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+PING AN
+Performance Overview
+Technology-Powered Business Transformation
+Directors, Supervisors, Senior Management
+and Employees
+Shareholders' Profile
+100
+Changes in the Share Capital and
+97
+Corporate Governance Report
+82
+CORPORATE GOVERNANCE
+Business Performance at a Glance
+6
+Chairman's Statement
+4
+FINANCIAL STATEMENTS
+Ping An Milestones
+Introduction
+1
+Five-Year Summary
+i
+ABOUT US
+Contents
+¥
+Expertise Makes Life Simple
+2018 Annual Report
+Operating profit
+Residual margin
+Comprehensive solvency margin ratio - Ping An Life (%)
+30.8
+35.5
+2
+27.0
+147 Independent Auditor's Report
+Report of the Board of Directors
+289,564
+Net profit attributable to shareholders of the parent
+company
+107,404
+89,088
+62,394
+54,203
+39,279
+Dividend per share(1) (in RMB)
+1.72
+1.50
+0.75
+0.53
+0.375
+Group comprehensive solvency margin ratio (%)
+118
+216.4
+210.0
+204.9
+205.1
+LIFE AND HEALTH INSURANCE BUSINESS
+Operating return on embedded value (%)
+Value of new business
+Embedded value
+12
+Customer Development
+8
+Report of the Supervisory Committee
+Significant Events
+125
+MANAGEMENT DISCUSSION AND ANALYSIS
+123
+214.9
+334,248
+21.4
+72,294
+95.6
+95.3
+223.8
+217.5
+267.3
+269.5
+164.5
+BANKING BUSINESS
+Net profit
+24,818
+23,189
+22,599
+21,865
+19,802
+8,817
+Net interest margin (%)
+2.37
+2.75
+2.81
+2.57
+Cost-to-income ratio (%)
+30.32
+29.89
+25.97
+31.31
+36.33
+Non-performing loan ratio (%)
+1.75
+1.70
+1.74
+2.35
+21.7
+12,650
+13,372
+96.2
+67,357
+50,805
+38,420
+21,966
+613,223
+496,381
+360,312
+325,474
+264,223
+71,345
+52,824
+40,518
+N/A
+N/A
+12,700
+95.9
+786,633
+454,705
+330,846
+N/A
+218.8
+234.1
+225.9
+219.7
+219.9
+PROPERTY AND CASUALTY INSURANCE BUSINESS
+Net profit
+Combined ratio (%)
+Comprehensive solvency margin ratio (%)
+12,274
+96.0
+616,319
+383,449
+473,351
+556,508
+He developed integrated finance with determination
+Now he leads technological innovation with passion
+He conducts Ping An Rural Communities Support to contribute to society
+He promotes Smart City to empower the ecosystem
+He seeks technological breakthroughs and advancements
+Artificial intelligence, fintech and smart poverty alleviation
+He enables countless use cases
+By proactively applying cutting-edge technologies
+This is a new day, a new beginning
+He is determined to seize the day
+And seize the future
+The 40th anniversary of reform and opening-up
+The 70th birthday of the People's Republic of China
+At this critical moment, Ping An embarks on a new journey
+Marching ahead with you, each family, and the nation
+He set sail in Shekou to explore modern insurance
+To pursue a better future
+For Ping An, now 30 years old, 2019 marks a new starting point. The Company
+will continue to seek survival via competition and pursue development via
+innovation. Ping An will provide customers with better services by empowering
+financial services with technologies, empowering ecosystems with technologies,
+and empowering financial services with ecosystems. Ping An will proceed with
+the Ping An Rural Communities Support to eradicate poverty, develop rural
+communities, and improve people's livelihood.
+Five-Year Summary
+(in RMB million)
+CUSTOMER DEVELOPMENT
+Number of internet users (in million)
+2018/
+December
+31, 2018
+2017/
+December
+31, 2017
+2016/
+December
+31, 2016
+2015/
+December
+31, 2015
+2014/
+December
+31, 2014
+Ping An strives to become a world-leading technology-powered retail financial
+services group. Ping An furthers "finance + technology" and pursues "finance +
+ecosystem," focusing innovative technologies on two major industries of pan
+financial assets and pan health care. As an industry and technology leader, Ping
+An applies technologies to traditional financial businesses and five ecosystems,
+namely financial services, health care, auto services, real estate services, and
+smart city services.
+538.43
+To his original aspiration, the dream chaser remains true
+Dream Chaser on a New Journey
+Life and Health Insurance Business
+Property and Casualty Insurance Business
+Investment Portfolio of Insurance Funds
+Banking Business
+50
+Fintech & Healthtech Business
+46
+42
+36
+32
+27
+20
+16
+Business Analysis
+16
+Liquidity and Capital Resources
+61
+After 30 years of hard work, with flowers and fruits
+66
+79
+Corporate Sustainability
+80 Prospects of Future Development
+153 Consolidated Statement of Income
+Consolidated Statement of Comprehensive
+Income
+154
+155 Consolidated Statement of Financial Position
+157 Consolidated Statement of Changes in Equity
+158 Consolidated Statement of Cash Flows
+159 Notes to Consolidated Financial Statements
+OTHER INFORMATION
+316 Honors and Awards
+Definitions
+317
+320 Corporate Information
+Cautionary Statements Regarding Forward-Looking Statements
+To the extent any statements made in this report contain information that is not historical, these statements are essentially forward-
+looking. These forward-looking statements include but are not limited to projections, targets, estimates and business plans that the
+Company expects or anticipates will or may occur in the future. These forward-looking statements are subject to known and unknown
+risks and uncertainties that may be general or specific. Certain statements, such as those including the words or phrases "potential",
+"estimates", "expects", "anticipates", "objective", "intends", "plans", "believes", "will", "may", "should", and similar expressions or variations on
+such expressions may be considered forward-looking statements.
+Readers should be cautioned that a variety of factors, many of which are beyond the Company's control, affect the performance,
+operations and results of the Company, and could cause actual results to differ materially from the expectations expressed in any of
+the Company's forward-looking statements. These factors include, but are not limited to, exchange rate fluctuations, market shares,
+competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market
+conditions and other risks and factors beyond our control. These and other factors should be considered carefully and readers should not
+place undue reliance on the Company's forward-looking statements. In addition, the Company undertakes no obligation to publicly update
+or revise any forward-looking statement that is contained in this report as a result of new information, future events or otherwise. None of
+the Company, or any of its employees or affiliates is responsible for, or is making, any representations concerning the future performance
+of the Company.
+中国平安 PING AN
+Risk Management
+436.39
+346.30
+241.57
+Operating profit attributable to shareholders
+of the parent company
+Operating ROE (%)
+23.7
+26.7
+21.0
+19.5
+20.0
+1,002,456
+825,173
+637,703
+551,514
+458,812
+112,573
+Embedded value
+94,708
+N/A
+N/A
+21.9
+22.0
+19.0
+N/A
+N/A
+Basic operating earnings per share (in RMB)
+6.31
+5.31
+3.82
+N/A
+N/A
+Equity attributable to shareholders of the parent company
+68,252
+Operating return on embedded value (%)
+GROUP
+11.8
+137.34
+Number of retail customers (in million)
+183.96
+165.73
+131.07
+109.10
+89.35
+Number of contracts per customer (contract)
+2.53
+2.32
+2.21
+2.03
+1.93
+Operating profit per customer (in RMB)
+531.25
+449.69
+N/A
+19.4
+22.3
+40.4
+35.6
+Proportion of the Group's new customers from internet
+users within the Group's five ecosystems (%)
+N/A
+1.45
+19.0
+28.5
+34.6
+different subsidiaries (%)
+Proportion of customers holding multiple contracts with
+N/A
+N/A
+24.0
+1.02
+Provision coverage ratio for loans more than 90 days
+overdue (%)
+Welcomes the Listing of
+care and Technology Company Limited
+平安健康醫療科技有限公司
+(Stock Code: 1833)
+on International Holdings Limited
+威誠國際控股有限公司
+1833 PA GOODDOCTOR
+ABA
+58.30
+3309
+On April 27, 2018, Ping An signed a strategic partnership agreement
+with Shenzhen Public Security Bureau to develop "smart policing."
+(Stock Code: 8107)
+HKE C
+4 Annual Report 2018
+香港交易所
+On May 4, 2018, Ping An Healthcare and Technology Co., Ltd. (Ping
+An Good Doctor, 01833.HK) was successfully listed on the HKEX.
+Holding, a leading online wealth management
+platform in China, also concluded a refinancing at
+a post-money valuation of USD39.4 billion, again
+favored by leading global investors.
+To serve the country, society and public, we are
+empowering China's smart city initiative by building
+"1+N" platforms with our core technologies. Such
+platforms now cover more than 100 Chinese
+cities, including Beijing, Shanghai and Shenzhen,
+as well as countries and regions along the
+Belt and Road Initiative. The platforms serve
+hundreds of millions of people through a variety
+of applications, including fiscal management,
+government administration, transportation, life,
+health care, customs control, education, agriculture,
+judicial activities, environmental protection, and
+community governance. We help provincial and
+municipal governments to address pain points and
+difficulties in city governance, improve efficiency and
+effectiveness, reduce urban development costs, and
+help promote citizen satisfaction.
+Through our Village Teacher Program, we built
+or upgraded nearly 400 village schools, trained
+nearly 5,000 village teachers, and provided distance
+learning courses for tens of thousands of teachers
+and students. Moreover, we established the Ping
+An Volunteers Association to engage employees in
+volunteer activities. As of the end of 2018, over 100,000
+employees took part in volunteer activities.
+The year 2019 marks the 70th anniversary of the
+founding of the People's Republic of China and
+is the beginning of Ping An's fourth decade, a
+crucial period for our strategic transformation. We
+have updated our brand logo, defining "finance +
+technology" as our core businesses. In 2019, we will
+maintain stable, healthy growth of core businesses,
+optimize the business mix, strictly manage risks, and
+build the foundation of our future. We will continue
+to increase investment in technology, pursue
+"finance + ecosystem," and enhance our data-driven
+operations and smart risk management capabilities to
+create value for customers, shareholders and society.
+Competition between ecosystems is heated and the
+era of smart operations has come. Technologies and
+data will empower us to anticipate trends, make
+timely decisions, and take actions ahead of others.
+At this new starting point, Ping An will continue
+to pursue "finance + ecosystem" and the all-round
+development and promotion of our smart data-driven
+operations. With the efforts of our outstanding staff
+and the support of our shareholders, Ping An will
+bravely navigate through the uncharted deep waters
+ahead toward a brighter future.
+中國平安
+PINGAN
+The (fourth) China Smart City International Expo 2018 was held in
+Shenzhen during August 21-24, 2018, co-sponsored by China Center
+for Urban Development under National Development and Reform
+Commission, Shenzhen Municipal Government, and Ping An.
+Ping An has been a beneficiary of the changing
+era. On turning 30, Ping An gratefully promoted
+the Ping An Rural Communities Support, covering
+village officers, doctors and teachers. We support
+rural industrial upgrade, strengthen health care in
+poor areas, and improve rural education. Through
+the Village Officer Program, we input over RMB5,000
+million for poverty alleviation and aided over 15,000
+poor rural residents by the end of 2018. Of the
+RMB5,000 million, RMB3,819 million was invested
+in poverty alleviation bonds, benefiting millions
+of people in 65 undeveloped counties in Guangxi,
+Yunnan, Guizhou and Sichuan. We integrate our
+financial and technological resources to support
+entire industry chains in poverty-stricken areas.
+We granted poverty-alleviation loans to support
+oat growing and poultry raising in Ulanqab, Inner
+Mongolia, where 1,995 registered poor households
+increased their average income by nearly RMB3,300.
+Our Village Doctor Program channeled urban medical
+resources to rural areas through Al and telemedicine.
+We built or upgraded over 400 village clinics, and
+held over 100 free medical services programs,
+providing 19,271 checkups and consultations.
+唱)
+12104
+村教第一课
+“家乡与世界”
+山明
+F
+Ping An Insurance (Group) Company of China, Ltd.
+In 2018, Ping An launched the Ping An Rural Communities Support.
+Li Jian, a famous singer and Ping An brand ambassador, gave an
+outdoor music lesson to children in Baise, Guangxi Province.
+HKEX
+At Ping An we empower ecosystems with
+technologies. We are building five ecosystems,
+covering financial services, health care, auto services,
+real estate services, and smart city services. The
+contribution from our technology innovation greatly
+increased. In the fintech and healthtech sectors, we
+have explored and developed innovative business
+models and built a number of unicorns from scratch.
+Several of our unicorns have completed financing to
+enhance their strength. Ping An Good Doctor went
+public on the Main Board of HKEX and successfully
+pursued overseas expansion. OneConnect completed
+a Series A financing at a post-money valuation
+of USD7,500 million. OneConnect established a
+subsidiary in Singapore and also began to export
+technologies to overseas markets. Ping An
+LU陆金所
+.com
+2018
+In response to the
+government's call for
+poverty alleviation, Ping
+An launched the Ping
+An Rural Communities
+Support (covering village
+officers, village doctors
+and village teachers)
+in nine provinces or
+autonomous regions
+across China at the 30th
+anniversary.
+Ping An
+Rural
+Communities
+Support
+金”产业。
+Annual Report 2018
+May 2006
+Ping An's national integrated
+operations center in Zhangjiang,
+Shanghai started operations,
+HealthKonnect completed a Series A financing at
+a post-money valuation of USD8,800 million. Lufax
+which was the largest
+July 2006
+Ping An acquired Shenzhen
+Commercial Bank, which was
+later renamed Ping An Bank.
+【有机-无机
+豆退化肥
+39
+Ping An Insurance (Group) Company of China, Ltd. 3
+ABOUT US
+Chairman's Statement
+The year 2018 marked the 40th anniversary of
+China's reform and opening-up. Also in 2018, Ping
+An celebrated its 30th birthday. With the global
+economic landscape changing and reshaping,
+China's economy has entered a new era of
+development. Technologies are advancing rapidly,
+with unprecedented impacts. The global financial
+services industry is also experiencing rapid and
+fundamental changes, and facing huge challenges
+and opportunities. Against this backdrop and with
+a strong sense of mission and urgency, Ping An has
+taken careful steps to manage the risks and to seize
+the opportunities. As a result, we realized stable
+and healthy growth in assets, revenue and profit in
+2018. To embrace the opportunities ahead, we made
+greater investment in our technologies at a faster
+pace in the year. We continued with our "finance
++ ecosystem" transformation. We are exploring
+data-driven operations and we made encouraging
+progress in developing our business models and
+technological innovations.
