On August 23, Caixin News (Reporter Xia Shuyuan) at noon, Ping An Insurance held a mid-year performance briefing for 2024. Ping An Group Chairman Ma Mingzhe attended the event with a group of senior executives and responded to the focus of public attention one by one.

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

Regarding the performance in the first half of the year, Ping An Insurance Vice President Fu Xin summarized it with three key words: stable performance, quality improvement, and deepening of strategy. Looking ahead to the second half of the year, Guo Xiaotao, Joint CEO and Vice President of Ping An Insurance, introduced that the future product structure of Ping An Insurance will focus on dividend insurance products, which are expected to account for more than 50% of total sales. In terms of insurance fund utilization, Deng Bin, Assistant General Manager and Chief Investment Officer of Ping An Group, said that Ping An Insurance will continue to increase its allocation of long-term bonds with lower interest rates and build a balanced "dumbbell combination" in the strategic layout of new productive forces by the country.

Reducing the cost of Ping An Life Insurance liabilities by lowering the target interest rate, and focusing on dividend insurance in the future product structure.

As one of the three core businesses of Ping An Insurance, life insurance and health insurance are the most important sources of profitability for the group. Data shows that in the first half of 2024, the life insurance and health insurance segment of Ping An Insurance achieved a net income attributable to the parent of 50.6 billion yuan, a year-on-year increase of 12%, contributing nearly 70% of the operating profit to Ping An.

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

With the gradual stabilization of the number of agents, Ping An achieved a new business value of 22.32 billion yuan in the first half of the year, a year-on-year increase of 11%. Among them, the new business value of the agent channel increased by 10.8%, the per capita new business value increased by 36% year-on-year, and the per capita monthly income reached 1.2 billion yuan, an increase of 2,149 yuan compared to the end of last year.

In response to the recent regulatory adjustment of the preset interest rates for life insurance products and the impact on Ping An Life's overall liability cost, Guo Xiaotao stated that the recent regulatory authorities have lowered the preset interest rates for the entire life insurance industry, which is a very positive and proactive measure, a significant bullish factor for the entire industry, for Ping An Life, and for the Ping An Group.

Guo Xiaotao pointed out that future interest rates will continue to decline, and the entire Chinese life insurance industry faces the issue of interest rate spread losses. Timely regulatory intervention in reducing preset interest rates effectively prevents the continuous deterioration of industry interest rate spread losses.

Similarly, Ping An Life Insurance business will also benefit from major regulatory measures, especially with the reduction of the liability cost of new policies under such regulations, which will have a positive impact on the future profitability of life insurance.

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

Furthermore, in the medical and elderly care service sector, Ping An will leverage its comprehensive financial advantages to provide differentiated product bundles based on varying customer needs, anticipating a continuous healthy and stable development for its life insurance business.

Ensuring the gradual clearance of insurance business risks, the property insurance comprehensive cost ratio is expected to be optimized year-on-year.

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

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

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

It is worth mentioning that Ping An Property Insurance gradually clears the risks of the guaranteed insurance business. In the first half of 2024, the comprehensive cost ratio of Ping An Property Insurance's guaranteed insurance business improved by 10.9 percentage points year-on-year to 106.8%. Ping An Insurance pointed out in its financial report that the company suspended the addition of financing guarantee insurance business in the fourth quarter of 2023.

Ping An Property Insurance's guaranteed insurance liability balance continued to decrease in the first half of 2024, and the risk exposure rapidly converged. Due to the gradual recovery of the claims of existing business, underwriting losses decreased significantly year-on-year, greatly reducing the impact on the overall business quality of the company.

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

In the second half of the year, focus on long-term interest rate bonds, and closely follow the national new qualitative productivity strategy to construct a balanced allocation dumbbell portfolio.

From the investment side, in the first half of 2024, Ping An's investment portfolio size exceeded 5.2 trillion yuan, an increase of 10.2% compared to the beginning of the year.

During the reporting period, Ping An Insurance's annualized comprehensive investment income rate of insurance funds was 4.2%, an increase of 0.1 percentage point year-on-year, mainly benefiting from a balanced asset allocation strategy and improved performance of equity assets compared to the same period of the previous year; The annualized net investment income rate was 3.3%, a decrease of 0.2 percentage points year-on-year, mainly affected by the decrease in the yield of existing and newly added fixed income assets.

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

Deng Bin said that Ping An Investment follows the investment principles of "strategic stability, cycle transcendence, tactical agility, preparedness, balanced allocation, and risk diversification". In the past three years, the A-share market has been volatile, and Ping An has adopted a dumbbell-shaped balanced allocation, bullish on high dividend and growth value stocks. For example, in the technology sector, there has been an increase in allocation to new productive forces and other aspects.

In recent years, there has been much attention on Ping An's real estate investment. As of the end of June, the balance of real estate investment in Ping An's insurance investment portfolio was 20.7425 billion yuan, accounting for 4% of total investment assets. Deng Bin believes that with the continuous introduction of policies, the real estate market is now at the bottom, and the worst time for the industry has passed.

Regarding the expectations of a US interest rate cut, Deng Bin said that an overseas interest rate cut is good news for every capital market. He believes that the US will cut interest rates by 25 basis points in September, which is a positive driving force for the US stock market, Asia-Pacific stock market, and China A-share market. Ping An's overseas investment risks are controllable, and there is the potential for asset appreciation.

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

In the past 10 years, Ping An has consistently exceeded budget allocations to long-term fixed-rate bonds, which has allowed Ping An's balance sheet to have a strong foundation. In the future, Ping An will continue to adhere to this asset-liability matching strategy.