china taiping insurance holdings company …holdings company limited 2014 annual results...
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CHINA TAIPING INSURANCE HOLDINGS COMPANY LIMITED
2014 ANNUAL RESULTSPRESENTATION
26 March 2015
Forward-Looking Statements
This presentation and subsequent discussions maycontain certain forward-looking statements with respectto the financial condition, results of operations andbusinesses of the CTIH Group. These forward-lookingstatements represent the CTIH Group’s expectations orbeliefs concerning future events and involve known andunknown risks and uncertainties that could cause actualresults, performance or events to differ materially fromthose expressed or implied in such statements
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Note (1): Ageas owns the remaining 24.9%, 20% and 20% equity interests in TPL, TPeC and TPAM, respectivelyNote (2): PT Megah Putra Manunggal owns the remaining 45% equity interest in TP IndonesiaNote (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
Ownership StructureAs of 31 December, 2014
TPG
100%
TPG (HK)The Public
68.96% 31.04%
CTIH
ReinsuranceBrokering andInsuranceAgency
LifeInsurance
Property andCasualtyInsurance
Reinsurance Pension E‐CommerceAsset
Management
GeneralManagement ofNon‐FinancialInvestments
Real EstateInvestment
FinancialSupportService
75.1% Note(1) 100% 100% 100% 80% Note(1) 80% Note(1) 100% 75.1% Note(3) 100%
TPL TPI TPRe TPP TPeC TPAM TPRB TPR (BJ) TPFSC
100% 100% 100% 100% 90.3% Note(4) 100%
TPIH
CTPI (HK) TPFH TP Japan SZTPI TPR (SH) TPFAS
100% 50% Note(7) 85.1% Note(5)
TP Macau TSFLTPR
(Suzhou)TPSI
75.1% Note(3)
100%
TP UK
55% Note(2)
TPIndonesia
100% 80.1% Note(6)
TPSingapore
TPR(Nanning)
100%
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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
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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
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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 4th 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
6Note: The above figures were measured in RMB
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
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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
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Highlights and Consolidated Results of Operations (Cont’d)
Successful Implementation of Strategic Cooperation and Cross-selling 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$90 million
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Highlights and Consolidated Results of Operations (Cont’d)
Brand Influence and Brand Value have been Significantly Improved In 2014, the ranking of China Taiping in the "Fortune" China 500 list
increased substantially After it was included in the list of the Best China Brands 2014 and the
2014 Hurun Most Valuable Chinese Brands List, China Taiping was awarded by Xinhua News Agency the "Most Trustworthy Insurance Institution" in the 5th Brand and Lifestyle Ranking 2015
A total of 9 companies of the Group received an A grade rating by international credit-rating agencies, which made the Group rank top among its domestic counterparts
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Status of Restructuring
All target assets have already been transferred to CTIH in
2014, with all settlement procedures completed. The 2014
financial results of CTIH have consolidated all target assets.
The restructuring process has been completed successfully
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Net Profit by Business Segment
HK$ million 2014 2013(Restated)
Change
Life Insurance 3,409 1,294 +1.6 times
PRC Property and Casualty Insurance 491 342 +43.6%Overseas Property and Casualty Insurance and Reinsurance 890 854 +4.2%
Pension and Group Life Insurance 56 2 +22.0 timesOthers 1 28 (152) -
Profit from operations 4,874 2,340 +1.1 timesNon-controlling interests (832) (687) +21.1%
Net profit attributable to the shareholders 4,042 1,653 +1.4 times
1 Others mainly include the operating results of the holding company, asset management, TPeC, TPIH, TPFH and consolidation adjustments
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The following figures are the results of TPL from its operations, before intra-group eliminations.
• TPL
Life Insurance Business Review
Note: In November 2013, the equity interest at TPL owned by the Group increased to 75.1% from 50.05%.