+In 2018, our market cap rose above RMB1 trillion
+as our strengths and achievements gained world-
+wide recognition. We ranked 29th in the Fortune
+Global 500 and 10th in the Forbes Global 2000 for
+the first time. Our operating profit attributable
+to shareholders of the parent company reached
+RMB112,573 million, up 18.9% year on year. Our net
+profit attributable to shareholders of the parent
+company grew to RMB107,404 million, up 20.6% year
+on year. With fast growing operating profit, we are
+increasing dividends. The cash dividend per share
+for 2018 jumped by 14.7% year on year to RMB1.72.
+In addition, the Company distributed the 30th
+Anniversary Special Dividend of RMB0.20 per share.
+Our integrated financial business model of "one
+customer, multiple products and one-stop services"
+provided 184 million retail customers and 538 million
+internet users with financial products and services
+via cross-selling. The operating profit per customer
+was RMB531. About 63.64 million retail customers held
+multiple contracts with different subsidiaries of the
+Group, up 34.7% from the beginning of 2018.
+① 公安
+GOES PING AN
+深圳市公安局,中国平安集团
+嗯合作签约 N
+At Ping An we are empowering our financial services
+with technologies by leveraging world-leading Al,
+blockchain and cloud computing to contain cost,
+boost efficiency, enhance risk management, and
+improve our customer experience. As a result, our
+financial offerings gained competitiveness and our
+core financial businesses grew steadily. The operating
+profit of the life and health insurance business was
+RMB71,345 million, up 35.1% year on year. NBV rose
+7.3% year on year to RMB72,294 million. We adopted
+innovative agent management models and tools,
+including an Al-based interview functionality, which
+helped us sharply boost our agent retention rate.
+Ping An Property & Casualty expanded its market
+share and increased premium income by 14.6% year
+on year to RMB247,444 million, with a better-than-
+industry combined ratio of 96.0%. We processed
+96.4% of onsite auto claim investigations within
+5-10 minutes via our upgraded "510 City Superfast
+Onsite Investigation" services. Ping An Bank made
+significant progress in its strategic transformation
+toward retail banking, which accounted for 53.0%
+and 69.0% of the Bank's revenue and net profit
+respectively. Ping An Bank continued to de-risk itself
+and strengthen its risk compensation.
+integrated operations platform
+in Asia.
+अभी
+Chairman and Chief Executive Officer
+Shenzhen, China
+March 12, 2019
+68,252
+112,573
+18.9%
+94,708
+38.8%
+2016
+2017
+Dividend Per Share(1) (in RMB)
+0.75
+2016
+2018
+1.72(2)
+14.7%
+1.50
+Operating Profit Attributable to Shareholders of
+the Parent Company (in RMB Million)
+100.0%
+Value of New Business (in RMB Million)
+50,805
+2016
+2018
+72,294
+7.3%
+67,357
+32.6%
+2017
+2018
+(2)
+This includes a final dividend of RMB1.10 per share pending
+approval at the 2018 Annual General Meeting. In addition,
+the Company distributed the 30th Anniversary Special
+Dividend of RMB0.20 per share in the first quarter of 2018.
+Ping An Insurance (Group) Company of China, Ltd.
+Finance Technology
+2017
+Annual Report 2018
+6
+(1) Dividend per share refers to cash dividend, including final
+dividend and interim dividend.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 5
+ABOUT US
+Business Performance at a Glance
+Financial Results of the Group
+Total Revenue (in RMB Million)
+774,488
+2016
+11.0% 1,082,146
+974,570
+25.8%
+2017
+Basic Operating EPS (in RMB)
+3.82
+2016
+2018
+6.31
+December 31, 2018
+December 31, 2017
+December 31, 2016
+637,703
+29.4%
+825,173
+Lufax
+21.5%
+2018
+Embedded Value (in RMB Million)
+2017
+39.0%
+5.31
+18.8%
+1,002,456
+Asset Management Business
+Lufax was established as
+Ping An began to build
+presence in fintech and
+healthtech.
+ANDRION
+Pan Financial Assets
+Finance + Technology
+Pan Health Care
+Finance + Ecosystem
+Insurance
+Banking
+Asset
+Management
+Financial
+Services
+Ecosystem
+Health
+Auto
+Care
+Services
+Ecosystem Ecosystem
+Real
+Estate
+Services
+Ecosystem
+Smart
+City
+Ecosystem
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+1
+Group
+ABOUT US
+平安保险公
+※保险监督管理委员会>
+SEX COMEDY 14
+关于中国平安保险股份有限公司
+分业经营改革的通知
+STR+*+ NA
+RADAR ANGAN
+NERAR KAN
+ANONIRAN
+WARRENTERING
+Founding
+of the
+Company
+May 27, 1988
+Ping An Insurance
+Company was
+Ping An Milestones
+established as the first
+joint-stock insurance
+company in China.
+World-leading Technology-
+powered Retail Financial Services
+Introduction
+159.45
+105.67
+98.51
+N/A
+N/A
+Core tier 1 capital adequacy ratio (%)
+8.54
+8.28
+8.36
+9.03
+8.64
+ASSET MANAGEMENT BUSINESS
+Net profit of trust business
+Assets held in trust of trust business
+Ping An strives to become a world-leading
+technology-powered retail financial services
+group. Ping An furthers "finance + technology" and
+pursues "finance + ecosystem," focusing on two
+major industries of pan financial assets and pan
+health care. Ping An applies new technologies to
+traditional financial businesses and five ecosystems,
+namely financial services, health care, auto services,
+real estate services, and smart city services. Ping An
+is empowering financial services with technologies,
+empowering ecosystems with technologies, and
+empowering financial services with ecosystems. Ping
+An leverages local advantages in line with global
+corporate governance standards. Ping An provides
+184 million retail customers and 538 million internet
+users with financial products and services under an
+integrated financial business model of "one customer,
+multiple products, and one-stop services."
+Net profit of securities business
+3,957
+652,756
+2,123
+2,322
+677,221
+2,215
+2,888
+558,435
+2,478
+2,212
+399,849
+924
+FINTECH & HEALTHTECH BUSINESS
+Operating profit
+7,748
+5,488
+(3,575)
+N/A
+N/A
+Notes: (1) The dividend per share was RMB1.72 in 2018. In addition, the Company distributed the 30th Anniversary Special Dividend of
+RMB0.20 per share in the first quarter of 2018.
+(2) Some indicators have been disclosed for less than five years. Certain figures have been reclassified or restated to conform to
+relevant periods' presentation.
+i
+3,012
+534,124
+1,680
+1988 1992
+Foreign
+investors
+Ping An introduced the
+individual life insurance
+十人股中国平安签约代
+marketing system,
+pioneering individual life
+insurance business in China.
+First life
+insurance policy
+Ping An Insurance (Group) Company of China, Ltd.
+平安银行
+PINGANPA
+H-share
+listing
+June 24, 2004
+Ping An Group
+enhanced its capital
+strength by going public
+1994
+in Hong Kong, which
+was the largest IPO in
+Hong Kong that year.
+July 2011
+Ping An became the controlling
+shareholder of Shenzhen
+Development Bank, which later
+merged with the original Ping
+An Bank, was renamed Ping An
+Bank, and built banking business
+presence across the country.
+2016
+Ping An Life's
+written premium
+exceeded RMB300
+billion, and new
+business premium
+exceeded RMB100
+billion.
+2004 2006
+2007
+2011
+2012
+2016
+2018
+March 1, 2007
+Ping An Group was
+listed on the Shanghai
+Stock Exchange, which
+was the world's largest
+IPO of an insurance
+company by then.
+A-share
+listing
+ARROW
+Acquiring SDB
+FOUT
+Annual Report 2018
+2
+1994
+Ping An brought on
+board Morgan Stanley
+and Goldman Sachs
+as its shareholders,
+becoming the first
+financial institution in
+China to have foreign
+investors.
+April 1996
+Ping An acquired
+ICBC Pearl River Delta
+Financial Trust Joint
+Company, which was
+then renamed Ping An
+Trust & Investment
+Company.
+1994
+1995
+1996
+2002
+Founding of
+the Group
+February 14, 2003
+Ping An Insurance (Group)
+Company of China, Ltd. was
+established, becoming a pilot
+company for integrated
+operations in China's financial
+industry.
+December 2003
+Ping An was given approval
+to acquire Fujian Asia Bank,
+which marked the start of its
+banking business.
+2003
+June 4, 1992
+The Company
+by HSBC
+Stake acquired
+largest shareholder.
+becoming its single
+October 8, 2002
+HSBC Group took
+a stake in Ping An,
+Ping An made a
+breakthrough in
+non-insurance
+financial business by
+establishing Ping An
+Securities Co., Ltd.
+2012
+October 1995
+AN IBURANCE COMPANY OF cel
+: 國平安保險公司
+Expanding
+nationwide
+China, becoming a
+national insurance
+company.
+Ping An Insurance
+Company of
+was renamed
+ALERTARNE
+Analysis of Embedded Value and
+Operating Profit
+Annual Report 2018
+All Directors of the Company have received a comprehensive Service Manual for the Performance of Duties
+upon their first appointment, so as to ensure their understanding of the business and operations of the
+Group and their responsibilities and obligations under the listing rules and relevant regulatory requirements.
+The Service Manual for the Performance of Duties is updated regularly.
+92
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Chairman of the Board and the Chief Executive Officer of the Company
+The Code Provision A.2.1 of the Corporate Governance Code provides that the roles of the Chairman and
+Chief Executive Officer shall be separate and may not be performed by the same individual. However,
+after considering the relevant principle of the Code Provision A.2.1 of the Corporate Governance Code and
+examining the management structure of the Company, the Board is of the view that:
+1.
+==
+2.
+4.
+Since the Company brought in international strategic investors (The Goldman Sachs Group, Inc.
+and Morgan Stanley) in 1994, the Company has built up a Board structure of international standard.
+In terms of the composition of the Board, the Company has reached an international, diversified
+and professional level, and the Company has established a very structured and strict operation
+system and a set of meeting procedural rules. The Chairman, as a convener and chairperson of the
+Board meetings, does not have any special powers different from those of other directors in the
+decision-making process.
+In the day-to-day operations of the Company, the Company has put in place a robust management
+system and structure, and has established various positions and organs such as the Co-Chief Executive
+Officers (Co-CEOs), President, Executive Committee and management committees. Decisions on all
+material matters are subject to complete and stringent deliberation and decision-making procedures in
+order to ensure that the Chief Executive Officer can perform his duties properly and effectively.
+Since the establishment of the Company, the business and operating results have maintained
+continuous, steady and fast growth, and the management model has been widely recognized. All
+along, the Chairman of the Board has assumed the role of the Chief Executive Officer of the Company.
+Under the leadership of Chairman of the Board and the Chief Executive Officer of the Company,
+Co-Chief Executive Officers practice unified leadership of the retail customers' integrated financial
+business, the corporate customers' integrated financial business and the technology business of
+the Company respectively, and allocate responsibilities professionally. This model has proven to be
+reliable, efficient and successful. Therefore, the continuity of this model will be beneficial to the future
+development of the Company.
+There is clear division of responsibilities of the Board and the management as set out in the Articles of
+Association.
+In light of the above, the Board is of the opinion that the Company's management structure is able to
+provide the Company with effective management and, at the same time, protect the shareholders' rights
+to the greatest extent. Accordingly, the Company does not intend to separate the roles of the Chairman of
+the Board and the Chief Executive Officer at the moment.
+3.
+None of the Directors is aware of any information that would reasonably indicate that the Company did not
+meet the applicable Code Provisions set out in the Corporate Governance Code for any part of the period
+from January 1, 2018 to December 31, 2018 save as disclosed below.
+During the Reporting Period, the Board held meetings to review the Company's compliance with the
+Corporate Governance Code and the contents disclosed in the Corporate Governance Report.
+The Board is responsible for performing the corporate governance duties set out in the terms of reference
+in the Code Provision D.3.1 of the Corporate Governance Code.
+MA Mingzhe,
+REN Huichuan
+The Nomination Committee also developed and followed the Board Diversity Policy, so as to ensure the
+Board members reach a balance in terms of skills, experience and diversified visions, and to elevate the
+efficiency of the Board and maintain a high level of corporate governance. All appointments under the
+Board are made on a merit basis with due regard for the benefits of diversity of the Board members.
+Selection of candidates will be based on a range of diversity aspects, including but not limited to gender,
+age, cultural and educational background, experience (professional or otherwise), skills and knowledge.
+The ultimate decision will be made upon the merits and contribution that the selected candidates will
+bring to the Board. In 2018, in addition to candidates with extensive experience in law and accounting,
+the Nomination Committee also recommended an Independent Non-executive Director candidate with
+profound experience in technology to the Board to support the Company's strategic development. The
+nomination was approved by the second extraordinary general meeting for 2018 on December 14, 2018, and
+shall become effective upon the CBIRC's approval of his qualification as Director.
+In 2018, the Nomination Committee held 4 meetings, which were convened in accordance with the
+requirements of the Articles of Association and the Charter of the Nomination Committee. The meeting
+deliberated and recommended the director candidates, the Chairman and Vice Chairman of the 11th
+Board and the Senior Management, deliberated and approved the Resolution on Improving the Decision
+Mechanism and Organization System of the Executive Committee of the Company and also reviewed the
+Annual Review Report of the Structure of the Board for 2017. The attendance records of each member
+of the Nomination Committee are set out in the section headed "Attendance Record of Directors" of this
+chapter.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 91
+CORPORATE GOVERNANCE
+Corporate Governance Report
+SUPERVISORY COMMITTEE AND SUPERVISORS
+The composition of the Supervisory Committee and the profile of each Supervisor have been included in
+the section headed “Directors, Supervisors, Senior Management and Employees" of this Annual Report. The
+details of the duty performance of the Supervisory Committee are set out in the section headed "Report of
+the Supervisory Committee.”
