Building A WorldBuilding A World--Class Financial Services Class Financial Services Operation PlatformOperation Platform

(Introduction to Ping An Group Integrated Operation Center)(Introduction to Ping An Group Integrated Operation Center)

November 2007November 2007

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n Supporting group strategyn Improving service levels

and sales support, reducing costs and risks

n Process reengineering, standardization

The premiseThe premise ValueValue

n Invested RMB 1 billion

n 147,000 m2

n Consistent service standard

n Continuous cost reduction n Separating front- and

back-office, reducing ops risks

ObjectivesObjectives

The WorldThe World--Class Integrated Class Integrated Operation Platform (IOC)Operation Platform (IOC)

3

AgendaAgenda

IOC Overview

Progress and performance

Future plans

4

AgendaAgenda

IOC Overview

Progress and performance

Future plans

5

A Solid Operation Platform is A Solid Operation Platform is Critical to Group AspirationsCritical to Group Aspirations

Insurance Banking Asset management

Integrated Financial Services PlatformIntegrated Financial Services Platform

Fully Shared Group-Wide Customer Resources

ØØ Ping An’s objective is to become one of the leading multiple financial services providers in the world that consistently delivers stable profit growth and shareholder return.

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CustomersCustomers

ChannelsChannels

ProductsProducts LifeIns.LifeIns. TrustsTrustsSecuri-

tiesSecuri-

tiesP&CIns.

P&CIns.

HealthIns.

HealthIns.

Pensi-ons

Pensi-onsBankingBanking

Asset Manage-

ment

Asset Manage-

ment

PersonalPersonal

Individual sales force Individual sales force

Security branches Security branches

Banking branches

Banking branches

Collections forces

Collections forces

CommercialCommercial

P&C

brokersP&

C brokers

Financial advisorsFinancial advisors

Telemarketing

Telemarketing

Bancassurance

branches B

ancassurance branches

Pension sale forePension sale fore

Security & investm

ent banking sales fore

Security & investm

ent banking sales fore

P&C

sales fore P&

C sales fore

Bank R

Ms

Bank R

Ms

Profit center

Profit center

HybridHybrid

Back-officeBack-office

Cost center

Integrated ServiceIntegrated ServiceCentralized & Standardized OperationsCentralized & Standardized Operations

The Operation Platform Must be Able to Support The Operation Platform Must be Able to Support the Multithe Multi--Product, MultiProduct, Multi--Chanel StrategyChanel Strategy

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Life

B1 B2 …

SB1

Data process-

ing UW

Callcenter Claims

Counter Policyadmin

SB2

Counter UW

Data process-

ing Claims

…

Health

B1 B2 …

Data process-

ing UW

Counter Claims

Policyadmin

…

B1 B2 …

HQHQ

Branch(~ 80)

Branch(~ 80)

Sub-branch(~800)

Sub-branch(~800)

• Various ops functions exist in >800 cities, difficult to capture economy of scale• Standards deviate by geographical areas and by business lines• Mixing services and pure back-office functions, not enough attention to

customer services• Minimum share of resources and expertise• Complexity in risk management

The Previous Operation Model The Previous Operation Model Cannot Support Such StrategyCannot Support Such Strategy

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Strategic value of centralizationStrategic value of centralization

n Cost advantage：u Enhanced efficiency and productivityu Improved cost structure and cost level

n Service enhancement：u Better and consistent service qualityu Good services level at any customer

contact points

n Risk control：u Managing risks centrallyu New risk management model, tailored for

new business model and strategy

Operation Centralization is Crucial Operation Centralization is Crucial for Ping An Groupfor Ping An Group

Key DriversKey Drivers

n WTO and Globalization：u China became the largest emerging

market，multi-national financial institutions became our key competitors

u Competitors secured cost advantages through new operation model

n Technology enables remote and large scale operations:u Online payment systemsu Imaging systemsu Large database and CRM

n Sophisticated customers demand：u One-stop servicesu Consistencyu Standardization

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AgendaAgenda

IOC Overview

Progress and performance

Future plans

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1. Customer interface(call centers, counters etc.)1. Customer interface

(call centers, counters etc.)

• One-stop services• Cross-product

2. Shared operations(Scanning, data entry etc.)2. Shared operations

(Scanning, data entry etc.)

• Highly standardized• Max. share of

resources

3. Professional operations(Underwriting, claims etc.)3. Professional operations

(Underwriting, claims etc.)

• Centralized• Build deeper

expertise

4. 3rd-party operations(Hospitals, repair shopsetc.)

4. 3rd-party operations(Hospitals, repair shopsetc.)

• Integrated processes and systems

• Consistent servicelevels

5. HR

/ Training5. H

R / Training

6. Ops &

Process mgm

t6. O

ps & Process m

gmt

7. Policy, Rules, and guidelines

7. Policy, Rules, and guidelines

Ops supportOps principles

& rules

The Group Started to Rebuild The Group Started to Rebuild Operation ModelOperation Model in 2004in 2004

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Established a GroupEstablished a Group--Wide Wide Operation UnitOperation Unit……

Integrated Operation Center (IOC)Integrated Operation Center (IOC)

Finance &

Accounting dept.

