China Taiping Insurance Holdings Company Limited Investor ... · Holdings Company Limited...
Transcript of China Taiping Insurance Holdings Company Limited Investor ... · Holdings Company Limited...
8 December, 2015
China Taiping Insurance Holdings Company Limited
Investor/Analyst Open Day
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Forward-looking Statements The presentation herein contains unaudited data. While the Company has endeavored to accurate and complete data, it makes no express or implied statement or warranty regarding fairness, accuracy, completeness and correctness of such information or opinions. All data contained in this presentation are only subject to the circumstances when they were provided and the Company makes no commitment to perform any update of the presentation for any consequent change
The “forward-looking statements” contained in the presentation herein refer to the statements of the Company on possible future business activities, events or evolutions. Such statements are assumptions formed on the basis of the Company’s future operations and various factors out of the control of the Company, hence actual operation outcomes may differ greatly from such statements
Data, statements or opinions contained in the presentation herein do not constitute any open offer or investment advice. The Company and its staff, whatever reason it might be, assume no responsibility for any loss or damage incurred from the use or interpretation of the presentation herein or any information in connection with it
China Taiping Group — Overall Business Review
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Operational Highlights
Delivered Good Quality and Sustainable Overall Operational
Results by the end of October 2015
Premium growth beats the market
Operational performance keeps improving
Quality of business remains strong and keeps improving
Overall competence continues to improve
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Operational Highlights (Cont’d)
Mainland Insurance Businesses Developed Rapidly, Quality of Business and Operating Performance Have Been Steadily Improved By the end of October, direct premium written of life insurance increased by 24.3% YoY Monthly production per agent achieved RMB17,117,resulting in a 41% increase in gross
premium of new policies which ranked No.4 in the industry. Outstanding agents(regular premium ≥ RMB300,000) increase by 31% YoY
Persistency ratios of agency & Banca channel continued to be stable at the forefront of the industry; The loss ratio of short-term group insurance kept in a satisfactory range
TPI’s direct premium written increased by 21.6% YoY. Growth of both motor & non-motor insurance outperformed the market, with non-motor insurance accelerated growth
Balance of pension assets under management was over RMB100 billion
Note: All data related in this material is stated in RMB 5
Operational Highlights (Cont’d)
Overseas Insurance Businesses Recorded Steady Growth, Quality of Business Stays Good
Premium of CTPI(HK) increased steadily, keeping its forefront ranking in the market
TP Macau ’s premium continued to be No.1 in the market
TPRe has become a member of Lloyd’s. Beijing branch of TPRe has been restructured as
TPRe(China) and approved by CIRC. This was the second case in PRC that a reinsurance
company was granted an independent legal license for reinsurance after China
Reinsurance (Group). The premium of TPRe for life insurance realized a significant growth
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Operational Highlights (Cont’d)
Successful Implementation of Strategic Cooperation and Cross-selling Initiatives with Large Clients China Taiping had signed Group Strategic Cooperation Agreements with large clients such as
Sinopec, EIBC, CDB and ICBC etc. in 2015. By the end of Oct. 2015, China Taiping had
established headquarters to headquarters strategic cooperation with 56 large clients
Our cross-selling initiatives achieved RMB2.2 billion of insurance sales, including RMB1.7
billion of property insurance sales through TPL, and RMB300 million of pension sales through
TPL
We have made a breakthrough in the Sinopec gas station program. By the end of Oct. 2015,
4,754 outlets has been stationed with over 12,000 employees. The premiums of this
program has achieved RMB660 million including RMB530 million of motor insurance during
the same period
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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: The Group holds 75.1% of the equity interest in TPL
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Life Insurance:Strong leading indicators of value creation
Agency headcount (not including agents from Sinopec project) has hit its full-year
target with 199,000 by the end of October. It is increasing ahead of our expectation.