+THE EXECUTIVE COMMITTEE
+The Company has established an Executive Committee, which is the highest execution authority under the
+Board. The primary duty of the Executive Committee is to review the Company's internal business reports,
+the Company's policies in relation to investment and profit distribution and the Company's management
+policies, development plans and resources allocation plans. The Executive Committee is also responsible
+for making management decisions in relation to matters such as material development strategies,
+risk control compliance, capital allocation, synergy and brand management. In addition, the Executive
+Committee is also responsible for reviewing the business plans of the subsidiaries of the Company and
+evaluating the financial performance of the subsidiaries. The Company has also established 9 management
+committees under the Executive Committee, including the Budget Management Committee, the Investment
+Management Committee, the Risk Management Executive Committee, the Investor Relations Management
+Committee, the Connected-party Transaction Management Committee and the Technology Development
+Committee.
+OTHER MATTERS REGARDING CORPORATE GOVERNANCE IN THE REPORTING PERIOD
+Amendments Made to the Articles of Association
+A proposal was made to amend the Articles of Association at the 2018 first extraordinary general meeting
+of the Company. The amendments have been approved by the relevant regulatory authorities and became
+effective during the Reporting Period. The valid Articles of Association after the amendments was
+published on the website of HKEX (www.hkexnews.hk) on August 8, 2018 and the website of SSE (www.sse.
+com.cn) on August 9, 2018.
+A proposal was made to amend the Articles of Association at the 2018 second extraordinary general
+meeting of the Company. The details of the proposed amendments are listed in the circular and the
+meeting material dated November 16, 2018 which were published on the websites of HKEX (www.hkexnews.
+hk) and SSE (www.sse.com.cn), respectively. As at December 31, 2018, the proposed amendments did not
+come into effect and were still subject to the approval by the relevant regulatory authorities.
+Our Compliance with the Corporate Governance Code
+Compliance with the Model Code
+In August 2007, the Company adopted a code of conduct regarding securities transactions by Directors
+and Supervisors of the Company ("Code of Conduct"), which was amended in October 2018, on terms no
+less exacting than the required standard set out in the Model Code. Specific enquiry has been made to all
+Directors and Supervisors of the Company who have confirmed that they had complied with the required
+standards set out in the Model Code and the Code of Conduct for the period from January 1, 2018 to
+December 31, 2018.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+For details of the Company's risk management, please refer to the chapter of "Risk Management” in this
+annual report.
+The Board acknowledges its responsibility for overseeing the Group's risk management and internal control
+systems and reviewing their effectiveness at least annually through the Audit and Risk Management
+Committee. The Audit and Risk Management Committee assists the Board in fulfilling its oversight and
+corporate governance functions in the Group's financial, operational, compliance, risk management and
+internal controls, as well as the role in monitoring and governing finance and internal audits.
+Based on the above disclosure, appropriate policies and controls have been designed and established to
+ensure that assets are safeguarded against improper use or disposal, that relevant laws, regulations and
+rules are adhered to and complied with, that reliable financial and accounting records are maintained in
+accordance with relevant accounting standards and regulatory reporting requirements, and that key risks
+that may impact on the Group's performance are appropriately identified and managed. The systems and
+internal controls can only provide reasonable but not absolute assurance against material misstatement
+or loss, as they are designed to manage, rather than eliminate the risk of failure to achieve business
+objectives.
+The Company regulates the handling and dissemination of inside information as set out in various inside
+information disclosure procedures to ensure inside information remains confidential until the disclosure of
+such information is appropriately approved, and the dissemination of such information is efficiently and
+consistently made.
+As disclosed above, in 2018, the Audit and Risk Management Committee held 4 meetings, in which the
+Group's risk management and internal control systems were reviewed. Through the Audit and Risk
+Management Committee, the Board has conducted annual review of the effectiveness of the Group's risk
+management and internal control systems for the year ended December 31, 2018, covering all material
+financial, operational and compliance controls, and it has considered the Group's risk management and
+internal control system are effective and adequate.
+In the year ended December 31, 2018, the Company conducted corporate governance activities and
+improved the corporate governance structure in line with realities and in strict accordance with applicable
+laws including the Company Law of the People's Republic of China, the Securities Law of the People's
+Republic of China, applicable regulations, and principles set out in the Corporate Governance Code. The
+General Meeting of Shareholders, the Board of Directors, the Supervisory Committee, and the senior
+management exercised their respective rights and performed their respective obligations in accordance
+with the Articles of Association. The Company had a robust, effective internal control system in place. The
+Company disclosed relevant information in a truthful, accurate and complete manner. No breach of laws or
+regulations occurred in the Reporting Period.
+By order of the Board
+Ma Mingzhe
+Chairman and Chief Executive Officer
+Shenzhen, PRC
+March 12, 2019
+96
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Continuous professional development of the Directors
+The Company has always taken risk management as a core part of its day-to-day activities and operations.
+We take steady steps to build a comprehensive risk management system that is aligned with the strategies
+and operations of the Company. We keep optimizing our risk management framework and standardizing
+our risk management procedures, while adopting both qualitative and quantitative risk management
+methodologies to identify, evaluate and mitigate risks to facilitate sustainable and healthy development of
+the businesses of the Company.
+Executive Directors
+RISK MANAGEMENT
+CORPORATE GOVERNANCE
+93
+CORPORATE GOVERNANCE
+ESTABLISHMENT AND PERFECTION OF THE INTERNAL CONTROL SYSTEM
+The Company has been committed to establishing internal controls in line with international standards
+and regulatory requirements, and improving internal controls in response to risks and environments. With
+its local advantages, the Company implements corporate governance in line with international standards,
+upholds the compliance philosophy of “Laws + 1”, and constantly enhances its risks control to ensure that
+the Group and its subsidiaries abide by laws and regulations in their business activities, to keep single and
+accumulated residual risks at levels acceptable to the Company, and to promote sustainable growth of the
+insurance, banking, investment and fintech & healthtech businesses, as well as that of the Group.
+Regarding the management framework for internal controls, the Company has a robust and well-staffed
+internal control management system in place with well-defined roles and responsibilities in line with
+applicable laws and regulations as well as business and risk control requirements. The Board is responsible
+for establishment, improvement, and implementation of internal controls. The Audit and Risk Management
+Committee under the Board monitors and assesses the implementation of internal controls, coordinates
+audits of internal controls, and oversees other relevant work. The Supervisory Committee supervises the
+establishment and implementation of internal controls. The Risk Management Executive Committee under
+the Group Executive Committee (the management) sets risk management targets, basic policies and rules,
+monitors risk exposures and available capital, and supervises risk management systems of subsidiaries and
+business units. The Company has established robust internal control policies and procedures, and specified
+the internal control targets, responsibilities and procedures to provide guidelines for business activities and
+operations.
+Regarding internal control operations and assessment, the Company continued to act in accordance with
+the Basic Norms for Internal Controls of Enterprises and relevant guidelines, meet regulatory requirements,
+and improve its governance structure, firewall management, connected-party transaction management,
+anti-money laundering management, operational risk management and other procedures. The Group and its
+members improved risk management through data foundation, technologies and management methods. We
+have developed or introduced data analysis models through technologies, monitored risks, and promoted
+targeted compliance reviews. We urged departments concerned to remedy issues and risk events
+identified, draw inferences from one instance, manage risks at earlier stages, and achieve risk information
+transfer and risk management jointly with the first line of defense. Besides, we tested the smart internal
+controls over standard procedures, piloted robotic process automation (RPA) in the internal control
+process, expanded the sampling range and randomness, reduced the manual workload, and improved
+internal control test efficiency. We have been developing a long-term mechanism of terminal information
+security management and a terminal smart dashboard platform, and using tools and rule models to
+optimize strategies and review their implementation, so as to improve the Company's information security
+management. In line with the Guidance for the Internal Control of Insurance Funds and its supplementary
+implementation guidelines, the Company reviewed risks in operations of insurance funds and internal
+controls, developed an internal control framework for insurance funds, and improved its internal control
+of insurance funds. In addition, the Company trained its employees on internal control assessment
+methodology, process, practice and platforms, implemented the compliance and internal control appraisal,
+and promoted the day-to-day operation in which "everyone is involved in internal controls, everyone is
+responsible for compliance, and internal controls have been integrated in the business and processes."
+94
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Regarding anti-money laundering (AML) management, in 2018, the Group took the opportunity of receiving
+the fourth round of mutual evaluations by the Financial Action Task Force (FATF) to thoroughly assess the
+compliance and effectiveness of its AML management and improve the AML management framework based
+on the evaluation results. We strictly followed the AML policies and regulations, improved the AML internal
+control rules, and optimized the money laundering risk evaluation framework and the blacklist monitoring
+mechanism. We also carried out AML inspections, strengthened AML performance appraisal, internal and
+external publicity and industry exchanges, and accelerated the development of interdisciplinary talent to
+secure our leading position in the industry. In addition, in order to effectively control the money laundering
+risk, we followed a technology-powered path for AML management, prioritized the R&D of smart products
+for customer identification, institutions' money laundering risk evaluation and regulation analysis, used
+artificial intelligence (AI) to enhance the identification of suspicious transactions, and upgraded AML
+management approaches.
+Regarding the management framework for internal audit and supervision, in 2018, we continued
+to implement an independent, vertical and centralized approach to internal audits, and facilitated
+development of the Group-level risk monitoring system and application of Al. Moreover, in accordance
+with the "finance + technology" development strategy, we continued to build an integrated, smart online
+monitoring framework for internal audit risks, and developed a smart internal audit system named "Ping
+An Shield" to give early warnings and take actions in time, repair the loopholes and recover the loss at
+the first time. Keeping abreast of changes in the external environment and internal strategies, we sped up
+audit transformation and integrated audit advisory services with high-risk event disposal, driven by risk
+monitoring and remote models. Novel tools were applied to identify and handle risks while fortifying the
+internal control basis. Meanwhile, we tightened controls over major risks and optimized the mechanism
+of 24/7 emergency response, so as to effectively prevent and mitigate risks in a timely manner and help
+achieve healthy business development.
+In 2018, the Company's internal control evaluations covered the following businesses and matters: corporate
+governance, organizational structures, development strategies, human resources, corporate culture, social
+responsibilities, sales management, insurance fund utilization, treasury management, actuarial management,
+investment and financing management, operations management, financial management, asset management,
+engineering management, document and chop management, inquiries, complaints and outbound calls to
+customers, information system management, information and communication, and internal supervision. We
+paid close attention to the following high-risk areas: sales management, insurance fund utilization, treasury
+management, actuarial management, investment and financing management, operations management,
+financial management, and information system management. In 2018, the Company maintained the
+effectiveness of internal controls over financial reporting in all major aspects in accordance with the Basic
+Norms for Internal Controls of Enterprises and relevant rules. The Internal Control Assessment Report for
+2018 has been approved by the Board of Directors. The Company has engaged PricewaterhouseCoopers
+Zhong Tian LLP to audit the effectiveness of internal controls over financial reporting as well as the
+effectiveness of internal controls over matters other than financial reporting. PricewaterhouseCoopers
+Zhong Tian LLP has issued the Internal Control Audit Report.
+For details of the Company's internal controls, please refer to the Internal Control Assessment Report of
+Ping An for 2018 and the Internal Control Audit Report on Ping An for 2018 released on the same date as
+this report on the website of SSE (www.sse.com.cn).
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 95
+Corporate Governance Report
+SUN Dongdong (Chairman),
+WONG Oscar Sai Hung,
+OUYANG Hui
+Corporate Governance Report
+Members
+Members
+Executive Director
+MA Mingzhe (Chairman)
+Independent Non-Executive
+Directors
+YIP Dicky Peter,
+WONG Oscar Sai Hung,
+GE Ming
+In 2018, the Strategy and Investment Committee held 2 meetings, which
+were convened in accordance with the requirements of the Articles of
+Association and the Charter of the Strategy and Investment Committee.
+The 2018 Work Plan of the Company, the Company's 2017 Annual Plan
+Implementation Evaluation Report, the Resolution on the Suggestion
+to General Meeting concerning Grant of General Mandate to the Board
+to Issue Additional H Shares, and the Resolution on Issuing the Debt
+Financing Instruments were deliberated and approved. The attendance
+records of each member of the Strategy and Investment Committee are
+set out in the section headed "Attendance Record of Directors" of this
+chapter.
+Non-Executive Directors
+88
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Audit and Risk Management Committee
+The primary duties of the Audit and Risk Management Committee are
+to review and supervise the Company's financial reporting process and
+conduct risk management. The Audit and Risk Management Committee is
+also responsible for reviewing any matters relating to the appointment or
+removal, and remuneration of the external auditors. In addition, the Audit
+and Risk Management Committee also examines the effectiveness of the
+Company's internal controls, which involve regular reviews of the internal
+controls of various corporate structures and business processes, and take
+into account the respective potential risk and level of urgency, to ensure
+the effectiveness of the Company's business operations and the realization
+of its corporate objectives and strategies. The scope of such examinations
+and reviews includes finance, operations, regulatory compliance and risk
+management. The Audit and Risk Management Committee also reviews
+the Company's internal audit plan and submits relevant reports and
+recommendations to the Board on a regular basis.
+Members
+YANG Xiaoping,
+WANG Yongjian
+The primary duties of the Strategy and Investment Committee are
+to conduct research and provide suggestions to the Board for their
+consideration in relation to major investments, property transactions,
+financing, major capital operations, asset management projects,
+production and operation projects and so on, and also to promptly
+monitor and track the implementation of investment projects approved
+by the general meetings or the Board, and promptly notify all Directors of
+any significant progress or changes in process.
+Strategy and Investment Committee
+SPECIALIZED COMMITTEES UNDER THE BOARD
+The Company also continually provides information including updates on statutory and regulatory
+requirements and the business and market changes to all Directors to facilitate the performance of their
+responsibilities and obligations under the listing rules and relevant statutory requirements.
+Independent Non-Executive
+Directors
+During the Reporting Period, and under the arrangement of the Company, all Directors of the Company
+actively participated in continuous professional development by attending external training or seminars,
+attending in-house training or reading materials on various topics, to develop and refresh their knowledge
+and skills, which ensure that their contribution to the Board remains informed and relevant. The Directors
+have provided records of training to the Company.