Docum

ent operation dept.

Call center

operation management

Process management

Planning & Research

Policy management

Life underwriting

Life policy admin.

Life claims

Pension claim

adjusting

Motor underw

ritingand claim

s

Non-m

otor under-w

riting and claims

Banking operation

Credit card

Performance m

gmt

HR

& Training dept.

Centralized professionalprocessing platform

Centralizedops supportplatform

Centralized shared services platform

Group-wide ops mgmt and planning platform

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……And a Network of Operation And a Network of Operation CentersCenters

Integrated Operation CenterIntegrated Operation Center

Call center UW/Policy admin Claims Finance &

AccountingData

processing

IB/OB

IB/OB

IB/OB

IB/OB

…

Life/Health/ Auto

Life/Health

Life/Health/ Auto

Life/Pension/Health/P&C

Life/Pension/Health

Life/Pension/P&C

Finance & Accounting

Data processing

… …

Finance & Accounting

…

Data processing

…

Suzhou

Shenzhen

Chengdu

…

Shanghai

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Accumulated Core Operation Accumulated Core Operation CapabilitiesCapabilities

n Motor claims nationwide “rule engine”

n Call center knowledge base

n Knowledge is treasury of the organizationn Document, store and use of knowledge are

important

Knowledge mgmt

n Motor insurance automatic underwriting system

n Data processing system

n Everything can be standardizedStandardization

n Ops command centern Prediction and scheduling

n Focus on both result and processn Maximize overall resources utilization

Ops mgmt

n ELISn OAn IT issues mgmt system

n Improve efficiency and costs through end-to-end straight-through-processing

n Proactively redesigning systems, preparing for business development upfront

System redesign

n IOC build-upn “Seals” centralizationn Telesales process design

n Efficiency and quality can and must be improved continuously

n Structured methodology and fact-based analysis is the key

Business Process Reengineering

Selected performanceSelected performanceBasic RationaleBasic RationaleCore Core capabilitiescapabilities

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Results of Core Capabilities Results of Core Capabilities (Example: BPR)(Example: BPR)

…Centralized authority control and auditing

Authority control

Centralized remote auditing

Scan

…Centralized processing…

Remote approval

Simplified front-end…

Information Collection only

System transfer

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Banks

TDB—Transaction Database

Branch Operation centers Customers/channelsWorkflow engineWorkflow engine

ImagingImaging

Workflow engines

Customer contact history

CRM WebWeb

Agents

Cust-omers

Mgrs

eLIS GBS ePCISOracle

financials

CIF2 TDB TDB TDB TDB …

Results of Core Capabilities Results of Core Capabilities (Example: system redesign)(Example: system redesign)

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Prediction…Prediction…

Historical data analysis

Forecast and scheduling

…Real-time monitoring……Real-time monitoring…

Real-time volume and service level monitoring

Real-time adjusting resources allocation

…Result tracking…Result tracking

Automatic reporting and tracking

Dynamic performance analysis

Results of Core Capabilities Results of Core Capabilities (Example: OPS mgmt)(Example: OPS mgmt)

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Quality (error rate)

Property insurance claims

1

0.03

-97%

1

0.1

-90%

Before Current

Data processing

Unit costs

Expense accounting

1

0.32

1

0.13

-87%

-68%

Motor claims

Before Current

Life UW(avg. policy issuing time)

10.8

Service levels

1

3.2

Health claims(% cases paid in 5 days)

Before Current

+220%

-20%

As of July, 2007

Delivered Superior Operation Results Delivered Superior Operation Results (Normalized figures)(Normalized figures)

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AgendaAgenda

IOC Overview

Progress and performance

Future plans

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Effectively Support Business GrowthEffectively Support Business Growth

Integrated Operations

Center

1.5mExpenses

21bClaims payout

Underwrite 7.5mvehicles

60mservice calls

Underwrite 5mnew policies

1.2mExpenses

18bClaims payout

Underwrite 5.8mvehicles

Underwrite 3mnew policies

40m service calls

20062006年年

20072007年年

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Continue to Centralize OperationsContinue to Centralize Operations

4400

300

2004 2005 2006

1200

2007 2008 2009

6600

8400

2500

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合肥

销专电文 Data processing

Call centerUW/claims etc.Telesales

销专电文

销专电

销专电

Chengdu

SuzhouShanghai

Shenzhen

Gradually Redeploy to Low Cost Gradually Redeploy to Low Cost Areas, Capturing Cost AdvantagesAreas, Capturing Cost Advantages

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Our VisionOur Vision

n Support and enabling group strategy, through leveraging latest technology and operation capabilities

n Building a “role model” operation platform, with the best services levels, operation quality, risk management practices and, the most competitive cost advantage

Leading integrated financial services providers

Leading integrated financial Leading integrated financial services providersservices providers

Thank YouThank You！！