Outstanding agents increased by 31% YoY during Jan-Oct 2015
The growth rate of new policies from our core business maintains rapid increase in
both Agency & Banca channels. The structure of new policies keeps optimizing . The
proportion of health insurance keeps increasing
Persistency ratio leads the industry
NBV margin remains stable and growing
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Life Insurance: Premiums Growth outperformed the Industry average, with Solvency Margin kept stable
Note: The calculation of the regulatory solvency adequacy ratio is based on C-SI. Due to the sub-debt redemption, capital market volatility, as well as new business growth, the solvency adequacy ratio decreased slightly
Direct Premium Written
(RMB million)
Regulatory Solvency Margin Ratio
68,766
55,339
Jan-Oct 2015 Jan-Oct 2014
+24.3% Over 200%
268%
At 31 Oct 2015 At 31 Dec 2014
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Life Insurance: Structure of Gross Premiums – By Distribution Channels
Jan-Oct 2014
Jan-Oct 2015
1,204 1,400
28,243 32,153
25,892 35,213
Rising Proportion of Agency Channel Business
(RMB million,%)
Jan-Oct 2014 Jan-Oct 2015
47%
51%
2%
51%
47%
2%
Agency Channel
Telemarketing and Group
Banca Channel
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Life Insurance: The Proportion Of Health Premium Increased
Premium Composition In Agency Channel:11.7%
Premium Composition In Banca Channel:3.7%
Jan-Oct 2014 Jan-Oct 2015
2.1%
90.2%
7.7%
2.5%
85.8%
11.7%
Health Accident Life
Jan-Oct 2014 Jan-Oct2015
0.1%
99.1%
0.8%
0.0%
96.2%
3.7%
Health Accident Life
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Life Insurance : Per capita productivity kept stable while number of agents increased, with a increase of high performance agents
Number of Agents Monthly Productivity Per Agent
Number of Outstanding Agents – Regular Premium
17,117 17,682
At 31 Oct 2015 At 31 Dec 2014
199,000
133,700
At 31 Oct 2015 At 31 Dec 2014
+49%
Agent with RMB1M Premium
Agent with RMB500K Premium
5,248
1,179
Jan-Oct 2014
2,780
6,854
1,315
Jan-Oct 2015
3,420
Agent with RMB300K Premium
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Life Insurance: Persistency Ratios stood at the forefront of the industry - No.1 in both Agency and Banca Channel in terms of 13th month persistency ratio
93% 93% 93%
88% 89% 87%
2013年底 2014年底 2015年10月底
第13个月之保费继续率
第25个月之保费继续率
Agency Channel Banca Channel
92% 91% 92%
90% 89% 87%
2013年底 2014年底 2015年10月底
第13个月之保费继续率
第25个月之保费继续率
Persistency ratio – 13th month
Persistency ratio – 25th month
At 31 Dec 2013 At 31 Dec 2014 At 31 Oct 2015 At 31 Dec 2013 At 31 Dec 2014 At 31 Oct 2015
Persistency ratio – 13th month
Persistency ratio – 25th month
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• TPI
Mainland P&C Insurance Business Review
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. 15
Mainland P&C Insurance: Premiums Growth outperformed the Industry average
The regulatory solvency ratio of TPI rises 18 pp due to its capital increase in Q3 2015
13,007
10,697
Jan-Oct 2015 Jan-Oct 2014
+21.6%
Direct Premium Written (RMB million) 192%
174%
At 31 Oct 2015 At 31 Dec 2014
+18PP
Regulatory Solvency Ratio
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The following figures are the results of the respective companies from their respective operations, before intra-group eliminations.
Overseas P&C 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: Overseas P&C premiums increased steadily, TPRe life reinsurance achieved sustainable and rapid growth
2,104
1,842
Overseas HK & Macau
Overseas P&C Insurance
707
650
Jan-Oct 2014 Jan-Oct 2015
2,682
2,979
1,025
2,717
Jan-Oct 2014 Jan-Oct 2015
Life Non-Life
Reinsurance
+14.2%
+8.8%
( RMB million ) ( RMB million )
3,707
5,696 +53.7%
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The following figures are the results of TPP from its operations, before intra-group eliminations.
• TPP
Pension and Group Life Insurance Businesses Review
Note: The Group holds 100% of the equity interest in TPP
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Pension and Group Life Insurance Businesses Direct Premium
Written
(RMB million)
Annuity Entrusted Assets
Jan-Oct 2014 Jan-Oct 2015
950
756
567
1,108
1,005
554
Short Term Non-health
Long Term Short Term Health
2,272
2,666 +17.3%
43,756
36,480
At 31 Oct 2015 At 31 Dec 2014
+19.9%
Annuity Invested Assets
48,706
42,005
At 31 Oct 2015 At 31 Dec 2014
+16.0%
(RMB million) (RMB million)
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Industry Outlook
Life Industry The C-ROSS is expected to be formally implemented in 2016 after 3-quarters’test running. Under the
risk oriented solvency management framework, those companies focus on business quality will take advantage of it
After participating insurance reform policy lands, the “three steps” of life insurance premium rate market reform will be successfully ended. Participating insurance will be facing new opportunities and challenges
As interest rates continued to decline, it’ll promote demand for insurance products With personal tax preferential health insurance policy lands, the relevant product guidelines and
provisions will be officially released, the health insurance market will witness a new growth point Personal tax deferred pension insurance is expected to land within this year, then the pension
insurance market will have great potential Occupational pension policy is expected to implement in the first half of 2016, and there will be
development opportunities in the annuity market
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Industry Outlook (Cont’d)
P&C Insurance
New car sales growth will be slower, resulting in the significant slow down of P&C insurance premium growth
With the advancing of Commercial motor insurance rate reform, there will be high insuring rate, high insurance amount, low accident frequency, rapid decline of premium rate and slow decline of cost rate in motor insurance market
As national economy development strategies such as the “13th Five-year Plan”, “One belt, one road”, and the new “State Council Ten Guidelines” lands, there will be a golden opportunity for insurance industry and new demands of professional services and management abilities for insurance company
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Industry Outlook (Cont’d)
Reinsurance
As C-Ross is taking into effect, it will have different risk reserve requirements between domestic and foreign reinsurance company, which is beneficial for TPRe’s business development and performance