+In 2018, all Directors of the Company attended professional training with topics covering corporate
+governance, regulations and the Company's businesses and training organized by the Insurance Association
+of China regarding Insurance asset-liability management, tax policy for insurance industry. In addition, Mr.
+Liu Chong attended training related to accounting organized by Ministry of Finance, and Mr. Yip Dicky
+Peter attended training related to the Belt and Road Initiative organized by Hong Kong Trade Development
+Council.
+Performance of Duties by Independent Non-Executive Directors
+The 11th Board includes 5 Independent Non-executive Directors, reaching one-third of the total number
+of the members of the Board, which is in compliance with the requirements under the regulatory rules
+of the Company's listing jurisdictions. All the Independent Non-executive Directors of the Company are
+professionals with extensive experience in fields including economics, finance, accounting and law, crucial
+to sustainable development of the Company. All Independent Non-executive Directors meet the specific
+independence requirements as set out in the regulatory rules of the Company's listing jurisdictions, and
+have presented their annual confirmation on independence to the Company. Therefore, the Company
+continues to believe that they are independent. The Independent Non-executive Directors owe fiduciary
+duties to the Company and its shareholders, and are especially responsible for protecting the non-
+controlling interests. They are playing a significant check-and-balance role in the decision-making of the
+Board and a key part in the corporate governance of the Company.
+The Independent Non-executive Directors of the Company conscientiously performed their duties
+and responsibilities conferred by the Articles of Association, promptly learnt the important operation
+information of the Company, paid close attention to the development of the Company and actively
+attended the meetings of the Board during the Reporting Period. After a due review of the external
+guarantees of the Company in 2017, the Independent Non-executive Directors of the Company believed
+that the Company had exerted stringent control over risks associated with external guarantees and
+that the external guarantees were in compliance with relevant laws and regulations and the Articles of
+Association. The Independent Non-executive Directors of the Company have conscientiously reviewed
+and provided independent opinions to agree with the matters regarding provision of assured entitlement
+to the H shareholders only for the overseas listing of Ping An Good Doctor, profit distribution, significant
+changes in accounting estimates, changes in accounting policies, recommendation of director candidates,
+shareholders' return plan for the next three years, connected transaction, implementation of the long-term
+service plan, buy-back of the shares of the Company and the relevant authorization, and improvement of
+the decision-making mechanism and organization system of the Executive Committee of the Company
+which were put forward by the Board during the Reporting Period.
+Ping An Insurance (Group) Company of China, Ltd. 87
+CORPORATE GOVERNANCE
+Corporate Governance Report
+Attendance of Independent Non-executive Directors at the Board meetings and the general meetings
+The details of the attendance of Independent Non-executive Directors at the Board meetings and the
+general meetings during the Reporting Period are set out in the section headed “Attendance Record of
+Directors" of this chapter.
+Objections of Independent Non-executive Directors on relevant matters of the Company
+During the Reporting Period, the Independent Non-executive Directors of the Company did not have any
+objection on the resolutions at the Board meetings and other matters that were not submitted to the Board
+meetings of the Company.
+Adoption of Independent Non-executive Directors' suggestions on the Company
+During the Reporting Period, the Independent Non-executive Directors made constructive advice and
+suggestions in respect of the shareholders and the Company as a whole, including but not limited to
+corporate governance, reform and development, business operations, risk management and internal
+control; particularly, attention was paid to the legitimate interests of the minority shareholders in the
+decision-making process. All of their opinions and recommendations were adopted by the Company.
+Independent Non-Executive
+Directors
+GE Ming (Chairman),
+YIP Dicky Peter,
+SUN Dongdong,
+OUYANG Hui
+The Board has established four specialized committees, namely the Strategy and Investment Committee,
+the Audit and Risk Management Committee, the Remuneration Committee and the Nomination Committee.
+The details of the roles, functions and the composition of each of these specialized committees are set out
+below.
+YANG Xiaoping
+18
+110
+Remuneration Committee
+The primary duties of the Remuneration Committee is to determine, with
+delegated responsibility by the Board, the specific remuneration packages
+of the Company's Executive Directors and senior management, including
+benefits in kind, pension rights and compensation payments, and to make
+recommendations to the Board on the remuneration of Non-executive
+Directors. The Remuneration Committee also advises the Board in relation
+to establishing a formal and transparent procedure for developing
+remuneration policy in respect of those individuals, considering and
+approving remunerations based on performance and market conditions,
+with reference to the corporate goals and objectives set forth by the
+Board. In particular, the Remuneration Committee is delegated with
+the specific task of ensuring that no Director or any of his associates
+is involved in deciding his own remuneration. Where the remuneration
+of a member of the Remuneration Committee is to be determined, that
+member's remuneration should be determined by the other members of
+the Committee.
+Members
+YIP Dicky Peter (Chairman),
+SUN Dongdong,
+GE Ming,
+OUYANG Hui
+Non-Executive Director
+Soopakij CHEARAVANONT
+In 2018, the Remuneration Committee held 3 meetings, which were all convened in accordance with
+the requirements of the Articles of Association and the Charter of the Remuneration Committee. The
+Committee deliberated and approved the Proposal on Reviewing the Remuneration of the Company's
+Senior Management, the Proposal on Reviewing the Company's 2017 Corporate Governance Report -
+Incentive and Restraint Mechanism, and the Proposal on Reviewing the Implementation of the Long-term
+Service Plan. In addition, the Committee also reviewed reports including the Report on the Participation
+in the 2018 Key Employee Share Purchase Scheme by the Group's Senior Management, the Report on
+the Settlement of Bonus for the Group's Senior Management for 2017, the Performance Report of the
+Remuneration Committee of the Board for 2017, the Report on Awarding Long-term Incentives of 2017
+to the Group's Senior Management, the Report on the Settlement of the 2015 Long-term Incentives for
+the Senior Management of the Group and the Report on the Government's Talent Incentive Policies.
+Attendance of meetings by the members of the Remuneration Committee is set out in the section headed
+"Attendance Record of Directors" of this chapter.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Nomination Committee
+Non-Executive Director
+The primary duties of the Nomination Committee are to review, advise
+and make recommendations to the Board regarding candidates to fill
+vacancies on the Board and senior management.
+The nomination of Directors is considered with reference to an
+individual's business acumen and undertakings, academic and professional
+achievements and qualifications, experience and independence, having
+regard to the Company's activities, assets and management portfolio. The
+Nomination Committee is delegated with the task of actively considering
+the needs of the Company at the Directors' level and senior management's
+level, studying the criteria and procedure for selecting directors and
+senior management. After considering and identifying appropriate
+candidates, the Nomination Committee then makes recommendations to
+the Board and implements any decisions and recommendations of the
+Board in relation to appointments. The aim and principal objective of
+the Nomination Committee are to ensure that there remains a dedicated,
+professional and accountable Board to serve the Company and its
+shareholders.
+7
+8
+Independent Non-Executive
+Directors
+90
+In 2018, the Audit and Risk Management Committee held 4 meetings, which were all convened in
+accordance with the Articles of Association and the Charter of the Audit and Risk Management Committee.
+In particular, the Audit and Risk Management Committee reviewed the Company's annual financial
+statements for the year ended December 31, 2017, the first quarterly financial statements for the three
+months ended March 31, 2018, the interim financial results for the six months ended June 30, 2018 and the
+third quarterly financial statements for the nine months ended September 30, 2018. Furthermore, the Audit
+and Risk Management Committee convened a meeting to review the unaudited financial report for the
+year 2018 and agreed to deliver it to the auditor for auditing. The Audit and Risk Management Committee
+also reviewed the audited financial report for the year ended December 31, 2018 at the first meeting in 2019
+and was satisfied with the basis of preparation of the financial report, including the appropriateness of the
+assumptions and accounting policies and standards adopted, and made recommendations to the Board for
+their consideration. The attendance records of the members of the Audit and Risk Management Committee
+are set out in the section headed "Attendance Record of Directors" of this chapter.
+The Audit and Risk Management Committee also reviewed and was satisfied with the performance,
+independence and objectiveness of the Company's auditors.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 89
+CORPORATE GOVERNANCE
+Further, in order to enable the members of the Committee to better evaluate the financial reporting
+systems and internal control procedures of the Company, all the members met with the Company's external
+auditors separately twice during the year.
+77
+Corporate Governance Report
+(in RMB million)
+Audit services for financial statements audits, reviews and agreed upon procedures
+Audit services for internal control
+Other assurance services
+Non-assurance services
+Total
+Fees payable
+According to the resolutions of the 2017 Annual General Meeting of the Company, the Company
+reappointed PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers (hereinafter refer to
+as "PricewaterhouseCoopers") as the auditors of the Company's financial statements under CAS and IFRS,
+respectively for the year 2018. PricewaterhouseCoopers has been engaged as the Company's auditor for six
+consecutive years. During the Reporting Period, the remuneration to be paid to PricewaterhouseCoopers is
+set out as follows:
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+0
+Mr. Sun is a Director of Ping An Life, Ping An Property & Casualty, Ping An
+Annuity and Ping An Asset Management.
+Executive Director, Co-CEO, Executive
+Vice President, Chief Insurance
+Business Officer
+Aged 53
+Mr. LEE Yuansiong
+102
+Past offices
+Education background and qualifications
+Mr. Sun was a Non-executive Director of China Vanke Co., Ltd.
+Prior to joining the Company, Mr. Sun was the Head of the Wuhan Branch
+of the PBC, the Deputy General Manager of the Wuhan Branch Office of
+the People's Insurance Company of China and the General Manager of
+Wuhan Securities Company.
+Since joining the Company, Mr. Sun has been the General Manager of the
+Management Department, Senior Vice President, Executive Vice President,
+and Vice Chief Executive Officer of the Company, and the Chairman of the
+board of directors of Ping An Bank.
+Other positions held with the Group
+Mr. Sun is a Non-executive Director of China Insurance Security Fund Co.,
+Ltd., and an Independent Non-Executive Director of Haichang Ocean Park
+Holdings Ltd.
+Other major offices
+Joined the Company in 2004
+Diploma in Finance from Zhongnan University of Economics and Law
+(previously known as Zhongnan University of Economics)
+Director since June 2013
+Mr. Ren is the Chairman of Ping An Trust, a Director of a number of
+controlled subsidiaries of the Company including Ping An Property &
+Casualty, Ping An Life, and Ping An Asset Management.
+Other positions held with the Group
+Mr. Ren served as a Senior Vice President of the Company from June
+2010 to March 2011, the Chief Insurance Business Officer of the Company
+from June 2010 to December 2010, and was appointed as an Employee
+Representative Supervisor of the Company from March 2009 to March 2010.
+Mr. Ren served as the Chairman and Chief Executive Officer of Shenzhen
+Wanlitong Internet & Information Technology Co., Ltd. from February 2015
+to December 2015, the Chairman and Chief Executive Officer of Ping An
+Property & Casualty from April 2007 to May 2011. Before that, Mr. Ren was
+the Assistant to the President and Financial Director of the Company, the
+Assistant Director of the Development and Reform Center, Vice President
+of Ping An Property & Casualty and the Assistant Manager of the property
+& casualty Insurance business of the Company.
+Term of office: May 2018-2021 election
+Past offices
+Mr. Ren is a member of the Council of Shenzhen Finance Institute.
+Other major offices
+Other positions held with the Group
+Term of office: May 2018-2021 election
+Joined the Company in 1992
+Director since July 2012
+Term of office: May 2018-2021 election
+Executive Director, President
+Aged 49
+Master's degree in Finance from The University of Cambridge
+Education background and qualifications
+Prior to joining the Company, Mr. Lee was a Senior Vice President of
+Prudential Taiwan Branch and the President of Citic-Prudential, etc.
+Mr. Lee served as the Special Assistant to the Chairman of Ping An Life
+from February 2004 to March 2005, President of Ping An Life from March
+2005 to January 2010 and Chairman of Ping An Life from January 2007 to
+February 2012.
+Past offices
+Mr. Lee serves as a Non-executive Director of Ping An Good Doctor and
+HealthKonnect Medical and Health Technology Management Company Ltd.
+Other major offices
+Mr. Lee is a Director of a number of controlled subsidiaries of the Company
+including Ping An Property & Casualty, Ping An Life, Ping An Annuity and
+Ping An Health.
+Mr. REN Huichuan
+Director since March 1995
+Directors, Supervisors, Senior
+Management and Employees
+Senior Vice Chairman (Executive
+Director), Executive Vice President
+Aged 66
+Ms. TAN Sin Yin
+Mr. CHEN Kexiang
+Mr. LEE Yuansiong
+Mr. YAO Jason Bo
+Mr. MA Mingzhe
+Mr. SUN Jianyi
+Ms. IP So Lan
+Mr. XIE Yonglin
+100
+Mr. REN Huichuan
+Ms. CAI Fangfang
+CORPORATE GOVERNANCE
+99
+99
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Shenzhen Investment Holdings Co., Ltd. is a wholly state-owned limited liability company founded
+on October 13, 2004, with Wang Yongjian as its legal representative. The business scope of Shenzhen
+Investment Holdings Co., Ltd. is as follows: investments in and mergers and acquisitions of financial and
+quasi-financial equities in sectors including banking, securities, insurance, fund management, and guarantee;
+real estate developments and operations with lawfully obtained land use permissions; investments and
+services in strategic emerging industries; investment, operation and management of state-owned equities in
+enterprises in which it has either the whole ownership, controlling stakes or non-controlling stakes through
+restructuring and mergers, capital operations, asset disposal and so on; other operations as authorized
+by the Shenzhen Municipal People's Government State-owned Assets Supervision and Administration
+Commission (if any of the above operations requires government approval, such approval shall be obtained
+before the operation can start).
+CP Group Ltd., the flagship company of CP Group, was established on September 23, 1976 in Thailand
+with Dhanin Chearavanont as its legal representative. The principal businesses of CP Group Ltd. include
+agriculture and animal husbandry and food, commercial retail and telecommunication, and it also
+engages in pharmacy, motorcycle, real estate, international trade, finance, media and other businesses, by
+participating in various industries to enhance mutual development and operations.
