On August 29, Caixin Financial News (Reporter Wang Hong) reported that Wang Tingke resigned and no longer serves as the Secretary of the Party Committee of PICC Group. In the absence of the chairman, Zhao Peng, the vice chairman and president of PICC Group, and several senior executives attended the 2024 mid-term earnings conference, responding to hot topics such as premium growth, mid-term dividends, new energy vehicle insurance, autonomous driving, and disaster compensation.

Zhao Peng said that this year, the group's premium growth in the first half of the year slowed down compared to the same period last year, as a result of the overall industry growth slowdown and proactive adjustment and optimization of business structure. The scale of wealth management products was reduced by 4.3 billion this year.

Yu Ze, vice president of PICC Group and CEO of PICC P&C, said that the auto insurance market has entered the stage of stock competition, and BYD P&C has little impact on the industry. Regarding autonomous driving, PICC P&C has many innovative products and clauses, with a focus on defining liability and related responsibility scope between humans and machines. So far, the gross loss caused by major disasters is 9 billion. The company is studying the issuance of diversified risk diversification products through the capital market.

The slowdown in premium growth is a common phenomenon in the industry and a result of proactive adjustment.

Zhao Peng said, "The premium income growth of PICC Group in the first half of the year has slowed down compared to the same period last year." On the one hand, it is affected by common factors in the industry. The overall growth rate of the insurance industry has dropped by 4.9% year-on-year, a decrease of 7.6 percentage points from the same period last year. On the other hand, it is also the result of our commitment to high-quality development and proactive adjustment and optimization of business structure.

Looking at different sectors, Zhao Peng explained that the property insurance business of the group has basically maintained a synchronous development trend with the industry, with a year-on-year increase of 3.7% in premium income in the first half of the year, slightly lower than the industry's growth rate of 4.5%. This is mainly due to the delayed introduction of some policies, and PICC P&C has a relatively high proportion of policy-related business, which is more affected. In terms of life insurance business, PICC actively optimized its structure and reduced the scale of wealth management products by 4.3 billion yuan this year. This part of the business is concentrated in the beginning of the year, so the impact in the first half of the year is greater. In terms of health insurance business, PICC has maintained a good growth momentum, with a premium growth rate of 7.4% in the first half of the year, higher than the growth rate of the life insurance industry.

Zhao Peng also stated that this year, the company will maintain steady and healthy development, refrain from engaging in short-term behaviors, and will not pursue business scale at the expense of relaxing requirements for business quality. The company will remain committed to optimizing its business structure and continuously improving its business quality, which is also the long-term operating strategy that PICC Group adheres to.

In response to the increase in the interim dividends of PICC Group, Zhao Peng stated that it is mainly to implement the requirements of the 'New National Nine Articles', further give back to investors, share the company's development dividends with investors in advance, and determine the dividend ratio based on a comprehensive consideration of regulatory requirements, business development, and operational results under the new guidelines.

Regarding the specific dividend ratio, Zhao Peng responded that it is mainly distributed around 40% of the distribution amount of the full-year profit in 2023. The annual dividend amount will be calculated based on the full-year net income attributable to the parent company achieved in 2024, and will also meet the requirements of the Ministry of Finance regarding the proportion of state-owned capital income contribution.

The auto insurance has entered the stage of stock competition, and the short-term impact of smart connected cars is not significant.

Regarding the current auto insurance market, Yu Ze expressed that although the growth rate of new car sales slowed down in the first half of the year, with the support policies such as trade-in incentives taking effect, comprehensive car insurance will maintain stable growth. He also determined that the current auto insurance market has entered the stage of stock competition. "In the short term, while steadily increasing the share of new cars, the company will build a 'car + everything' business new model that covers the entire lifecycle of vehicles and the full service scenarios in the medium to long term."

In response to whether BYD Insurance will bring changes to the industry's auto insurance when insuring BYD vehicles, Yu Ze stated that there is not much change in the willingness of BYD car owners to insure. It's just that the BYD OEMs guide car owners to compare BYD Insurance through different channels, which overall has little impact on the industry and on PICC. "PICC has a cooperative and open attitude towards the insurance entities in the market, especially the small and medium-sized insurance entities, especially the insurance companies with OEM backgrounds, and looks forward to them bringing new ideas and practices to the industry."

Yu Ze revealed that PICC has already launched exclusive insurance clauses for smart connected cars since 2022, and reported the progress of the clause work and the overall plan to the China Banking and Insurance Regulatory Commission in 2023. At the same time, it has preliminarily accumulated underwriting claims data and accident handling experience for smart connected cars. In addition, the company has cooperated with mainstream car manufacturers to conduct special research on the effectiveness of autonomous driving functions.

"Facing the blue ocean of smart connected cars, the company is not only studying industrial trends in advance, but also reserving a lot of innovative products and clauses based on regulatory and industry association requirements, focusing on the issues of human-computer responsibility and the scope of related responsibilities." Yu Ze stated that smart connected cars are still in the transition phase from testing to the road, with around a thousand vehicles on the road, a very low claims ratio, and very stable. In the short term, it will not have any impact on the company's business or the industry.

Regarding non-auto insurance business, Yu Ze stated that, due to the impact of disasters such as rain, snow, and severe rain in South China in the first half of the year, the comprehensive cost ratio of non-auto insurance of the company's domestic caliber reached 97.3%. He also revealed, "The gross loss from major disasters in the first half of the year was 4 billion yuan. So far, the gross loss from major disasters is 9 billion, and the net loss is 7 billion yuan; last year the gross loss was 13.3 billion, and the net loss was 11.9 billion yuan. Under these proportional circumstances, the profitability of non-auto insurance in the second half of the year will be better than last year if there are no major disasters."

In the past year, frequent catastrophic events have brought what kind of challenges to the insurance industry? "The government continues to strengthen the construction of the emergency management system, and disaster prevention, reduction, relief, and rescue capabilities are constantly being strengthened. A major disaster does not necessarily result in major losses," said Yu Ze. The company continues to strengthen the excess of loss reinsurance contracts and fully leverage the function of reinsurance to protect against major disasters and heavy losses under the premise of cost control. In addition, PICC is also building a risk diversification system with the traditional reinsurance market and the capital market as the "twin pillars".

The three-year earthquake catastrophe bonds issued in the Hong Kong market at the end of 2022 are still within the protection period. Yu Ze revealed that based on this, the company is further studying the issuance of diversified risk diversification products through the capital market.