There is an upward trend of non-proportional reinsurance, which is beneficial for TPRe’s further expansion
Under supervision of C-Ross, reinsurance proportion of non-motor and life insurance will increase, and benefit TPRe in the way of further improving profitability and new business value
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TPL — Agency Channel Development Introduction
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• Business Development
Agency Channel Development Introduction
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Regarding agency channel, the Company, based on actual market situation, formulated and implemented short-term wealth management insurance products supplemented by high-value health products to focus on business volume and improve market share in the first half of 2015 while priorities were given to marketing of high-value health insurance and 10 years and above wealth management insurance products to raise business value and optimize product structure for the whole year. As of October, NBV margin of agency channel has improved on a YoY basis
In the context of a 62% growth of the number of agents compared to the year beginning, key indicators including activation ratio and per capita policy maintained stable and high performance agents increased by 52% on a YoY basis, achieving personnel and profitability improvement
Regarding the Sinopec project, a 2-year pilot program has led to phased breakthrough up till now. As of Oct 2015, a total of 12,000 agents are in service, attracting over 300,000 clients, establishing itself as a potential development channel
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Business Development
Business Development(Cont’d)
Number of agents and insurance premium rise steadily At October, 2015, number of agents has reached 199,000. As of November 25,
the number of agents has reached 217,000
FYP ranked No. 5 in the market in 2013, and No. 4 in 2014. Remains No. 4 by the end of October, 2015
Jan-Oct 2014 Jan-Oct 2015 Year-on-Year Growth
Total Number of Agents 127,000 199,000 58.2%
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2015 Trend Chart for Agency Force In March and July 2015, company-wide recruitment has been conducted, by the end of
August, the number of agents has exceeded 200,000
From September, agent consolidation and retention for new recruits has been carried out. In November when the annual business goal has been basically accomplished, another agent recruitment has been executed in the whole company. By November 25, the number of on-the-job agents is 217,000, up 62% since the beginning of the year
12.3
12
13.8
14.5
14.5
15.818.7
20.1
20.319.9
21.7
5
7
9
11
13
15
17
19
21
23
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Unit:10,000 Agent
Business Development(Cont’d)
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• Key Agent and Performance Indicators
Agency Channel Development Introduction
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Key Agent and Performance Indicators
2015 1H Jul-Oct 2015
6th Month Retention Rate 83.9% 82.2%
13th Month Retention Rate 52.7% 51.8%
18th Month Retention Rate 31.4% 36.7%
2015 1H Oct 2015
Agency Force per Group 7.8 9.2
Agency Force per Department 36.3 47.2
Agency Force per Group, Agency Force per Department
Retention Ratio
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2015 Agent Development
With the policy adjustment on agent qualification management by China Insurance Regulatory Commission, the number of agent has grown substantially in July and August. The new agent number in that period is 71,000. New health insurance (Fu Li Jian Kang+) was adopted to lower the sales difficulty, and to improve productivity of new recruits. By the end of August, the number of agency channel exceeded 200,000
From September, the sale of protection and non-participating financing insurance are adopted to ensure the accomplishment of the annual business goal ahead of schedule. In the condition that the initial premium plan has been basically completed, more agents were recruited in November. At November 25, agents number has reached 217,000
Key Agent and Performance Indicators (Cont’d)
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Key Performance Indicator
2014 Jan-Oct 2015
Policy Per Month Per Capita 1.03 1.02
Productivity Per Month Per Capita 17,682 17,117
Monthly Overall Activation Ratio 54.3% 53.1%
Three Month Formalization Ratio 39.6% 41.5%
Cumulative Activation Ration In Three Months 77.1% 78.5%
Jan-Oct 2014 Jan-Oct 2015
Monthly Agents With RMB10K Sales In The Period(regular Premium ) 23,861 36,763
Annual Agents With RMB1 MM Sales In The Period(regular Premium ) 1,179 1,315
Key Agent and Performance Indicators (Cont’d)
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Agent Force with Superior Performance Grew with an Optimized Structure From Jan-Oct, 2015, there are 36,763 agents whose regular premium exeeded RMB10k
per month, with year-on-year growth of 52.1%. Among these agents, the 2015 new recruits makes up 43%
Agents recruited before 2013 with high performance grows from 9,703 to 9,765 in 2015, up 0.6%
Start working
Year
Agents with High
Performance* Percentage
Comparison with 2014 Note
Number Percentage
2015 15,814 43% 10,248 42% Recruited in 2015
2014 7,344 20% 4,223 17% Recruited in 2013
2013 3,840 10% 1,695 7% Recruited in 2012 and 2011
Before 2013 9,765 27% 8,008 33% Recruited 2 years before
Total 36,763 24,174
Key Agent and Performance Indicators (Cont’d)
Note: *Agents with high performance refers to agents with over RMB10k regular premium per month 33
• Development Strategy of 2016
Agency Channel Development Introduction
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Development Strategy of 2016: Opportunities
New Recruit Premium Gross Premium Percentage
RMB2.56 Billion RMB8.74 Billion 30%
The agent team grows very fast. In 2015, the cumulative recruits is 164,000. As of November 25, the agent number is 217,000. The performance growth based on the number of agents increase has been achieved
The huge expansion of the agent team does not result in obvious decline in management indicators, on the contrary, various kinds of training and team leader self-management have been greatly improved, which pushes the expansion
The statistics is based on the premium contribution made by 2015 new recruits during April 1 to October 31, 2015.
