual Results Presentation 23 March 2016
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 forwardlooking 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
Company Structure 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):TPSM and TPR (BJ) are wholly-owned subsidiaries of TPL. CTIH s effective interest in TPSM 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 TPPM 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. Note (8):The above structure was as of 31 Dec 2015. 3
Highlights and Consolidated Results of Operations Continued Enhancements in Value Creation for shareholders Total premium was over HK$138.4 billion, increased by 24.0% over the Last Year Profit attributable to the owners was HK$6.341 billion, increased by 56.9% over the Last Year Owners equity was HK$55.021 billion, increased by 52.9% over the end of Last Year Life Insurance new business values was HK$6.017 billion, increased by 39.1% over the Last Year (increased by 47.7% in terms of RMB) Group embedded value per share attributable to shareholders was HK$26.1, increased by 29.9% over the last year-end figure of HK$20.1, while TPL s embedded value increased by 24.9% over the end of Last Year The combined ratio of property and casualty insurance and reinsurance business remained stable, continuing to making underwriting profit 4
Highlights and Consolidated Results of Operations (Cont d) PRC Insurance Businesses Realized Rapid Development with Quality Total premium of the life insurance increased by 25.5% over the Last Year, with its market share reaching 5.2% Number of life insurance agents was 232,000, increased by 73.3% as compared to the beginning of the Year, resulting a 17.4% increase in individual premium from new policies over the Last Year, which ranked fourth in the industry; high productivity (RMB300,000 regular premium above) agents increased by more than 16.1% over the Last Year Persistency ratios of the individual agents and bancassurance lines were industry-leading; loss ratio of short-term group insurance was kept in a satisfactory range Total premium of PRC property and casualty insurance increased by 20.3% over the Last Year, direct premium increased by 17.7% over the Last Year, faster than market average by 6.0 percentage points; the proportion of non-motor insurance increased by 2.3%, and net profit achieved significant increase Balance of pension assets under management was over RMB100 billion Note: All data related in this material is stated in RMB 5
Highlights and Consolidated Results of Operations (Cont d) Continuous Improvement in International Operations The total premium of CTPI (HK) increased by 60.5% over the Last Year, the underwriting profit increased by 17.1% over the Last Year TP Macau continued to maintain its #1 market share, and the combined ratio remained at an outstanding level The total premium of TP UK increased by 28.9% over the Last Year, and the underwriting profit increased by 3.6 times over the Last Year The total premium of TP Singapore increased by 7.1% over the Last Year, and the underwriting profit maintain at a high level The total premium of TP Indonesia increased by 64.8% over the Last Year, and the underwriting profit increased by 2.2 times over the Last Year Property and casualty reinsurance business of TPRe continued its growth, with premium income increased by 14.8% over the Last Year; long-term life reinsurance business of TPRe continued to make breakthroughs, with its premium increased by 62% over the Last Year 6
Highlights and Consolidated Results of Operations (Cont d) Investment Income Increased Significantly The total investment yield of the Group was 7.97% overall, reaching a new high in 8 years The third-party entrusted investment assets amounted to HK$233.8 billion, increased by 27% over the beginning of the Year The debt assets investment yield of the Group reached 6.12%, outperformed the full price index of ChinaBond in Mainland China The equity assets of the Group including shares and funds obtained an investment yield of 34%, outperformed the Shanghai Composite Index and the Hang Seng Index significantly Conducted innovative alternative investments, of which the 101 Tribeca equity investment in Manhattan, New York, and the equity investment fund project on aviation asset, Taiping-Fontaine DVB (which was the first aircraft leasing project) have been honored as the benchmarks of the industry 7