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Life Insurance: Premiums Grew Faster than Industry Averages, Market Share Increased, Sufficient Solvency Margin
Gross Premiums Written Market Share
Regulatory Solvency Margin Ratio
64,908 82,209
2013 2014
HK$ million
4.8%
5.1%
At 31 Dec 2013 At 31 Dec 2014
166%275%
At 31 Dec 2013 At 31 Dec 2014
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Life Insurance: Structure of Gross Premiums – By Distribution Channels
2013 201454 125
1,429 1,83128,524 38,81334,901 41,440
Rising Proportion of Individual Agency Business
* Other Channels comprise mainly telemarketing products15
53.8% 50.4%
43.9% 47.2%
2.2% 2.2%0.1% 0.2%
2013 2014
HK$ million
GroupOther Channels *IndividualBancassurance
64,908 82,209
Life Insurance: Individual Premium - First Year Regular Premium Increased Significantly, New Business Value Margin Remains StableFirst Year Regular Premium Profit Margin
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7,942
12,745
2013 2014
HK$ million
34% 33%
2013 2014
Life Insurance: Individual First Year Regular Premium
By Payment Term
Middle/Long Duration Products Over 80%
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20132014
69.0% 83.9%
31.0% 16.1%
Below 10 Years
10 Years and above
Life Insurance: Bancassurance First Year Regular Premium Grew Faster than Industry Averages, New Business Profit Margin Increased Significantly
First Year Regular Premium Profit Margin
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2,038
3,003
2013 2014
HK$ million
29%33%
2013 2014
10,600 16,331
At 31 Dec 2013 At 31 Dec 2014
RMB
Life Insurance : Individual Agent Size Target Achieved, Per Capita Productivity Significantly Improved, Increasing Numbers of High Producing Agents
Monthly Productivity Per Agent
Number of Outstanding Agents – Standardized Premium
Number of Individual Agents
112,796 133,734
At 31 Dec 2013 At 31 Dec 2014
More than 130,000
More than 130,000
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523 1,148 2,472
1,257 2,894
6,070
RMB1 Million Elite RMB500,000 Elite RMB300,000 Elite
At 31 Dec 2013 At 31 Dec 2014
Life Insurance: Persistency Ratios at the Forefrontof the Industry
Individual Bancassurance
92.3% 92.9% 92.6%
88.5% 88.4% 88.7%
At 31 Dec 2012 At 31 Dec 2013 At 31 Dec 2014
Persistency ratio ‐ 13th month
Persistency ratio ‐ 25th month
92.9% 92.3% 91.1%
90.2% 89.6% 88.5%
At 31 Dec 2012 At 31 Dec 2013 At 31 Dec 2014
Persistency ratio ‐ 13th month
Persistency ratio ‐ 25th month
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TPL Embedded Value
Embedded Value Key Components
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
45,390
65,553
At 31 Dec 2013 At 31 Dec 2014
HK$ million
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24,819
40,194
540
65,553
Adjusted Net Worth Value of In‐ForceBusiness
Fair valueadjustments to HTM
assets
Embedded Value
HK$ millionAt 31 Dec 2014
1
2
TPL Embedded Value– Movement Analysis of Embedded Value
* mainly include investment return, dividend, mortality, morbidity, lapses, expenses, income tax and business taxes, as well as the effect from reinsurance contracts
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45,390 4,326
4,215 4,262
7,360 65,553
Embedded Value asat 1 Jan 2014
New BusinessValue
Expected Return onEmbedded Value
HTM Fair ValueAdjustment
Investment Return,Other Experience
Variance and Others
Embedded Value asat 31 December
2014
HK$ million
*
TPL New Business Value Tendency
New Business Value Grow Faster Than Peers
2013
2014
3,148 4,326
HK$ million
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The following figures are the results of TPI from its operations, before intra-group eliminations.
• TPI
PRC Property and Casualty Insurance Business Review
Note: In November 2013, the equity interest at TPI owned by the Group increased to 100% from 61.21%.