+Education background and qualifications
+MBA degree from Peking University
+From left to right:
+Joined the Company in 1990,
+Annual Report 2018
+Annual Report 2018
+Mr. SUN Jianyi
+of Economics and Law (previously known as Zhongnan University of
+Economics)
+Doctorate degree in Money and Banking from Zhongnan University
+Education background and qualifications
+Prior to founding the Company, Mr. Ma was the Deputy Manager of China
+Merchants Shekou Industrial Zone Social Insurance Company.
+Since the establishment of the Company, Mr. Ma has successively served as
+the President, Director, and concurrently as the Chairman and CEO of the
+Company, and has been fully involved in the operations and management
+of the Company.
+Working experience
+Term of office: May 2018-2021 election
+Ping An Insurance (Group) Company of China, Ltd.
+Director since March 1988
+Founder of the Company
+Mr. MA Mingzhe
+Directors
+MAJOR WORKING EXPERIENCE AND CONCURRENT POSITIONS OF DIRECTORS, SUPERVISORS, SENIOR
+MANAGEMENT AND KEY PERSONNEL
+Directors, Supervisors, Senior
+Management and Employees
+CORPORATE GOVERNANCE
+101
+Ping An Insurance (Group) Company of China, Ltd.
+Chairman and CEO (Executive Director)
+Aged 63
+Annual Report 2018
+Bachelor's degree in Accounting from Jiangxi University of Finance and
+Economics
+103
+Non-executive Director
+Mr. LIU Chong
+Directors, Supervisors, Senior
+Management and Employees
+55
+105
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Experience of studying in Japan
+Aged 59
+Bachelor's degree from Jiangxi Institute of Technology (now known as
+Nanchang University)
+Mr. Yang was a member of the Twelfth National Committee of Chinese
+People's Political Consultative Conference, and served as the Manager of
+Nichiyo Co., Ltd. for China Division and the Chief Representative of Nichiyo
+Co., Ltd. Beijing Office.
+Past offices
+Mr. Yang is the Senior Vice Chairman of the CP Group, an Executive
+Director and Vice Chairman of C.P. Lotus Corporation, CEO of CT Bright
+Holdings Limited, the Chairman of Jilin Deda Co., Ltd., the Co-Chairman
+of the board of directors of China Minsheng Investment Group, a Non-
+executive Director of Tianjin Binhai Teda Logistics (Group) Corporation
+Limited, a Non-executive Director of CITIC Limited and a Non-executive
+Director of Honma Golf Limited. Mr. Yang is an Associate Dean of the
+China Institute for Rural Studies of Tsinghua University, an Associate Dean
+of Institute of Global Development of Tsinghua University, a Director of
+China NGO Network for International Exchanges, the President of Beijing
+Association of Enterprises with Foreign Investment and an Adviser of
+Foreign Investment to Beijing Municipal Government.
+Other major offices
+Term of office: May 2018-2021 election
+Director since June 2013
+Mr. YANG Xiaoping
+Non-executive Director
+Aged 55
+CORPORATE GOVERNANCE
+Education background and qualifications
+Bachelor's degree in Science from the College of Business and Public
+Administration of New York University
+Director since January 2016
+Other major offices
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+106
+Master's degree in system engineering at the Management College of
+Shanghai Jiao Tong University
+Education background and qualifications
+Previously, Mr. Wang served as the Vice Chairman of Shenzhen Nanyou
+(Holdings) Co., Ltd., the Vice Chairman of Shenzhen Samsung Vision Co.,
+Ltd., a Director of Shenzhen Textile (Holdings) Co., Ltd., the Chairman of
+Shenzhen TopoScend Capital Co., Ltd., an Executive Director of Shenzhen
+Angel FOF Management Co., Ltd., a Director of Guosen Securities Co., Ltd.
+and other positions.
+Past offices
+Mr. Wang is the Chairman and the Secretary of Party Committee of
+Shenzhen Investment Holdings Co., Ltd., a Director of Guotai Junan
+Securities Co., Ltd., an Executive Director, General Manager and Legal
+Representative of Shenzhen Investment Holding Capital Co., Ltd., a
+Representative of Managing Partner of Shenzhen Investment Holdings
+Shenzhen Bay Equity Investment Fund Partnership (Limited Partnership).
+Term of office: May 2018-2021 election
+Other major offices
+Director since July 2018
+Mr. WANG Yongjian
+Non-executive Director
+Aged 54
+Senior Accountant qualification
+53.99%
+Education background and qualifications
+Mr. Liu successively served as a Deputy General Manager and Financial
+Controller of Shenzhen SDG Company Limited, a Director and Financial
+Controller of Shenzhen Petrochemical Group Co., Ltd., a Director and
+Financial Controller of Shenzhen Health Mineral Water Co., Ltd., a director
+of Shenzhen Tellus (Group) Company Limited from June 2009 to June 2010,
+and an Independent Non-executive Director of Shenzhen Shenxin Taifeng
+Group Co., Ltd. from May 2009 to February 2014.
+Past offices
+Mr. Liu is the Vice President of Shum Yip Group Limited and Shum Yip
+Holdings Company Limited, the Vice President and Executive Director of
+Shenzhen Investment Limited.
+Term of office: July 2018-2021 election
+Ping An Insurance (Group) Company of China, Ltd.
+Education background and qualifications
+Other major offices
+Executive Director, Chief Human
+Resources Officer
+Ms. CAI Fangfang
+Education background and qualifications
+MBA degree from New York University
+Fellow of the Society of Actuaries (FSA)
+Prior to joining the Company, Mr. Yao served in Deloitte Touche Tohmatsu
+as a consulting actuary and Senior Manager.
+Mr. Yao served as the Senior Vice President of the Company from June
+2009 to January 2016. Prior to that, Mr. Yao successively held positions
+of the Deputy General Manager of the Product Centre, the Deputy Chief
+Actuary, the General Manager of the Planning Department, the Deputy
+Financial Officer and Financial Director of the Company.
+Past offices
+Mr. Yao serves as a Non-executive Director of Lufax Holding, Ping An Good
+Doctor and OneConnect Financial Technology Co., Ltd.
+Other major offices
+Aged 45
+Mr. Yao is a Director of a number of controlled subsidiaries of the
+Company including Ping An Bank, Ping An Life, Ping An Property &
+Casualty and Ping An Asset Management.
+Term of office: May 2018-2021 election
+Director since June 2009
+Joined the Company in 2001
+Executive Director, Executive
+Vice President, Chief Financial
+Officer, Chief Actuary
+Aged 48
+Mr. YAO Jason Bo
+Directors, Supervisors, Senior
+Management and Employees
+104
+CORPORATE GOVERNANCE
+Other positions held with the Group
+Mr. Chearavanont is the Chairman of the C.P. Group, an Executive Director
+and the Chairman of C.P. Lotus Corporation, a Non-executive Director and
+the Chairman of Chia Tai Enterprises International Limited, an Executive
+Director and Vice Chairman of C.P. Pokphand Co., Ltd. and the Chairman
+of CP Bright Holdings Limited. Mr. Chearavanont is also a Director of True
+Corporation Public Company Limited and CP ALL Public Company Limited
+(both listed in Thailand) and the Chairman of True Visions Public Company
+Limited based in Thailand.
+Joined the Company in 2007
+Term of office: May 2018-2021 election
+Term of office: May 2018-2021 election
+Director since June 2013
+Aged 55
+Non-executive Director
+CHEARAVANONT
+Mr. Soopakij
+9
+Ping An Insurance (Group) Company of China, Ltd.
+Director since July 2014
+Annual Report 2018
+Education background and qualifications
+Prior to joining the Company, Ms. Cai served as the Consulting Director
+of Watson Wyatt Consultancy (Shanghai) Ltd. and the Audit Director on
+financial industry of British Standards Institution Management Systems
+Certification Co., Ltd.
+Ms. Cai was the Vice Chief Financial Officer and General Manager of the
+Planning Department of the Company from February 2012 to September
+2013 and successively held the positions of Vice General Manager and
+General Manager of the Remuneration Planning and Management
+Department of the Human Resources Centre of the Company from October
+2009 to February 2012.
+Past offices
+Ms. Cai serves as a Non-executive Director of Ping An Good Doctor
+and OneConnect Financial Technology Co., Ltd. and the Executive Vice
+President of Ping An School of Financial Management.
+Other major offices
+Ms. Cai is a Director of a number of controlled subsidiaries of the Company
+including Ping An Bank, Ping An Life, Ping An Property & Casualty and
+Ping An Asset Management.
+Other positions held with the Group
+Master's degree in Accounting from The University of New South Wales
+Other A
+shareholders
+Others
+5.27%
+CORPORATE GOVERNANCE
+Ping An Insurance (Group) Company of China, Ltd. 97
+Annual Report 2018
+454,179 (including 449,513
+domestic shareholders)
+domestic shareholders)
+537,923 (including 533,258
+February 28, 2019
+December 31, 2018
+100.00
+18,280,241,410
+100.00
+18,280,241,410
+40.74
+7,447,576,912
+59.26
+10,832,664,498
+Total number of shareholders
+Changes in the Share Capital and
+Shareholders' Profile
+Shareholdings of top ten shareholders as at the end of the Reporting Period
+Shareholding
+percentage
+Total number
+Ping An Insurance (Group) Company of China, Ltd.
+Unknown
+or frozen shares
+(shares)
+Number of pledged
+Number of
+selling-restricted
+shares held
+(shares)
+H Share
++10,820,538
+5,991,668,030(4)
+Unit: Shareholder
+32.78
+Hong Kong Securities Clearing Company
+Nominees Limited (3)
+Type of shares
+Changes
+during the
+Reporting Period
+(shares)(2)
+(%)
+Nature of shareholder(¹)
+Name of shareholder
+of shares held
+Overseas legal person
+Number of shareholders
+Number of shareholders and their shareholdings
+SHAREHOLDERS' INFORMATION
+1.
+Percentage (%)
+December 31, 2018
+Number of
+shares
+Sub-total
+Others
+Changes during the Reporting Period
+Transfer from
+reserve
+Bonus issue
+Issue of
+new shares
+RMB ordinary shares
+Percentage (%)
+circulating shares
+II. Selling-unrestricted
+Selling-restricted
+shares
+Unit: Shares
+There was no change in the total number of shares and shareholding structure of the Company during the
+12 months ended December 31, 2018 (the "Reporting Period").
+Statement of changes in share capital
+CHANGES IN SHARE CAPITAL
+Changes in the Share Capital and
+Shareholders' Profile
+January 1, 2018
+Number of
+shares
+State
+10,832,664,498
+2.
+As at the end of the Reporting Period, the Company had no staff shares.
+Staff shares
+There was no issuance of securities during the Reporting Period.
+Security issuance of the Company
+Security issuance and listing
+100.00
+18,280,241,410
+100.00
+59.26
+18,280,241,410
+Subtotal
+Others
+4.
+40.74
+7,447,576,912
+3. Overseas listed foreign shares
+shares
+Domestically listed foreign
+III. Total number of shares
+5.27
+Shenzhen Investment Holdings Co., Ltd.
+A Share
+Particulars of controlling shareholder and de facto controller
+Save as disclosed above, the Company is not aware of any connected relationship or acting-in-concert
+relationship among the above-mentioned shareholders.
+Explanation of the connected relationship or acting-in-concert relationship of the above shareholders:
+Business Fortune Holdings Limited and New Orient Ventures Limited are indirect wholly-owned subsidiaries
+of CP Group Ltd., and they are of acting-in-concert relationship since they are under common control.
+(5) The shares held by Hong Kong Securities Clearing Company Limited refer to the shares held by non-registered shareholders of
+the Northbound Trading of the Shanghai-Hong Kong Stock Connect Program.
+(4) Business Fortune Holdings Limited and New Orient Ventures Limited are indirect wholly-owned subsidiaries of CP Group Ltd.,
+and the shares owned by these two companies have been registered under the name of HKSCC Nominees Limited. In order to
+avoid double counting, the shares owned by the above two companies have been deducted from the shares held by HKSCC
+Nominees Limited.
+(3) Hong Kong Securities Clearing Company Nominees Limited ("HKSCC Nominees Limited") is the nominee holder of the shares
+held by non-registered H shareholders of the Company.
+(2) As the shares of the Company could be used as underlying securities for margin financing and securities lending, the
+shareholdings of the shareholders are the aggregate of all the shares and interests held in ordinary securities accounts and
+credit securities accounts.
+Notes: (1) Nature of the holders of A shares represents the nature of accounts held by the holders of A shares registered on the
+Shanghai Branch of China Securities Depository and Clearing Corporation Limited.
+The shareholding structure of the Company is relatively scattered. There is no controlling shareholder, nor
+de facto controller.
+A Share
+199,511,462
+1.09
+Asset Management Plan
+China-Huaxia Zhongzheng Financial
+Others
+Huaxia Fund-Agricultural Bank of
+Management Plan
+962,719,102
++25,713,964
+A Share
+96
+Annual Report 2018
+31.55%
+1.36%
+3.91%
+3.92%
+Holdings Co., Ltd.
+Shenzhen Investment
+Other H
+shareholders
+Others
+98
+New Orient
+Ventures Limited
+100%
+Shenzhen Municipal People's Government
+State-owned Assets Supervision and
+Administration Commission
+100%
+Charoen Pokphand Group
+Company Limited
+The following chart shows the relationship between the Company and the ultimate controller of
+shareholders holding more than 5% of equity interest of the Company:
+As at December 31, 2018, CP Group Ltd. indirectly held 1,680,755,534 H shares of the Company in total,
+representing 9.19% of the total share capital of the Company; Shenzhen Investment Holdings Co., Ltd. held
+962,719,102 A Shares of the Company, representing 5.27% of the total share capital of the Company.
+Information on shareholders holding more than 5% of equity interest of the Company
+Ping An Insurance (Group) Company of China, Ltd.
+Business Fortune
+Holdings Limited
++27,358,546
+- Dacheng Zhongzheng Financial Asset
+1.10
+201,948,582
+710,541,257
+3.89
+Hong Kong Securities Clearing Company
+714,663,997
+pledged shares
+485,202,650
+pledged shares
+H Share
+714,663,997
+A Share
+3.91
+New Orient Ventures Limited
+H Share
+-11,262,534
+717,306,596
+3.92
+Overseas legal person
+Business Fortune Holdings Limited
+341,740,000
+pledged shares
+Overseas legal person
+Limited (5)
++315,630,799
+Others
+Others
+Dacheng Fund Agricultural Bank of China
+-
+A Share
+257,728,008
+1.41
+China Securities Finance Corporation
+Shum Yip Group Limited
+A Share
+State-owned legal person
+2.65
+Others
+Central Huijin Asset Management Ltd.