Highlights and Consolidated Results of Operations (Cont d) Successful Implementation of Strategic Cooperation and Cross-selling Initiatives with Large Clients As at the end of 2015, China Taiping had established strategic cooperation relationships with 55 large clients Our cross-selling initiatives within the Group achieved HK$3.41 billion insurance sales, including HK$2.81 billion of property insurance sales through TPL, HK$440 million of pension sales through TPL, and HK$90 million of property insurance sales through TPP The Sinopec gas station pilot project realized significant breakthroughs. By the end of 2015, 5,205 outlets had been stationed, with insurance sales of HK$1.16 billion 8
Net Profit by Business Segment HK$ million 2015 2014 Change Life Insurance 6,698 3,409 +96.5% PRC Property and Casualty Insurance 821 491 +67.2% Overseas Property and Casualty Insurance and Reinsurance 888 890-0.1% Pension and Group Life Insurance 178 56 +2.2 times Others 1 (417) 28 - Profit from operations 8,168 4,874 +67.6% Non-controlling interests (1,827) (832) +1.2 times Net profit attributable to the shareholders 6,341 4,042 +56.9% 1 Others mainly include the operating results of the holding company, asset management, TPeC, TPIH, TPFH and consolidation adjustments. 9
Life Insurance Business Review TPL TPL (HK) Note: The Group holds 75.1% of the equity interest in TPL, and 100% in TPL (HK) As TPL (HK) is a newly established company during the Year and its business is still in its initial state, the results under life insurance business for the Year still mainly contributed by TPL. The following figures are the results of TPL from its operations, before intra-group eliminations. 10
Life Insurance: Premiums Maintained Rapid Growth, with Solvency Margin Remained Stable Direct Premiums Written (HKD million) Regulatory Solvency Margin Ratio +21.1% 95,538 268% 226% 82,209 Solvency l Solvency I 2014 2015 At 31 Dec 2014 At 31 Dec 2015 Note: TPL redeemed RMB3.7billion subordinate term debts in 2015 11
Life Insurance: Structure of Gross Premiums By Distribution Channels Further Increase in Proportion of Individual Agency Business (HKD million,%) 2% 2% 2014 2015 51% 44% Group and other channels* 1,956 2,268 Bancassurance 41,440 43,295 47% 54% Individual 38,813 53,975 2014 2015 *Other channels is mainly telemarketing 12
Life Insurance: Individual First Year Premium Realized Substantial Growth; NBV Margin Improved Significantly First Year Premium (HKD Million) 17,006 +16.0% 14,665 NBV Margin 33% +3pp 36% 2014 2015 2014 2015 Note:NBV Margin=NBV/First Year Annualized Premium First Year Annualized Premium=First Year Regular Premium + Single Premium/10 13
Life Insurance : Per Capita Productivity Kept Stable Number of Agents 231,766 +73.3% 133,734 (person) Monthly Productivity Per Agent 19,573 +19.9% 16,331 (RMB) At 31 Dec 2014 At 31 Dec 2015 At 31 Dec 2014 At 31 Dec 2015 14
Life Insurance : First Year Regular Premium Through Bancassurance Channel Grew Fairly Rapid; NBV Margin Kept Stable First Year Regular Premium (HKD million) Regular NBV Margin +8.9% 3,271 33% 30% 3,003 2014 2015 2014 2015 Note: NBV Margin=NBV/Regular FYP 15
Life Insurance: Persistency Ratios Stood at the Forefront of the Industry Individual Bancassurance 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% 88% 90% 89% 87% At 31 Dec 2013 At 31 Dec 2014 At 31 Dec 2015 At 31 Dec 2013 At 31 Dec 2014 At 31 Dec 2015 2013 年底 2014 年底 2015 年 10 月底 2013 年底 2014 年底 2015 年 10 月底 Note: According to communications with peers, TPL was No.1 in both Individual and Bancassurance Channels in terms of 13th month persistency ratio 16
Life Insurance : Embedded Value Grew Significantly Embedded Value (HKD million) 81,862 +24.9% Key Components (HKD million) 3,878 81,862 45,605 65,553 32,379 At 31 Dec 2014 At 31 Dec 2015 Adjusted net worth Value of in-force business Net fair value adjustments to HTM assets Embedded Value Note: :32.6% growth in terms of RMB Note: Adjusted net worth is mainly the shareholders net assets of TPL as calculated on a PRC statutory basis Fair value adjustments to HTM assets after considering profit/loss sharing with policyholders for participating business 17