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PRC P&C Insurance: Premiums Grew Faster than Industry Averages
Gross Premiums Written Regulatory Solvency Margin Ratio
20132014
13,519
16,750
HK$ million
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At 31 Dec 2013 At 31 Dec 2014
166%174%
PRC P&C Insurance
Combined Ratio Trend of Combined Ratio102.1%
99.9% 99.8% 99.8% 99.8%
2010 2011 2012 2013 2014
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52.8% 54.4%
47.0% 45.4%
2013 2014
Loss ratio Expense ratio
99.8% 99.8%
The following figures are the results of the respective companies from their respective operations, before intra-group eliminations.
Overseas Property and Casualty Insurance and Reinsurance Businesses Review
HK & Macau• CTPI (HK)• TP Macau
Overseas• TP Singapore• TP UK• TP Indonesia
Reinsurance• TPRe
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Overseas P&C Insurance and Reinsurance: Premium Income Steadily Increased
ReinsuranceOverseas P&C Insurance
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1,704
817
1,929
934
HK & Macau OverseasHK$ million 2013 2014
3,693 4,007 44
2,101
2013 2014HK$ million Non‐Life Life
3,737
6,108
3,737
6,108
Achieved Breakthroughs in Long Term Life Insurance Business
Overseas P&C Insurance and Reinsurance
Satisfactory Combined Ratios, Continued to Maintain Underwriting Profitability
* Non-Life
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95.7%87.8%
96.5%93.9% 91.3% 89.3%
HK & Macau Overseas Reinsurance*
2013 2014
The following figures are the results of TPP from its operations, before intra-group eliminations.
• TPP
Pension and Group Life Businesses Review
Note: In November 2013, the equity interest at TPP owned by the Group increased to 100% from 96%.
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Pension and Group Life BusinessesStrong Business Growth, Scale Expanding, Enterprise Annuities Continues to Grow
Annuity Invested Assets
Gross Premium Profit from Operation
Annuity Entrusted Assets
1,662
3,673
2013 2014
HK$ million
2
56
2013 2014
HK$ million
38,787 53,247
2013 2014
HK$ million
35,805 46,243
2013 2014
HK$ million
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Investments
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Group Invested Asset Allocation% 2013 2014
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%
Invested Asset
20132014
292,752
357,261
HK$ million
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Investment Income
Note 1 Including the income from the spread of investment securities, gain or loss on changes in fair value and impairment lossNote 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 agreementsNote 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
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10,15213,927
1,128
3,539
2013 2014
HK$ million
Net realized and unrealizedinvestment gains
Net investment income
11,280
17,466
5.1% 5.8%Total investment yield Note 3
Note 2
Note 1
Debt Securities: Corporate Bonds and Bond Portfolio Have High Credit Ratings
93.9% of debt securities were domestic bonds, of which 95.5% weregovernment bonds, financial policy bonds with high credit ratings andcorporate government rated AAA. Investment grade bonds with BBBratings or higher reached 99.9%
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Foreign bonds accounted for the remaining 6.1%, of which 91.4% were investment grade with international ratings
22.2% 23.9%
49.4%
3.8% 0.6% 0.0% 0.1%
GovernmentBonds
FinancialPolicy Bonds
AAA AA A BB Non‐Rated
Credit Ratings forDomestic Bonds Portfolio
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 2014 1H
Among them, investment properties represents 3.6% of the total assets, a further decrease of 0.7 percentage point compared to 2014 1H
Continuous optimization in credit ratings of debt financial products, 86% were rated AAA, an increase of 4 percentage points from 2014 1H
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
Key Risk Exposures Represented a Low Percentage of the Total Assets
Note: Including exposures to each other, which is not directly in the total
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Outlook
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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
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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
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Outlook (Cont’d)
TPI 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
TPP 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
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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
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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
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Questions & Answers
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