+Limited
+A Share
+-147,375,226
+547,459,336
+2.99
+483,801,600
+The purpose and principle of the Company's remuneration policy are relatively long-term and stable while
+the specific strategies and structure of remuneration are to be adjusted and optimized according to the
+changes in the market, the development stage of the Group's business and so on, so as to help achieve the
+operating objectives of the Company.
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+116
+With regard to Directors, the Executive Directors' remunerations are determined according to their posts
+with the Company and the Company's remuneration policy; for the Non-executive Directors from China and
+abroad, emoluments are determined as per the standards approved by the Company's General Meeting of
+Shareholders. Remunerations for all the Directors shall be considered and proposed by the Remuneration
+Committee under the Board of Directors, and shall be deliberated and approved by the Company's General
+Meeting of Shareholders.
+The Company established a long-term service program as approved at the Second Extraordinary
+General Meeting for 2018. The program is intended to align the Company's long-term interests with the
+employees', enhance internal incentives, improve the corporate governance structure, strengthen long-term
+incentives and restrictions, ensure health and stability of talent pipelines, and create sustainable value for
+shareholders.
+Change Reason for the change
+The purpose of the Company's remuneration policy is to attract, retain and motivate talented people so
+as to help achieve the operating objectives of the Company. The principle of the remuneration policy is
+to characterize a clear orientation, reflect differences, motivate performances, respond to the market and
+optimize cost. The remuneration package for the Company's employees is based on the following aspects:
+the salary shall be determined according to its post value so as to keep in line with the market conditions;
+and the bonus shall be determined in light of performance so that contributions could be reflected. In
+addition to remuneration and bonuses, employees also enjoy certain welfare treatment. Meanwhile, the
+structure of remuneration packages of each subsidiary or business unit may not be the same since they
+vary in the operating features, development stage and remuneration level in the market.
++226,589
+1,120,555
+4,273,639
+4,007,565
+893,966
+A
+Beneficial owner A
+Senior Vice Chairman and Executive Vice
+President
+Beneficial owner
+Chairman and CEO
+Ma Mingzhe
+Sun Jianyi
+(%)
+(%)
++266,074
+interest
+total issued
+Percentage of Percentage of
+total issued
+H/A shares
+Nature of
+Number of
+shares held at
+the end
+of the period
+Number of
+shares held at
+the beginning
+of the period
+H/A
+shares
+Capacity
+Position
+Name
+As at December 31, 2018, the interests of the current Directors, Supervisors and Senior Management of the
+Company and those who vacated office during the Reporting Period in the shares of the Company which
+shall be disclosed pursuant to the Standard No. 2 Concerning the Contents and Formats of Information
+Disclosed by Listed Companies - The Contents and Formats of Annual Report (Revised in 2017) issued by
+CSRC, were as follows:
+SHAREHOLDINGS OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Change in the Number of Shares Held in the Company
+shares
+The current Directors, Supervisors and senior management of the Company and those who vacated office
+during the reporting period were not subject to any punishment by securities regulatory authorities over
+the past three years.
+Share Purchase Plan
+Share Purchase Plan
+0.01034
+60,144
+Beneficial owner A
+Executive Director, Executive Vice President,
+Yao Jason Bo
++226,589
+597,961
+371,372
+Beneficial owner A
+Executive Director and President
+Ren Huichuan
+0.00078
+Long position
+0.00131
+Share Purchase Plan
++101,314
+141,915
+40,601
+Beneficial owner A
+Executive Director, Co-CEO, Executive Vice
+President and Chief Insurance Business
+Officer
+Lee Yuansiong
+0.02338
+0.03945
+Long position
+0.00613
+Long position
+175,655
+PUNISHMENTS IMPOSED ON THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT BY
+SECURITIES REGULATORY AUTHORITIES IN THE LAST THREE YEARS
+Annual Report 2018
+53
+Male
+56
+Female
+54
+Male
+Age
+Period of appointment
+2018.07-2021 election
+2015.06-2018.05
+Gender
+Retired Senior Management
+Retired Independent Non-executive
+Director
+2016.01-2018.05
+Retired Non-executive Director
+Position
+MELDRUM(1)
+YAO Jun (2)
+XIONG Peijin (1)
+Stephen Thomas
+WANG Yongjian (1)
+LIN Lijun (1)
+Name
+APPOINTMENT OR REMOVAL OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Shenzhen Investment
+Holdings Co., Ltd.
+Shum Yip Group Limited
+CP Group
+January 2017 - Present
+April 2010 Present
+July 2017 Present
+January 2017 - Present
+Newly-appointed Non-executive Director
+Retired Non-executive Director
+Ping An Insurance (Group) Company of China, Ltd.
+Male
+2015.06-2018.05
+114
+Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51B(1)
+of the HKEX Listing Rules.
+Mr. Gu Liji, an Independent Supervisor of the Company, has ceased to serve as an Independent
+Non-executive Director of Maxphotonics Co., Ltd. since August 2018, and has ceased to serve as a
+Distinguished Professor of Graduate School at Shenzhen, Tsinghua University since January 2019.
+Mr. Ouyang Hui, an Independent Non-executive Director of the Company, has served as the Associate
+Dean at Cheung Kong Graduate School of Business since February 2018.
+Mr. Ge Ming, an Independent Non-executive Director of the Company, has ceased to serve as an
+Independent Non-executive Director of Asia Investment Finance Group Limited since December 2018,
+and has served as an Independent Non-executive Director of Asialnfo Technologies Limited since
+December 2018.
+Mr. Wong Oscar Sai Hung, an Independent Non-executive Director of the Company, has ceased to
+serve as a Non-executive Director of Chong Sing Holdings FinTech Group Limited since February 2018,
+has ceased to serve as a Non-executive Director of PAN Securities Group Limited since July 2018, and
+has served as an Independent Non-executive Director of Green Energy Group Limited since June 2018.
+Mr. Wang Yongjian, a Non-executive Director of the Company, has ceased to serve as a Director of
+Guosen Securities Co., Ltd. since July 2018.
+Mr. Yang Xiaoping, a Non-executive Director of the Company, has served as a Non-executive Director
+of Honma Golf Limited since May 2018, and has served as the Co-Chairman of the board of directors of
+China Minsheng Investment Group since February 2019.
+6.
+5.
+4.
+76
+3.
+1.
+CHANGES IN INFORMATION OF DIRECTORS AND SUPERVISORS
+(3) Mr. CAO Shifan ceased to serve as the Company's Senior Vice President on January 29, 2019.
+(2) Mr. YAO Jun moved to the office of Senior Legal Counsel of the Board Office of the Company on December 10, 2018, not being.
+a member of the Group's senior management any longer. However, Mr. Yao continues to act as the Company Secretary.
+Notes: (1) The election of the new Board of Directors was conducted at the 2017 Annual General Meeting of the Company held on May 23,
+2018. According to the resolution, the 11th Board of Directors is composed of 15 Directors. Ms. Lin Lijun and Mr. Xiong Peijin did
+not stand for re-election as Directors of the Company due to personal work arrangements, and Mr. Stephen Thomas Meldrum
+did not stand for re-election as a Director of the Company due to expiration of his term of office of 6 years as an Independent
+Non-executive Director. According to the resolution passed at the general meeting, Mr. Wang Yongjian was elected as a Non-
+executive Director of the 11th Board of Directors of the Company. The qualification of Mr. Wang Yongjian as a Director of the
+Company was obtained from CBIRC on July 13, 2018, and the appointment of Mr. Wang Yongjian became effective on the same
+day.
+2008.10-2018.12
+2007.04-2019.01
+Retired Senior Management
+CAO Shifan (3)
+63
+53
+Male
+Male
+2.
++115,511
+Share Purchase Plan
+Share Purchase Plan
+Long position
+Secretary of the Board
+Sheng Ruisheng
+Senior Vice President
+Chen Kexiang
+0.00074
+0.00125
+Long position
+Share Purchase Plan
++98,245
+134,959
+36,714
+Cao Shifan (2)
+Beneficial owner A
+Ip So Lan
+Information Officer and Chief Operating
+Officer
+0.00034
+0.00058
+Long position
+0.00034
+0.00058
+Long position
+Share Purchase Plan
+Share Purchase Plan
++62,680
+62,680
+Senior Vice President, Chief Internal Auditor,
+Compliance Officer and Person-in-charge
+of Auditing
+Beneficial owner A
+Retired Senior Vice President
+Company Secretary
+0.00065
+Long position
+0.00075
+0.00126
+0.00047
+0.00079
+Long position
+Long position
+0.00096
+0.00163
+Long position
+Share Purchase Plan,
+Purchase
+Share Purchase Plan
+Share Purchase Plan
+Share Purchase Plan
+Yao Jun
++58,935
++84,704
++33,413
+36,714
+136,836
+52,132
+Beneficial owner A
+Beneficial owner A
+85,823
+26,888
+Beneficial owner A
++132,968
+176,164
+43,196
+Beneficial owner A
+70,127
+Co-CEO, Executive Vice President, Chief
+Tan Sin Yin
++62,680
+Beneficial owner A
+0.00042
+0.00070
+Long position
+Share Purchase Plan
++51,179
+75,866
+24,687
+Beneficial owner A
+Executive Director and Chief Human
+Resources Officer
+Retired Non-executive Director
+Lin Lijun (1)
+1,140
+Cai Fangfang
+0.00032
+Long position
+24,000
+24,000
+In accordance with the CSRC's Guidelines on Employee Stock Ownership Plans for Public Companies and
+as approved at the First Extraordinary General Meeting of 2015, the Company incepted and implemented
+the Key Employee Share Purchase Plan. This plan will strengthen the long-term value orientation and
+align interests of key employees closely with those of the shareholders and the Company so as to ensure
+the focus on sustainable growth of the Company in the long term, improve the shareholders' value and
+facilitate sustainable development.
+Chief Financial Officer and Chief Actuary
+0.00096
+0.00162
+Long position
+0.00327
+0.00552
+0.00013
+2,897
++1,757
+Wang Zhiliang
+62,680
+Beneficial owner A
+Co-CEO and Senior Vice President
+Xie Yonglin
+0.00008
+0.00014
+Long position
+0.00015
+0.00025
+Long position
+0.00002
+0.00003
+Long position
+Share Purchase Plan
+Share Purchase Plan
+Share Purchase Plan
++6,842
+15,220
+8,378
+Beneficial owner A
+Employee Representative Supervisor
+Pan Zhongwu
++11,969
+27,505
+15,536
+Beneficial owner A
+Employee Representative Supervisor
+Period of engagement
+0.00038
+Chairman and Secretary
+of Party Committee
+Senior Vice Chairman
+Mr. Huang was the Deputy Party Committee Secretary and Disciplinary
+Committee Secretary of China Merchants Shekou Industrial Zone Co., Ltd.
+Mr. Huang was the Deputy General Manager of Shenzhen Huada Electronic
+Co., Ltd. and held the position of supervisor in various companies including
+China Merchants Shekou Industrial Zone Co., Ltd., Shenzhen Shekou Anda
+Industry Co., Ltd., Shenzhen Shekou Telecom Co., Ltd., China Merchants
+Petrochemical Co., Ltd. (Shenzhen) and China Merchants Logistics Co., Ltd.
+Past offices
+Annual Report 2018
+Term of office: May 2018-2021 election
+Supervisor since June 2016
+Mr. HUANG Baokui
+Independent Supervisor
+Aged 76
+Advanced Management Program AMP (151) certificate from Harvard
+Business School
+Master's degree in Engineering from Management Science Department of
+University of Science and Technology of China
+Bachelor's degree in Engineering from Tsinghua University
+Education background and qualifications
+Mr. Gu was a Distinguished Professor of Graduate School at Shenzhen,
+Tsinghua University from January 2016 to December 2018, an Independent
+Non-executive Director of Maxphotonics Co., Ltd. from December 2014 to
+August 2018, a Director of ERGO China Life Insurance Co., Ltd. from May
+2013 to August 2014, and was an Executive Director of China Merchants
+Technology Holdings Co., Ltd. and China Merchants Technology Investment
+Co., Ltd. (Shenzhen) from November 2008 to October 2010. Before
+retirement in October 2008, Mr. Gu had served as the Managing Director of
+China International Marine Containers Co., Ltd., the Chairman and President
+of China Merchants Shekou Port Service Co., Ltd., the Vice Chairman of the
+Company, a Director of China Merchants Bank and China Merchants Group
+Ltd., the Managing Director of China Merchants Shekou Industrial Zone
+Co., Ltd., Hoi Tung Marine Machinery Suppliers Limited (Hong Kong) and
+China Merchants Technology Group, and the Chairman of China Merchants
+Technology Holdings Co., Ltd.
+Education background and qualifications
+Past offices
+Other major offices
+Term of office: May 2018-2021 election
+Supervisor since June 2009
+Chairman of Supervisory Committee
+(Independent Supervisor)
+Aged 71
+Mr. GU Liji
+Supervisors
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+108
+Ph.D. in Finance from the University of California, Berkeley
+Ph.D. in Chemical Physics from Tulane University
+Mr. Gu is an Independent Non-executive Director of Shenzhen Changhong
+Technology Co., Ltd., a Non-executive Director of Xiangtan Electric
+Manufacturing Group Co., Ltd (XEMC) and an Independent Non-executive
+Director of Bosera Asset Management Co., Limited. Mr. Gu is also an expert
+on Applied Electronics of Shenzhen Expert Association.
+Education background and qualifications
+Bachelor's degree in Physics from Jilin University
+Ping An Insurance (Group) Company of China, Ltd.
+Mr. Wang served as the Deputy General Manager of the Group Head Office
+in Shanghai and the Deputy Director of the Group Office of the Company,
+and served in the Administration Department of Tianjin Branch of Ping An
+Life.
+Past offices
+Mr. Wang is the Director of the Group Office of the Company.