Life Insurance : Movement Analysis of Embedded Value (HKD million) 5,443 3,368 1,481 81,862 65,553 6,017 Embedded Value as at the end of 2014 New business value Expected return on Embedded Value Fair Value Adjustments to HTM Assets Other experience variance and other* Embedded Value as at the end of 2015 Note:*Including differences between the actual experience and expected experience for investment return, dividend, mortality, morbidity, lapses, expenses and the effect from reinsurance contracts and assumption changes, as well as exchange loss arising from the exchange rate of the RMB. 18
Life Insurance : New Business Value Achieved Substantial Growth New Business Value (HKD million) 6,017 +39.1% 4,326 2014 2015 Note: 47.7% growth in terms of RMB over the last year 19
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. 20
Mainland P&C Insurance: Premiums Growth Outperformed Industry Average Direct Premiums Written (HKD million) Regulatory Solvency Ratio +16.1% 19,447 174% +4PP 178% 16,750 2014 2015 At 31 Dec 2014 At 31 Dec 2015 21
Mainland P&C Insurance: Combined Ratio Kept Stable Over the Years Combined Ratio Trend of Combined Ratio Expense Ratio Loss Ratio 102.1% 99.8% 99.8% 99.8% 45.4% 45.6% 99.9% 99.8% 99.8% 99.8% 99.8% 54.4% 54.2% 2014 2015 2014 年 2015 年 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 22
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. 23
Overseas P&C Insurance and Reinsurance: P&C premiums Increased Steadily; TPRe Life Reinsurance Continued to Achieve Breakthroughs Overseas P&C Premiums Reinsurance Premiums 2,862 ( HKD million ) ( HKD million ) +48.4% +31.1% 8,005 1,929 +10.6% 934 1033 6,108 4,007 4,601 2,101 3,404 HK & Macau Overseas 2014 2015 2014 2015 Life Non-Life 24
Overseas P&C Insurance and Reinsurance: Combined Ratios Increase Slightly, Continuing to Make Underwriting Profits Combined Ratio 93.9% 95.9% 91.3% 92.1% 89.3% 93.3% 港澳海外再保险 * HK & Macau Overseas Reinsurance* 2014 2015 * non-life business 25
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. 26
Pension and Group Life Insurance Businesses: Assets Under Management was Over 100 billion Direct Premiums Written (HKD million) Annuity Entrusted Assets (HKD million) Annuity Invested Assets (HKD million) 3,673 +11.9% 4,109 46,243 +17.3% 54,236 53,247 +16.0% 60,642 2014 2015 At 31 Dec 2014 At 31 Dec 2015 At 31 Dec 2014 At 31 Dec 2015 27
Investment 28
Allocation of Investment Assets of the Group 380000 365000 350000 335000 320000 305000 290000 Investment Assets (HKD million) +4.3% 372,667 357,261 At 31 Dec 2014 At 31 Dec 2015 % of Total 2014 2015 Fixed income 78.6% 72.8% Debt securities 41.9% 38.8% Term deposits 15.6% 9.2% Debt products 16.9% 19.3% Other fixed income investments 4.2% 5.5% Equity investments 10.1% 14.4% Equity securities 5.7% 7.0% Investment funds 1.5% 3.4% Other equity investments 2.9% 4.0% Investment properties 4.5% 3.3% Cash, cash equivalents and others 6.8% 9.3% Total 100.0% 100.0% Note: Figures may not match totals due to rounding. 29
Investment Income 30,000 25,000 20,000 15,000 (HKD million) 17,466 3,539 +52.6% 26,657 11,042 10,000 Net Realized and unrealized 5,000 investment gains 1 13,927 15,615 Net investment income 2 0 2014 2015 Total investment yield 3 5.78% 7.97% 1 Including the income from the spread of investment securities, gain or loss on changes in fair value and impairment loss. 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. 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. 30
Debt Investments: High Credit Ratings of Debt Asset 88.4% of the debt securities held by the Group were domestic bonds, 97.3% out of such domestic bonds were government bonds (GB), financial policy bonds (FPB) with high credit ratings and corporate bonds rated AAA. Investment grade bonds with BBB ratings and above reached 100% 60% 50% 40% 30% 20% 10% 0% 50.4% Credit ratings of domestic bonds 24.1% 21.3% 2.3% 1.6% 0.3% 0.0% AAA GBs FPBs AA+ A-1 AA Short-term debt A- Foreign bonds accounted for the remaining 11.6%, of which 84.2% were investment grade with international ratings 31