After the “good start”, the 2015 new recruits contributes 30% of the annual gross premium
2015 1H Jul-Oct 2015
Monthly Overall Activation Ratio 53.6% 52.3%
13th Month Retention Ratio 52.7% 51.8%
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The new recruits with entry time shortly than 6 months makes up 49%; recruits with entry times within 12 months makes up 71%. New recruits accounts for a large proportion. As a result, the basic management is under pressure for the production improvement and effective retention of the new recruits need time and constant training
The duty exemption policy for Annuities Insurance products are still pending, which affects the design of new products
The implementation of health insurance tax preferential policy will affect the design and profit of critical illness products
Development Strategy of 2016: Challenges
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Effective growth of agent team is the guarantee for the healthy, stable and sustainable development of personal insurance
Continue to promote the effective growth of agent team Special training is designed for the 2015 new recruits to ensure the stability and formalization, and to improve the retention ratio with promotion. Three-month formalization rate and employee performance indicators for business manager growth rate are set
Continue to promote “large unit, large department” “large unit, large department” will be continuously carried out in personal life insurance. Under the condition that the total cost of Sales Performance Appraisal and Remuneration Measures remains the same, the cost input of high productivity team will be increased, and the input of low productivity team will be decreased. Average agent number of department and unit will be increased under direct of supervisor to improve the performance of the team
Development Strategy of 2016: Continuously adhering to Sales Performance Appraisal and Remuneration Measures to lead the growth of the agent team
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Carrying out the standard training for new recruits and lay a solid foundation for the new recruits, cultivating seeded lecturer and head teacher to improve training quality, fully implementing the 90 days training for sales unit new recruits to improve their skills, the 135 growing days for new recruits will help them build confidence and pave the way for future development to improve retention rate and consolidate the foundation of the team
Working Idea on New Recruits Retention — One focus, four key points
1
2
3
4
The implementation of standard training for new recruits
The cultivation of
seeded
lecturer and head
teacher
90 days training for sales unit new recruits
New recruits
cultivation project
135 growing days for new
recruits
Training class
Three month Formalization rate
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Integrated with Internet+, efforts should be made to develop simple and cost-effective product with great appeal and to develop personal agent products in internet channel. Quick customer accumulation can be achieved with simple and cost-effective products
Adhering to the relevant tax preferential policy requirement of China Insurance Regulatory Commission, different models should be used to match different groups for sales to maintain regular customers and develop new customers
With marketing strategic projects such as Health Cabin to improve customer experience and to push the transformation from customer accumulation to the sales of health insurance
Development Strategy of 2016: Multi-dimension customer accumulation to enlarge customer basis
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Formulate development policy with differentiation for institutions and push the institution with star performance to keep growing and become stronger By the end of October, compared with same period last year, third tier institutions with over 50% new policy premium growth rate reaches 93 and the number of fourth tier institutions amounts to 457. we will continuously promote the development of third tier and fourth tier institutions to improve the branch productivity and market ranking
Further improve the institution management system and the operation management of third tier and fourth tier institutions
Promote “Operation Manual for China Taiping Personal Life Insurance Fourth Tier Institutions” to establish person in charge file of personal life insurance for third tier and fourth tier institutions
Improve leader training system to cultivate good leader in large-batch for Taiping personal life insurance Establish hierarchical institutional head training system
