Ping An Insurance Group said it will focus on new digital insurance products and distribution channels after reporting its steepest decline in profits since the 2008 financial crisis, reflecting pressures on its life insurance unit.
The Shenzhen, China-based financial firm, the third-largest insurer in the world by premiums, on Thursday reported CNY 68.9 billion ($9.96 billion) in net profits attributable to shareholders for the first half of 2020, a 29.7% drop year over year. It’s the largest drop for the company since 2008, when first-half profits fell nearly 12%.
Ping An Life, the country’s second-largest life insurer, saw the value of new business fall 24.4% year over year to CNY 31 billion ($4.5 billion), despite the group’s efforts to lower operating costs and bring new users to existing digital platforms.
“At Ping An, 2020 is a year of reform for the life insurance business as we pivot the business toward the high-value protection products,” Ping An Group Chairman Ma Mingzhe said.
To this end, Ma said, Ping An will center its efforts on developing new digital products and platforms for “long-term sustainable growth” as the COVID-19 pandemic continues to disrupt the profitability of life and auto lines.
Ping An claimed it applied for 4,625 patents year to date, including 1,500 applications for global fintech patents, bringing its tally of applications to just over 26,000.
The company’s existing digital products, especially in the life and health segments, grew rapidly due to the pandemic. Ping An Good Doctor, an online platform that connects consumers to medical resources, was accessed more than 1 billion times at the peak of the virus, the firm said, and more than doubled its revenue year over year.
In other parts of the company, OneConnect, a technology-as-a-service cloud platform for financial firms, served a total of 630 banks and 100 insurers, growing 39.7% year over year in revenue.
The platforms grew 108% and 84% in market value, respectively, Ping An said.
“The reform projects are progressing steadily and paying off gradually,” Ma said. “We aim to become not only the largest life insurer, but also a market leader, an industry benchmark, the customer’s first choice and a world-leading life insurer.”
Ping An acquired about 18 million new retail customers in the first half of 2020 at a growth rate of 4.6% versus 9.5% in the previous-year period. Contracts per customer only grew by 1.9% from the beginning of the year compared to 7.9% growth last year.
The retail business, which comprises 87.5% of Ping An’s operating profits, declined 2.3% year over year in operating profit, the company said. Meanwhile, the corporate insurance unit saw cross-selling premiums jump 168.4% year over year, Ping An said.
The property and casualty line grew 10.5% year over year in premium income despite lower car sales in China, Ping An said. Ping An Auto Owner, an app powered by artificial intelligence that connects drivers to car dealers and other automotive services, grew 17.8% year to date to more than 109 million registered users and 27 million monthly active users in June.
Despite the slump in its performance, Ping An said it will issue an interim dividend of CNY 0.80 ($0.12) per share in cash, up 6.7% year over year.