+Other Positions held with the Group
+Term of office: May 2018-2021 election
+Supervisor since August 2017
+Joined the Company in July 2002
+Aged 39
+Mr. WANG Zhiliang
+Employee Representative
+Supervisor
+EMBA degree from Guanghua School of Management of Peking University
+Member of CPA Australia
+Bachelor's degree in Economics from University of International Business
+and Economics
+Senior political practitioner
+Education background and qualifications
+Past offices
+Ms. Zhang is the Managing Director of CPG Overseas Company Limited
+(Hong Kong).
+Other major offices
+Term of office: May 2018-2021 election
+Supervisor since June 2013
+Supervisor
+Aged 39
+Shareholder Representative
+Ms. ZHANG Wangjin
+Directors, Supervisors, Senior
+Management and Employees
+CORPORATE GOVERNANCE
+109
+Before joining CPG Overseas Company Limited (Hong Kong), Ms. Zhang
+worked in the Audit Department of PricewaterhouseCoopers LLP and
+the M&A and Restructuring Department of Deloitte & Touche Financial
+Advisory Services Limited.
+Education background and qualifications
+Previously, Mr. Ouyang served as an Associate Professor of Finance at
+Duke University, Managing Director of UBS AG, Managing Director of
+Nomura Securities, Senior Vice President and Managing Director of Lehman
+Brothers.
+Mr. Ouyang is an Associate Dean and the Dean's Distinguished Chair
+Professor at Cheung Kong Graduate School of Business. Mr. Ouyang is
+also an Independent Non-executive Director of AEGON-INDUSTRIAL Fund
+Management Co., Ltd., Hytera Communications Corporation Limited and
+Peak Reinsurance Limited.
+107
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Higher Diploma in Business Studies (Marketing) from Hong Kong
+Polytechnic (now known as The Hong Kong Polytechnic University)
+Education background and qualifications
+Mr. Wong was a director and the President of ICBC (Asia) Investment
+Management Company Limited from September 2008 to December 2011,
+and was a Non-executive Director of PAN Securities Group Limited and
+Chong Sing Holdings FinTech Group Limited, the Vice Chairman of China
+Regenerative Medicine International Limited, the Chairman of LW Asset
+Management Advisors Limited, an Independent Non-executive Director
+of ARN Investment SICAV (listed on the Luxembourg Stock Exchange)
+and the Hong Kong Exchanges and Clearing Limited, the Director and
+Chief Executive of BOCI-Prudential Asset Management Limited and
+Prudential Portfolio Managers Asia Limited, the Non-executive Director of
+the ARN Asian Enterprise Fund Limited (formerly listed on the Irish Stock
+Exchange).
+Past offices
+Mr. Wong is an Independent Non-executive Director of JPMorgan
+Chinese Investment Trust plc (listed in London), a Director of One Asset
+Management Limited (registered in Thailand), and an Independent Non-
+executive Director of Green Energy Group Limited (listed on HKEX).
+Other major offices
+Director since June 2013
+Term of office: May 2018-2021 election
+Mr. WONG Oscar Sai Hung
+Independent Non-executive Director
+Aged 63
+CORPORATE GOVERNANCE
+Certified Financial Management Planner certificate
+Member of Chartered Institute of Bankers, London
+MBA degree from University of Hong Kong
+Education background and qualifications
+Mr. Yip joined The Hongkong and Shanghai Banking Corporation Limited
+("HSBC") in 1965, and served as a Chief Executive of China Business
+at HSBC's Area Office China from January 2003 to May 2005, a General
+Manager of HSBC from April 2005 to June 2012, and an Executive Vice
+President of Bank of Communications Co., Ltd. from May 2005 to June 2012.
+Mr. Yip also served as a Director of the Company and the original Ping
+An Bank Co., Ltd. from November 2002 to May 2005. Besides, Mr. Yip had
+served in many consultative boards including Hong Kong Aviation Advisory
+Board, Hong Kong Arts Development Council and Hong Kong Urban
+Renewal Authority.
+Past offices
+Mr. Yip is an Independent Non-executive Director of Sun Hung Kai
+Properties Limited, South China Holdings Company Limited (formerly
+known as South China (China) Limited), S.F. Holding Co., Ltd., and DBS
+Bank (China) Limited, respectively. Besides, Mr. Yip is an Honorary Member
+of the Hong Kong Committee of UNICEF.
+Other major offices
+Term of office: May 2018-2021 election
+Director since June 2013
+Independent Non-executive Director
+Aged 71
+Mr. YIP Dicky Peter
+Certified Financial Planner certificate
+Past offices
+Directors, Supervisors, Senior
+Management and Employees
+Independent Non-executive Director
+Aged 59
+Other major offices
+Certified Public Accountant qualification of China
+Senior Accountant qualification
+Master's Degree in Western Accounting from the Research Institute for
+Fiscal Science, Ministry of Finance (now known as Chinese Academy of
+Fiscal Science)
+Education background and qualifications
+Mr. Ge served as the Chairman of Ernst & Young Hua Ming LLP, a Partner
+and the Chief Accountant of Ernst & Young Hua Ming LLP, an Independent
+Non-executive Director of Shunfeng International Clean Energy Limited,
+Shanghai Zhenhua Heavy Industries Co., Ltd. and Asia Investment Finance
+Group Limited.
+Past offices
+Mr. Ge is an Independent Non-executive Director of Chong Sing Holdings
+FinTech Group Limited, Focus Media Information Technology Co., Ltd.
+and AsiaInfo Technologies Limited, Supervisor of the Bank of Shanghai,
+Executive Director of the Chinese Institute of Certified Public Accountants,
+a member of the Certified Public Accountants Testing Committee of
+the Ministry of Finance, a Deputy Director of the Industry Development
+Committee of the Beijing Institute of Certified Public Accountants and
+a member of the third session of the Listed Companies Mergers and
+Acquisitions Expert Consultation Committee of CSRC.
+Other major offices
+Term of office: May 2018-2021 election
+Director since August 2017
+Independent Non-executive Director
+Aged 56
+Mr. SUN Dongdong
+Mr. OUYANG Hui
+Director since June 2015
+Independent Non-executive Director
+Aged 67
+Mr. GE Ming
+Bachelor's Degree of Medical Science from Beijing Medical College (now
+known as Peking University Health Science Center)
+Education background and qualifications
+Mr. Sun served as an Independent Non-executive Director of Zhejiang Dian
+Diagnostics Co., Ltd. from December 2013 to July 2017.
+Past offices
+Mr. Sun is a professor of Law School in Peking University and the director
+of Peking University Health Law Research Center. Mr. Sun is also a deputy
+director of the Social Legal Work Committee of Chinese Peasants' and
+Workers' Democratic Party, a standing director of Chinese Health Law
+Society and China Law Society Research Center of the Law of Protection
+of the Rights and Interests of Consumers, and an expert of the Health
+Insurance Experts Committee under Insurance Association of China and
+Chinese Medical Doctor Association.
+Other major offices
+Term of office: May 2018-2021 election
+Director since June 2013
+Term of office: May 2018-2021 election
+Bachelor's degree in Economic Information Management of the Tianjin
+University of Finance and Economics (previously known as Tianjin Institute
+of Finance and Economics)
+Mr. PAN Zhongwu
+Employee Representative
+Supervisor
+Aged 49
+MBA degree from the Chinese University of Hong Kong
+Bachelor of Arts degree from Nanjing University
+Education background and qualifications
+From August 2002 to January 2014, Mr. Sheng acted as Assistant to General
+Manager, Deputy General Manager and General Manager of the Company's
+Branding Department.
+Past offices
+Mr. Sheng serves as the Brand Director and spokesperson of the Company.
+Other positions held with the Group
+Term of office: April 2017-present
+Joined the Company in 1997
+Aged 49
+Mr. SHENG Ruisheng
+Secretary of the Board
+Chief Actuary
+Ping An Insurance (Group) Company of China, Ltd.
+112
+Master's degree in Finance from Zhongnan University of Economics and
+Law (former Zhongnan University of Economics)
+Education background and qualifications
+From February 2003 to January 2007, Mr. Chen served as Assistant to the
+President of the Company. He served as General Secretary of the Board
+of the Company from June 2002 to May 2006, and Director of the General
+Office from June 2002 to April 2007. From 1999 to 2002, Mr. Chen served as
+Senior Vice President and then President of Ping An Trust. From 1996 to
+1999, Mr. Chen served as Deputy Director and then Director of the General
+Office of the Company. From 1995 to 1996, Mr. Chen served as President of
+Ping An Building Management Company. From 1993 to 1995, he served as
+Assistant Director and then Deputy Director of the General office of the
+Parent Company.
+Past offices
+Term of office: January 2007-present
+Joined the Company in 1992
+Aged 61
+Mr. CHEN Kexiang
+Senior Vice President
+Bachelor's degree in Computing from the Polytechnic of Central London
+Education background and qualifications
+Annual Report 2018
+Prior to joining the Company, Ms. Ip worked with AIA, Prudential Hong
+Kong and so on.
+For the work experience and concurrent positions of Mr. Yao Jason Bo, the Chief Actuary of the
+Company, please refer to "Directors" in this chapter.
+Mr. CHAN Tak Yin
+Chairman
+Position
+CP Group
+Name of corporate shareholder
+WANG Yongjian
+LIU Chong
+YANG Xiaoping
+Soopakij CHEARAVANONT
+Name
+POSITIONS HELD IN CORPORATE SHAREHOLDERS BY DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT
+Directors, Supervisors, Senior
+Management and Employees
+Chief Investment Officer
+CORPORATE GOVERNANCE
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Bachelor of Arts degree from the University of Hong Kong
+Education background and qualifications
+Previously, he worked as Fund Manager, Investment Director, Chief
+Investment Director, and Managing Director at BNP Paribas Asset
+Management SAS, Barclays Investment Management Limited, SHK Fund
+Management Limited, and Standard Chartered Investment Management
+respectively.
+Mr. Chan served as Deputy Chief Investment Officer of the Company,
+Chairman and Chief Executive Officer of Ping An Asset Management
+and the Chairman of Ping An of China Asset Management (Hong Kong)
+respectively. From December 2008 to May 2017, Mr. Chan acted as a Non-
+executive Director of Yunnan Baiyao Group Co., Ltd.
+Past offices
+Mr. Chan serves as a Director of Ping An Life and Ping An Asset
+Management.
+Other positions held with the Group
+Joined the Company in 2005
+Chief Investment Officer
+Aged 58
+113
+Ms. Ip was the Assistant to the President of Ping An Life from February
+2004 to March 2006, and the Assistant to the President of the Company from
+March 2006 to January 2011.
+Past offices
+Ms. Ip is a Non-executive Director of Lufax Holding.
+Education background and qualifications
+President of Ping An Bank from March 2006 to November 2013, and Special
+Assistant to the Chairman, President and Chief Executive Officer, and the
+Chairman of Ping An Securities from November 2013 to November 2016
+consecutively.
+Term of office: September 2016-present
+Joined the Company in 1994
+Co-CEO and Senior Vice President positions of Operations Director, Human Resources Director, and Vice
+Aged 50
+Mr. Xie served as the Deputy General Manager of Ping An Property and
+Casualty's sub-branches, Deputy General Manager and General Manager of
+Ping An Life's branches, and General Manager of Ping An Life's Marketing
+Department. Mr. Xie was the Deputy Director of the Company's Strategic
+Development & Reform Center from June 2005 to March 2006. He held
+Past offices
+Mr. Xie is the Chairman of Ping An Bank and a Director of Ping An
+Financial Leasing.
+Other positions held with the Group
+Mr. XIE Yonglin
+For the work experience and concurrent positions of Mr. Ma Mingzhe, Mr. Sun Jianyi, Mr. Lee Yuansiong,
+Mr. Ren Huichuan and Mr. Yao Jason Bo, please refer to “Directors" in this chapter.
+Master's degree in Science from Nanjing University
+Senior Management
+Annual Report 2018
+110
+Master's degree in Finance and Insurance from Wuhan University
+Education background and qualifications
+Mr. Pan served in the Comprehensive Management Department of Ping An
+Property & Casualty.
+Past offices
+Mr. Pan is the Deputy Director of the Group Office of the Company.
+Other Positions held with the Group
+Term of office: May 2018-2021 election
+Supervisor since July 2012
+Joined the Company in 1995
+Ping An Insurance (Group) Company of China, Ltd.
+Ph.D. in Corporate Management from Nanjing University
+Ms. TAN Sin Yin
+Co-CEO, Executive Vice President,
+Chief Operating Officer and Chief
+Information Officer
+Aged 41
+Other major offices
+Ms. Ip is a Director of a number of controlled subsidiaries of the Company
+including Ping An Bank.
+Other positions held with the Group
+Term of office: January 2011-present
+Joined the Company in 2004
+Senior Vice President, Chief Internal
+Auditor, Compliance Officer and
+Person-in-charge of Auditing
+Aged 62
+Ms. IP So Lan
+Directors, Supervisors, Senior
+Management and Employees
+CORPORATE GOVERNANCE
+111
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Master's degree in Electrical Engineering and Computer Science from MIT
+Massachusetts Institute of Technology (MIT)
+Bachelor's degrees in Electrical Engineering and Economics from the
+Education background and qualifications
+Prior to joining the Company, Ms. Tan was a Global Partner of McKinsey &
+Company.
+Ms. Tan was a Senior Vice President of the Company from June 2015 to
+December 2015, and Deputy CEO of the Company from October 2017 to
+November 2018.
+Past offices
+Ms. Tan is also a Non-executive Director of Lufax Holding and OneConnect
+Financial Technology Co., Ltd.
+Other major offices
+Ms. Tan is the Chairman of Ping An Technology. She is also a Director
+of a number of controlled companies of the Company including Ping An
+Property & Casualty, Ping An Life, Ping An Annuity, Ping An Financial
+Technology, and Ping An Asset Management.
+Other positions held with the Group
+Term of office: June 2015-present
+Joined the Company in 2013
+Vice President
+Notes: (1) Ms. Lin Lijun ceased to serve as Non-executive Director of the Company on 23 May, 2018.
+(2) Mr. Cao Shifan ceased to serve as the Company's Senior Vice President on January 29, 2019.
+(3) During the Reporting period, there were no share options held by or restricted shares granted to the current Directors,
+Supervisors and Senior Management of the Company and those who vacated office during the Reporting Period.
+Beneficial owner H
+Ping An Insurance (Group) Company of China, Ltd.