Development Strategy of 2016: Improve institution operation system, push the institution to keep growing and become stronger
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Comparison table of institution regular premium platform in the same period
Type Institutions Jan-Oct 2014 Jan-Oct 2015 Growth rate
Second tier institution
Provincial branch 28,698 39,539 38%
City branch 17,758 26,205 48%
Third tier institution
Provincial capital key-sub branch 11,215 14,224 27%
Prefecture-level city key- sub branch 1,982 2,740 38%
Fourth tier institution
Sales office within the same city with the branch 1,716 2,321 35%
Sales office outside the same city with the branch 420 621 48%
41
RMB 10K
TPI — P&C Insurance Business Introduction
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Highlights and consolidated results of operation
Outperformed the industry average By the end of October, direct premium written reached RMB13.01 billion, outperforming the industry average by over 9 percentage point
Profit keeps growing: Continue to achieve underwriting profit since 2011. The total loss ratio keeps improving, decreasing by 0.3 percentage points on a YoY basis
Successful implementation of Boutique strategy Sales through Strategic cooperation and cross-selling channel increased by 72.9% and 37.6% respectively. Almost 5,000 Sinopec gas stations had been stationed. Actively expanded development of third-party cooperation and online claim processing, with 350,000 Wechat followers
43
Premium growth outperformed industry average, with an increasing market share
Direct premium written increased to RMB13.01 billion by the end of Oct 2015, 9 percentage points higher than industry average
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
201410 201411 201412 201501 201502 201503 201504 201505 201506 201507 201508 201509 201510
TPI Industry
Direct Premium Written Growth
44
Continued underwriting profitability for 5 years 99.9%
99.8% 99.8% 99.8%
2011 2012 2013 2014 2015Q1-Q3
Combined Ratio
45
56.5%
56.3%
Jan-Oct 2014 Jan-Oct 2015
45.0%
44.6%
Jan-Oct 2014 Jan-Oct 2015
Improvement of loss ratio resulting from strict cost control
54.8%
54.5%
Jan-Oct 2014 Jan-Oct 2015
-0.3PP
-0.4PP
-0.2PP
Loss Ratio Motor Insurance Loss Ratio
Non-motor Insurance Loss Ratio
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Improvement of business quality, with a balanced development of both motor and non-motor business
Direct premium written of motor insurance increased by 20.4% to RMB10.53 billion by the end of Oct 2015 on a YoY basis. Business growth exceeds 20% in the pilot areas of commercial motor-insurance marketization reform
Direct premium written of non-motor insurance increased by 26.9% to RMB2.48 billion by the end of Oct 2015 on a YoY basis, among which Liability, Credit, Accident and Health lines grew more than 35%
10,529
8,745
Jan-Oct 2015 Jan-Oct 2014
+20.4% 2,478
1,952
Jan-Oct 2015 Jan-Oct 2014
+26.9%
Motor Insurance Business (RMB million)
Non-motor Insurance Business (RMB million)
47
Successfully implemented the Boutique Strategy
Strategic cooperation channel business grew fast, increasing by 72.9% than the same period of last year
Cross Selling channel business increased by 37.6% than the same period of last year; Almost 5000 Sinopec gas stations has been stationed, with nearly RMB530 million premium income
Serving the “One belt and One road "strategy, the overseas inward premium reached RMB26.3 million
0.55
1.24 0.96
1.70
Strategic Cooperation Property Insurance Sales throughTPL
Jan-Oct 2014 Jan-Oct 2015
Strategic Cooperation and Property Insurance Sales through TPL
(RMB billion)
+72.9%
+37.6%
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Promote Internet business
Explore new marketing channel, develop client-service communication platform and provide more value-added services
350,000 Wechat Followers
E-Claim Actively implemented internet claim methods, covering 27 business branches
Enriched functions in Wechat , attracted 350,000 followers
Cooperation with Ant Financial Services, Zuihuibao Network, etc.
Third Party Platform
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Outlook
Continue to outperform the industry, accelerate innovation, grasp opportunities of marketization reform, and improve profitability To improve strategic cooperation and cross-selling channels, and expand the development
of third-party platforms To pursue steady increase of traditional channels and at the same time promote innovation.
To improve agent productivity and achieve new breakthroughs of auto dealers channels in third and fourth-tier cities
To grasp opportunities during motor-insurance marketization, innovate pricing model, prove profitability and pursue steady increase of market share.
