Human Capital in China Insurance Industry

Dominic LeungChairman and CEO, Ping An Insurance, P. R. China12th July, 2005

This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Ping An of China. This Material was used by Ping An during an oral presentation

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• Industry environment in China

• Challenge to Human capital

• Agenda of HR change management in Ping An

Content:

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Industry environment in China

• Competition entities are expanding dramatically

• Operation of insurance company is becoming more international

• The average market growth has been over 30% since 1980

158.756

210.804

305.456

388.04

431.813

130

180

230

280

330

380

430

2000 2001 2002 2003 2004

premi umi ncome

--- Premium incomeBillion

32

41 41

6168

1320 21

32 34

19 21 20

2934

0

15

30

45

60

2000 2001 2002 2003 2004

totaldomest i cf orei gn- i nvested

--- number of insurance company

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Industry environment in China (continued)

• Human capital as sources of productivity growth for the whole industry

(Take life insurance for example)

1050000

1290000

14300001500000

800000

900000

1000000

1100000

1200000

1300000

1400000

1500000

1600000

2001 2002 2003 2004

Insurance agentnumber

--- Employee number

62632

79920

111265

127196

50000

60000

70000

80000

90000

100000

110000

120000

130000

2000 2001 2002 2003

employee number

--- Insurance agent

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Challenge to Human capital

• A talent war in China insurance industry

• In shortage of a professional workforce capable of -- driving sales faster than the competition

-- managing multiple distribution channels

-- providing exceptional customer service

-- ensuring high levels of operational efficiency

-- managing risk and complying with industry regulation.

Intensive competition result in three main challenges to Human capital

--- The gap between talent supply and demand

Serious in need of

Actuaries

Certified Risk Manager

IT specialist

creative and risk taking entrepreneur

High-level manager ,with international background, know well insurance marketing

Experience trainer 、 underwriter

Well-informed and cross functional insurance agent

--- Many companies are relying on buying ready-made talent while the supply gap is existing.

• Talent cost increasing significantly

Investment specialist

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Agenda of HR change management in Ping An • Since Ping An has been regarded as the talent tank of china insurance industry, we are seriously confronted with Human capital challenges:

• Ping An has utilized short-term and long-term change approaches, aligning our human capital agenda to our business agenda and strategy

In short-term

In short-term, retaining good performers and win talent war

In long-term term, creating and maintaining professional workforce

Retain good performersWin the war for talent

Learning & Development opportunities

Culture value

Incentive salary system: defer payment

stock option

variable pay

goal approaches

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Agenda of HR change management in Ping An (continued)

Once talent supply gap identified according to business strategy , Ping An has launched talent pool project, as a long-term change approach.

Talent pooling

Creating and Maintaining a professional workforce

Talent

Development

succ

essi

on

pla

nn

ing

In long-term

identify talent gap through HR planning

selected and identified by line managers

competence evaluation

on job training

formal train program provided by Ping An university

project assignment

design individual career path

provide mentoring support

objective performance assessment

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Thank You!