Alternative Investments Alternative investments key risk exposures decreased The proportion of alternative investments held by the Group to total investment assets slightly increased by 0.8% to 19.9% as compared to 2014 year end Investment properties represents 2.5% of the total assets, a further decrease of 1.1 percentage point compared to 2014 year end Continuous optimization in credit ratings of debt financial products, 88% were rated AAA, an increase of 2 percentage points from 2014 year end Alternative investments key risk exposures represented a low percentage of the total assets. Local Government Debt Financing Local government debt investments of approximately HK$11.38 billion, represented 2.3% 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 88% of the projects were rated AAA, 6% were rated AA+ 74% 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$18.07 billion, represented 3.7% of the total assets The credit ratings of the real estate financial investment debt products remained stable Purchased External Financial Products Purchased external financial products of HK$13.3 billion represented about 2.7% of the total assets The purchased external products chose by the Group were of high rating, of which 90% had ratings of AAA, with the remaining 10% had ratings of AA+ or AA Note: including exposures to each other, which is not directly in the total 32
Outlook 33
Outlook Implement The Boutique Strategy to Create The Most Unique and High Potential Boutique Insurance Company China Taiping will take the initiative to adapt to the new normal economic situation, and will establish the five major development ideas of innovation, coordination, going green, opening and sharing. We will steadily implement the Boutique Strategy" and strive to maintain a better-thanthe-market growth for our core business TPL and TPL (HK) TPL will strive to strengthen the business development in individual and bancassurance channels regular premiums, reinforce its human resources and raise per capita capacity as well as expand the business development of selling insurance through the telephone and internet, so as to further optimize the business structure and improve the New Business Value TPL (HK) will research and develop the insurance market for mainland China visitors while vigorously expanding local individual insurance and bancassurance business 34
Outlook (Cont d) TPI To consolidate our motor insurance business, and to accelerate the development of non-motor insurance business; to enhance the integrated expansion and implement the business with strategic clients; to enhance cost control to reduce the combined ratio TPP To strengthen the cooperation with strategic clients and to promote the progress of new businesses such as occupational annuity and tax-preference health insurance; to expand the scale of pension assets under management; to optimize the business structure of group insurance 35
Outlook (Cont d) Overseas Business CTPI (HK) will commit great efforts to the business structure adjustment, so as to increase market share and influence TP Macau will strengthen the market linkage between domestic and overseas business. In addition, it will proactively explore new business lines TP Singapore will strengthen claims management to promote quality upgrading TP UK will actively focus on large and medium-sized projects, further tapping into the insurance market for Chinese enterprises and local Chinese residents TP Indonesia will commit to develop profitable insurance products, continuing its efforts on strengthening quality control TPRe will make greater efforts exploring business opportunities in the mainland, while keeping a balanced development pace between property and casualty business and life business 36
Outlook (Cont d) Investment The Company is committed to building outstanding capability, and a leading platform for investment management Will adopt international practices and comply with the requirements under the C-ROSS issued by the CIRC to develop a sound C-ROSS compliant system of investment management with a view to further improve assets and liabilities management Will take economic downside risks into full consideration and optimize our asset allocation structure so as to improve the stability and return of investment; will continue to strengthen our alternative investments, especially the monitoring afterwards Will optimize investment structure; will invest in high quality projects in the pension, health and medical sectors based on Taiping s main insurance business; will invest in suitable projects in strategic emerging industries in line with the national plan of industrial transformation and upgrading such as energy saving, environmental protection, high-end equipment, communication technology and new energy; will invest in the national major construction projects in accordance with national strategy such as "One Belt One Road" 37
Questions and Answers 38