To continuously optimize business structure, improve product mix, embrace internet, improve business quality and pursue steady increase of persistency ratio
To continue strengthening the customer relationship management by internet methods including wechat, and expend the development of third-party platforms
To enhance cost controls, reduce operation fees and enhance business value by improving IT system and e-claim, utilizing e-statements, and standardized procedures
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China Taiping Group —Overall Investment Business
51
• Investment Profile from January to October 2015
Investment Business Introduction
52
Investment yields: Group investment yields reached a relatively high level, and will surpass the yearly budget goal
As of the end of October, both the book yield and market value yield were higher than those on a YoY basis
In terms of comparison within the industry, as of the end of October, the yield is higher than the average yield of 6.5% in the insurance industry
4.9%
6.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Book Yield(unannualized) Market Value Yield(unannualized)
YoY Comparison of Investment Yields
October 2014
October 2015
53
Asset size: Own and third-party entrusted investment assets grow strongly
As of the end of October, insurance assets under management within the Group was RMB 288.1 billion, increased by 15% compared to the beginning of the year; and third-party entrusted assets was over RMB 175.4 billion, increased by 33% compared to the beginning of the year
Rapid growth of third-party entrusted investment assets led to an increase in management fees. For example, the management fee income from January to October 2015 of our subsidiary Taiping Asset was RMB 470 million, with 67% derived from third-party entrusted assets
404
1,602 1,917
2,507 2,881
0
1,000
2,000
3,000
4,000
2006 2012 2013 2014 Oct. 2015
Insurance AuM of the Company
113
472
796
1,320
1,754
0
500
1,000
1,500
2,000
2006 2012 2013 2014 Oct. 2015
Third-Party Entrusted Assets
54
(RMB 100million) (RMB 100million)
Performances of various assets: Stock and bond investment performances surpass the market
TPAM’s overall return on equity portfolio at the end of October is higher than that of the Shanghai and Shenzhen 300 index as well as the equity funds
TPAM’s overall return on bond asset realized a return higher than China Bond index as well as bond fund index
21.4%
1.5%
Performance of Taiping Asset’s Equity Portfolio
TPAM
9.2%
3.0%
Performance of Taiping Asset’s Debt Portfolio
TPAM Overall Index for equity funds
Shanghai and Shenzhen 300 index
Bond fund index
China Bond index
55
• Stick to Risk Management Standards and Constantly Innovate Alternative Investments
Introduction to Investment Business
56
Overall: Alternative investments proportion of the Group is slightly lower than industry average
As of the end of October, the Group’s total alternative investments amounted to RMB 86.65 billion, accounted for 22.3% of total assets, 3 percentage points lower than industry average
or 18.5%, if the South-to-North Water Diversion debt investment of RMB 14.7 billion(the central government credit) is excluded, which was 6.7 percentage points lower than industry level
October 2015 Book value (RMB 100m) Percentage of total assets
Investment in equity financial products 108.6 2.80% Equity investment programs and equity investment funds 82.6 2.13%
100% equity asset management products 26.0 0.67%
Investment in debt financial products 544.7 14.02%
Domestic debt financial products 529.2 13.62%
Oversea debt financial products 10.8 0.28%
100% bond asset management products 4.7 0.12%
Investment in other four types of new products 114.0 2.93%
Investment properties 99.2 2.55%
Total 866.5 22.31%
57
Debt financial products: Rating of most of the projects were above cnBBB+
As of the end of October 2015, AAA level products accounted for 88%, AA+ and AA products accounted for 6%
Based on credit rating classification application in Greater China, projects rated cnBBB+ or above accounted for 90%
88%
5%
1% 6%
Ratings of Group’s debt financial products
AAA
AA+
AA
Not Applicable
52%
20% 1%
10%
2% 1%
3%
4% 5%
0% 2%
Greater China credit ratings
cnAAAcnAA+cnAAcnAA-CnA+cnA-cnBBB+cnBBBcnBBB-cnB+Not Applicable
58
Debt financial products: Most of them were Quasi-central government bonds, or guaranteed by banks, large-scale enterprises
In terms of credit enhancements, as of October, 75% investments were quasi-central government debt or guaranteed by banks major SOEs and enterprises
8% had credit enhancements in the form of collateral/pledge. As of October, there are 4 projects exempted by CIRC from having credit enhancements, which accounted for 6% of total investments
Other credit enhancement include: requirement for debts to repurchase assets under securities brokerage business at a premium, and liquidity guarantee by parent as credit enhancement for Oversea assets management products
35%
34%
8%
3% 6%
9% 6%
Credit Enhancements
Quasi-central Government Bonds/Bank Guarantee
Large-scale Enterprise Guarantee
Collateral/Pledge
Superior/Inferior
Credit Enhancement Free
Others
Non-bank Guarantee and Collateral/Pledge
59
As of the end of October, local government related investments in debt financial products amounted to RMB 9.6 billion , representing 2.5% of total asset
98% of these projects were sponsored and established within the Group, with good understanding of project particulars and sound overall risk control
For credit enhancements, 67% of the funds were invested in projects secured by banks and large-scale enterprises, 17% invested in projects pledged/with collateral and 16% invested in projects with seniority arrangement and repurchase commitment from substantial shareholder of counterparties to increase credit enhancements.
the Group adopts a more stringent approach to calculate local government debts than that adopted by regulators, which is local government debt refers to debts with repayments to be made directly or indirectly or secured by local government.
29%
16%
17%
38%
Credit Enhancements for Local Govt
Debts Large-scale Enterprises
Seniority Arrangement
Collateral/Pledge
Bank Guarantee
2.40%
2.70%
2.50% 2.50%
2014年第一季度 2014年第四季度 2015年第一季度 2015年1-10月
Proportion of Local Government
Debts in Total Assets
Quarter I of 2014 Quarter 4 of 2014 Quarter I of 2015 Jan.-Oct. 2015
Debt financial products: Proportion of local government debt is stable with adequate credit enhancements
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As of the end of October, investments of the Group in debt financial products from property development industry amounted to RMB 15.16 billion, representing 3.9% of total assets
93% of the funds were invested in AAA and AA+ products
70% of the projects were quasi-central government bonds/secured by banks or large-scale enterprises, while the remaining 25% were secured by land collateral and pledge over costs recovered from the projects and 5% are credit enhancement free projects approved by CIRC
16% of the projects were secured in a mixed way with guarantees from major enterprises plus collateral/pledge as dual credit enhancements to protect funds invested
19%
35% 25%
5%
16%
Credit Enhancement for Debt Financial Products in Real Estate
Quasi-central Government
Debts/Bank GuaranteeNon-bank Guarantee
Collateral/Pledge
Credit Enhancement Free
Non-bank Guarantee and
Collateral/Pledge
Debt financial products: Rating of debt investment in real estate is high and adequate credit enhancements
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79%
14%
7%
Rating of Creditor Financial Product Investment in Real Estate
AAAAA+Not Applicable
Real estate investment: Highlight our exquisite strategy focused on core cities and locations with manageable risk
The Group concentrates its property investments in tier one core cities. Developed properties on lease include the Shanghai Taiping Finance Tower, China Taiping Tower in Hong Kong, The Exchange Beijing and Shenzhen Taiping Finance Tower.
Bespoken projects Beijing Guang’anmen Taiping Finance Tower and projects under development including Suzhou Taiping Finance Tower and Nanning Taiping Finance Tower are in good progress as planned.
Projects Occupancy rate Rent (yuan/m2/day)
Shanghai Taiping Finance Tower 100% 8.9
China Taiping Tower in Hong Kong 100% 13.1
The Exchange Beijing 91% 10.3
Shenzhen Taiping Finance Tower 92% 8.7
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Alternative Investment Innovations: Overseas investment, innovative equity investment, senior health industry investment
Alternative investments
Real Estate and senior living
communities
Overseas investments
Financial leasing
Traditional investments
Explore overseas investment
Innovate equity investment
Equity investment in emerging industries
Establishing senior living investment platform
New York Tribeca 111 Project
TFDAC Aviation Assets Equity Investment Funds - with stable cash flow dividends
Lakala
Uber
Establishing Joint-venture Pension Company with advanced foreign companies
Reaching definite intention in establishing Senior Health Investment Fund Management Company with Poly
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• Basic Ideology for Investment and Asset Management in 2016
Introduction to Investment Business
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I: The Group strengthens macro guidance and management and supports the transformation of new and old driving forces of Chinese economy
For traditional surplus productivity industries such as cement, steel, coal and coal chemical industry etc, two measures will be taken: one is strictly controlling new investments including increasing threshold, and the other one is strengthening risk check for exiting investment to guarantee the safety of funds by early discovery, early response and early disposing
Supply reform and innovation will be supported to promote the industry waking towards middle and high end, cultivate new growth point of future economy and make investment efficiently go through economy cycle
Investment in the following new emerging industries will be strengthened: national strategy industries like new energy and new material etc; modern service industries like senior health medical industry and modern manufacture industries like aviation, aerospace, navigation, high-speed rail and nuclear power industries
Greatly support and cultivate new growth point development of future economy
Strictly control investment in traditional surplus productivity industries
In investment the Group plays the role of providing directional guidance mainly at a macro level. In 2016 the basic direction of Group investment is to limit the investment in traditional surplus productivity and strengthen the investment in new growth points of future economy
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II: Strengthen investment in the fields beneficial to national welfare and the people’s livelihood or with synergy effects
The state policy measures of promoting the fast development of senior living industry, health industry, new consumption and life service industry will be put into effect; new mode of combining medical and recuperating will be explored; multi-measures will be taken like development, acquisition, reconstruction and rent; synergy of internal funds and external funds will be carried out to form national layout network. And the investment management mode of “Best Quality” senior housing community with Taiping characteristics will be created through effort
Collaboration with foreign companies will be conducted to push the establishment of our group controlled joint-venture operational management company so that we can learn advanced experiences of foreign senior living industry. By collaborating with leading real estate venture capital companies in the country, senior living health industry equity investment fund will be established and social fund investment in senior living industry will be introduced actively
Continue to be adapted to national strategy, like investment in national significant construction and significant infrastructure construction and in health, medical and senior living industries which are beneficial to national welfare and the people’s livelihood and have synergy effects with insurance industry
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III: In debt investment, default risk of existing debts will be checked, and to ensure new allocations will be of investment grade
For existing debts, risk check will be carried out comprehensively to reach the goal of early discovery, early response and early disposal. From current situation, the whole situation is sound. No risk involvement variety is found and portfolio’s credit risks are managable as a whole.
Focus on the prevention and response against default risks during economic downturn
For new funds, will be focus on high graded debt. Within a certain future period, national debt default risks will be rising whereas currently credit risk premium is not high. From the perspective of risk prevention and from the performance of all kinds of bond type during the spread of debt default, interest rate debt and high grade credit debt are usually better than low grade credit debts.
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IV: In equity investment, gradually cultivate long term investment and value investment idea and style
It is taken into full consideration that insurance fund has a longer investment period and lower risk tolerance. Absolute profit return character should be focused on, and long-term investment, steady investment and value investment idea and style adapting to its own characteristics should be cultivated gradually.
The following stocks will be chosen: “Best Quality” stock with strong downturn resistance, stock with high dividend guarantee and stock with outstanding advantages of coping with adverse stock market volatility so that stable yield will be produced.
Further optimize position structure
Gradually cultivated value investment philosophy
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V: In terms of alternative investment, post-investment management of projects shall be strengthened.
By fully leveraging the account custody bank as an independent supervisor, the monitor of insurance fund flows will be strengthened. A supervision bank will be established to controls special payment and ensure a fixed sum for a fixed purpose. When a project with risk signals occurs, it shall be tackled as soon as possible to ensure the safety of insurance fund practically.
For equity investment projects, explorations on how to strengthen supervision right before returning equity investment shall be made. Controlling force of equity investment project and management methods after investment will be increased by means of contracts or agreements.
For new projects, relevant agreements on investment management will be strengthened.
For existing alternative investment, the supervision of project’s main situation and insurance fund flow will be strengthened.
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VI: In terms of overseas investment, the advantage of cross-border platform will be fully leveraged for diversified allocations
Domestic Investment of Oversea Funds •RQFII Investment •RQFII Publicly Offered Funds •Foreign Capital Equity Investment Funds •Cross-border Loan and Equity Financing
Oversea Investment of Domestic Funds •Entrust QDII Investment within the Group •QDII Investment Entrusted by Third Parties •Dual-currency Insurance Policy Entrust Investment in Free Trade Area
•Insurance Funds •QDII Funds •Insurance Asset Management Products •Alternative Investment Projects •Entrusted by Other Companies
Taiping Assets Taiping Pension
Taiping Investment Holdings Taiping & Sinopec Financial Leasing
•Insurance Funds •RQFII Funds •MPF •Public Funds •Private Equity Funds
Taiping Financial Holdings
Oversea Investment Management Platform Domestic Investment Management Platform
The Group is endowed with the following advantages: it is the only central financial enterprise whose HQs is located overseas with cross-border investment platform and diversified asset allocation. The adverse situation of domestic shortage of investment will be relieved through allocating oversea “Best Quality” asset
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VII: Headquarters to headquarters strategy and comprehensive financial layout will be played fully
Currently the Group has Headquarters to headquarters strategic cooperation agreements with over fifty large-scale enterprises, state-owned enterprises and some provinces and cities
Alliance between giants with strategic customers and large-scale state-owned enterprises will be carried out; deep cooperation will be made; and two party will not only act as fund providers but assume risks and share profits, effectively control project quality and appropriately cover investment yields
Comprehensive financial advantage will be played and a package of financial services will be provided for customers
Headquarters to headquarters strategy will be implemented with Comprehensive
financial advantage
Domestic Integrated Financial Services
Overseas Integrated Financial Services
Taiping Sinopec Financial leasing
Securities
Wealth Management
Center
Controlled Public Fund
Trust
Futures
Asset Management
Financial Management
Asset Management
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Liability Investment
VIII: Asset & Liability management will be strengthened, and investment and liability business will be coordinated
Insurance investment needs to deeply understand the liability feature of insurance funds and keep a balance of risk and yield
Benign interaction of asset & liability will be realized, acquisition cost of insurance fund will be controlled properly and loss from difference of interest rate will be avoided
Liability business strategy will be identified according to investment market change
On the basis of liability features
Overall Management of Assets & Liabilities
Carry out asset allocation
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Q&A
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Thank you!
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