+Change Reason for the change interest
+Long position
+(%)
+(%)
+0.00027
+0.00011
+Yao Jason Bo
+Executive Director, Executive Vice President,
+Chief Financial Officer and Chief Actuary
+shares
+H
+64,000
+THE ASSESSMENT & EVALUATION AND REMUNERATION SYSTEMS OF THE COMPANY
+Change in the Number of Shares Held in Associated Corporations of the Company
+As at December 31, 2018, none of the Directors and chief executives held or was deemed to hold any
+interests or short positions in the shares, underlying shares or debentures of the Company's associated
+corporations (as defined in the SFO), which shall have been notified to the Company and HKEX pursuant
+to Divisions 7 and 8 of Part XV of the SFO, or which are recorded in the register required to be kept under
+Section 352 of the SFO, or otherwise required to be notified by the Directors and chief executives to the
+Company and the HKEX pursuant to the Model Code.
+0.00035
+0.00086
+Purchase Long position
++20,000
+Annual Report 2018
+44,000
+total issued
+spouse
+Interest of his
+spouse
+Percentage of
+total issued
+H/A shares
+115
+Percentage of
+CORPORATE GOVERNANCE
+Directors, Supervisors, Senior
+Management and Employees
+Save as disclosed above, as at December 31, 2018, the interests and short positions of the Directors and
+chief executives of the Company in the shares, underlying shares and debentures of the Company which
+shall have been notified to the Company and HKEX pursuant to Divisions 7 and 8 of Part XV of the SFO,
+including interests and short positions which the Directors, or chief executives of the Company are taken
+as or deemed to have under such provisions of the SFO, or which are recorded in the register required to
+be kept by the Company pursuant to Section 352 of the SFO or as otherwise required to be notified by the
+Directors, and chief executives to the Company and HKEX pursuant to the Model Code, were as follows:
+Number of
+shares held at
+Position
+Ma Mingzhe
+Chairman and CEO
+Name
+H/A
+shares
+the beginning
+Nature of
+of the period
+Interest of his
+H
+20,000
+Capacity
+Number of
+shares held at
+the end
+of the period
+20,000
+DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES
+Ping An Insurance (Group) Company of China, Ltd.
+DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS AND REMUNERATIONS
+No Director or Supervisor of the Company or entity connected with the Directors or Supervisors had a
+material interest, directly or indirectly, in any transaction, arrangement or contract of significance to the
+business of the Group to which the Company or any of its subsidiaries was a party during 2018.
+Details of remunerations for the Directors and Supervisors for the year ended December 31, 2018 are set out
+in Note 56 to the consolidated financial statements.
+DIRECTORS' AND SUPERVISORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+Annual Report 2018
+According to the resolutions of the 25th meeting of the 7th Board of Directors and the 2nd meeting of the
+7th Supervisory Committee of the Company, the Company entered into service contracts with all Directors
+of the 11th Board of Directors and all Supervisors of the 9th Supervisory Committee in July 2018. Terms,
+duties, remuneration packages, confidentiality duties of Directors and Supervisors and commencement and
+termination of contracts were specified in the service contracts. As at December 31, 2018, no Director or
+Supervisor had a service contract with the Company which was not terminable by the Company within one
+year without payment of compensation other than statutory compensation.
+120
+RESERVES
+PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY
+There are no provisions regarding pre-emptive rights under the Company Law of the People's Republic of
+China or the Articles of Association, which would oblige the Company to issue new shares to its existing
+shareholders in proportion to their existing shareholdings.
+PRE-EMPTIVE RIGHTS
+Details of movements in property and equipment and investment properties of the Group during 2018 are
+set out in Notes 35 and 34 to the consolidated financial statements, respectively.
+PROPERTY AND EQUIPMENT AND INVESTMENT PROPERTIES
+Charitable donations made by the Company during 2018 totaled RMB240 million.
+CHARITABLE AND OTHER DONATIONS
+Details of movements in the reserves of the Company and the Group during 2018 are set out in the Note 40
+to the consolidated financial statements and the Consolidated Statement of Changes in Equity respectively.
+The change in share capital of the Company in 2018 and the share capital structure of the Company as
+at December 31, 2018 are set out in the section headed "Changes in the Share Capital and Shareholders'
+Profile."
+At no time during 2018 was the right to acquire benefits by means of acquisition of shares or debentures
+of the Company granted to or exercised by any Directors, Supervisors or their respective spouse or minor
+children, nor was the Company, or any of its subsidiaries, a party to any arrangement which enables the
+Directors or Supervisors to acquire such rights in any other legal entity.
+Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed
+shares during 2018.
+DIRECTORS' AND SUPERVISORS' INTERESTS IN A COMPETING BUSINESS
+Chairman and Chief Executive Officer
+PERMITTED INDEMNITY PROVISION
+122
+March 12, 2019
+Shenzhen, PRC
+SHARE CAPITAL
+Ma Mingzhe
+By order of the Board of Directors
+Based on the information that is publicly available to the Company and within the knowledge of the
+Directors as at the latest practicable date prior to the issue of this Annual Report, being March 12, 2019,
+at all times during the year ended December 31, 2018, not less than 20% of the issued share capital of the
+Company (being the minimum public float applicable to the shares of the Company) was held in public
+hands.
+SUFFICIENCY OF PUBLIC FLOAT
+According to the resolution made at the 2017 Annual General Meeting of the Company, the Company
+continued to engage PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers as
+auditors of the Company's financial statements under CAS and IFRS respectively, and engaged
+PricewaterhouseCoopers Zhong Tian LLP as the auditor of the Company's internal controls in 2018.
+AUDITORS
+Report of the Board of Directors
+CORPORATE GOVERNANCE
+121
+Annual Report 2018
+None of the Directors of the Company is aware of any information that would reasonably indicate that the
+Company did not meet the applicable Code Provisions set out in the Corporate Governance Code for any
+part of the period from January 1, 2018 to December 31, 2018, except that Mr. Ma Mingzhe has occupied
+both the positions of the Chairman and Chief Executive Officer of the Company. Further details of the
+Company's arrangements and considered reasons for the Company's intention not to separate the roles of
+the Chairman of the Board of Directors and the Chief Executive Officer of the Company are set out in the
+section headed "Corporate Governance Report."
+COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE CONTAINED IN APPENDIX 14 TO THE HKEX
+LISTING RULES
+In 2018, the Group maintained compliance with relevant laws and regulations that have significant impacts
+on operations of the Group.
+COMPLIANCE WITH LAWS AND REGULATIONS
+Details of the post balance sheet events are set out in Note 62 to the consolidated financial statements.
+POST BALANCE SHEET EVENTS
+The Company has arranged appropriate insurance cover for Directors and senior management's liabilities
+in respect of possible legal actions against its Directors and senior management arising out of corporate
+activities.
+As far as the Directors are aware, none of the Directors or Supervisors of the Company has any competing
+interest in a business, which competes or is likely to compete, either directly or indirectly, with the Group's
+business.
+For equity investment, please refer to the section headed "Significant Events."
+The 30th Anniversary Special Dividend of the Company was deliberated and approved at the 2017
+Annual General Meeting of the Company held on May 23, 2018, according to which the Company paid
+in cash the 30th Anniversary Special Dividend of RMB0.20 (tax inclusive) per share, in a total amount of
+RMB3,656,048,282.00, based on its total share capital of 18,280,241,410 shares.
+The non-raised funds of the Company mainly come from its core insurance business. The Company has
+been strictly following the relevant requirements of the CBIRC on the management of insurance funds. All
+the investments of insurance funds were made in the normal course of day-to-day operations.
+According to Article 217 of the Articles of Association, the Company shall attach importance to the
+reasonable investment returns for investors in its profit distribution. The profit distribution policy shall
+maintain its continuity and stability. The accumulated profit to be distributed in cash for recent three years
+shall not be less than 30% of the average annual distributable profit realized in recent three years, provided
+that the annual distributable profit of the Company (namely profit after tax of the Company after covering
+the losses and making contributions to the surplus reserve) is positive in value and such distribution is
+in compliance with the prevailing laws and regulations and the requirements of regulatory authorities for
+solvency ratio. In determining the specific ratio of distribution of cash dividend, the Company shall take
+into account its profit, cash flow, solvency, and operation and business development requirements. The
+Board of Directors of the Company shall be responsible for formulating and implementing a distribution
+plan according to the provisions of the Articles of Association.
+Cash Dividend Policy
+REPORTING PERIOD
+IMPLEMENTATION OF CASH DIVIDEND POLICY AND PROFIT DISTRIBUTION PLANS DURING THE
+The Group believes that it is important to maintain good relationships with its customers to fulfill its long-
+term goal “to become a world-leading technology-powered retail financial services group.” To achieve
+this goal and maintain the leading position in terms of brand value, the Group is committed to delivering
+high-quality financial services to its customers. During 2018, there was no material and significant dispute
+between the Group and its customers.
+RELATIONSHIPS WITH CUSTOMERS
+In 2018, revenue from the Group's five largest customers accounted for less than 1% of the total revenue for
+the year. None of the top five customers is a connected party of the Company.
+MAJOR CUSTOMERS
+A summary of the results, assets and liabilities of the Group for the past five years is set out in the section
+headed "Five-Year Summary."
+SUMMARY OF FINANCIAL INFORMATION
+The principal activities of the Company and its subsidiaries (the “Group") comprise the provision of a
+wide range of financial products and services with a focus on the businesses of insurance, banking, asset
+management, fintech and healthtech. There were no significant changes in the nature of the Group's
+principal activities during 2018.
+PRINCIPAL ACTIVITIES
+Report of the Board of Directors
+CORPORATE GOVERNANCE
+117
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+In 2018, Ping An School of Financial Management introduced over 300 new face-to-face courses from top
+business schools and consultancies to develop a learning organization and future-oriented talent. The
+courses cover five areas, namely strategy execution, technological innovation, management decision
+making, specialized skills, and personal development. A total of 44,411 employees attended 1,500 face-to-
+face training sessions nationwide, covering 48.25% of the Company's senior managers and higher-level staff.
+We provided financial courses for 1,714 investment, risk management and financial services staff members.
+Moreover, we provided agile software development and database courses for 837 IT staff members.
+On an online learning platform, Ping An School of Financial Management launched highly personalized
+learning products, enabling customization and smart recommendation of contents. By doing so, the school
+delivered precisely targeted training to meet employees' diverse demands throughout their careers. In 2018,
+more than 25.19 million trainees attended online training sessions for over 2.612 million hours, with a monthly
+activity rate of 89.7%.
+Committed to providing the best training, Ping An School of Financial Management has invested sufficient
+resources in employee development. The school has worked with the Group's member companies to build
+a smart learning platform and a lecturer resources platform. By doing so, the school unlocks value from
+knowledge and supports business development.
+STAFF TRAINING PROGRAMS
+Doctorate or master's degree 5.96
+• Bachelor's degree 52.14
+⚫ College education 36.57
+Others 5.33
+In preparing a profit distribution plan, the Board of Directors of the Company shall listen to views and
+advice from shareholders (in particular, the minority shareholders), independent directors and independent
+supervisors in various ways. Independent directors of the Company shall express their independent
+opinions on the profit distribution plan. When a specific cash dividend distribution plan is put forward for
+consideration at a general meeting, a variety of channels shall be provided for communication and opinion
+exchange with shareholders (in particular, the minority shareholders), whose opinions and demands shall
+be fully heard and prompt response shall be given to any issues the minority shareholders are concerned
+about.
+Where an adjustment to our profit distribution policy is required due to the applicable laws and regulations
+and new rules promulgated by the CSRC regarding profit distribution policies of listed companies or
+significant changes in the external business environment and/or operating situations of the Company, it
+shall be done for the purpose of safeguarding the shareholders' interests and in strict compliance with
+the decision-making process. To this end, the Board of Directors shall draft an adjustment plan based
+on the operating situations of the Company and the relevant regulations of the CSRC, and then submit
+the adjustment plan to the general meeting for deliberation. Implementation of the adjustment plan is
+conditional upon approval by shareholders (including their proxies) holding at least two thirds of voting
+rights present at the general meeting.
+118
+Annual Report 2018
+PARTICULARS ON INVESTMENT DURING THE REPORTING PERIOD
+An aggregate of 594,056,000 new H Shares were successfully allotted and issued by the Company under
+general mandate on December 8, 2014 and the gross proceeds raised from the placing amounted to
+HKD36,831,472,000. The proceeds raised from the placing were used to develop the main businesses and
+replenish the equity and working capital of the Company. The use of the proceeds raised was consistent
+with the purposes approved by the Board of Directors. As at December 31, 2018, HKD4,059 million from the
+placing was kept in the specific fund-raising account, and the rest had been used.
+USE OF PROCEEDS
+For management discussion and analysis, please refer to the section headed “Management Discussion and
+Analysis."
+MANAGEMENT DISCUSSION AND ANALYSIS
+As at December 31, 2018, the Company's distributable reserves totaled RMB72,250 million. The Company has
+proposed to distribute the 2018 final dividend of RMB1.10 per share (tax inclusive) in cash. After deducting
+the 2018 final dividend, the remaining distributable reserves were carried forward to 2019. Besides, the
+Company's capital reserve and surplus reserve amounted to RMB140,901 million, which can be distributed in
+a future capital issue.
+DISTRIBUTABLE RESERVES
+Report of the Board of Directors
+CORPORATE GOVERNANCE
+Ping An Insurance (Group) Company of China, Ltd. 119
+EQUITY INVESTMENT DURING THE REPORTING PERIOD
+Annual Report 2018
+The Company distributed the 30th Anniversary Special Dividend of RMB0.20 (tax inclusive) per share in the
+first quarter of 2018, and the 2018 interim dividend of RMB0.62 (tax inclusive) per share, which amounted to
+RMB14,989,797,956.20. The Company proposes to pay in cash the 2018 final dividend of RMB1.10 (tax inclusive)
+per share, in a total amount of RMB20,108,265,551.00, based on its total share capital of 18,280,241,410 shares.
+The remaining undistributed profit will be carried forward to 2019. The undistributed profit of the Company
+is mainly for the purpose of organic capital accumulation to maintain a reasonable solvency ratio as well as
+funding for subsidiaries so that they can maintain a reasonable solvency ratio or capital adequacy ratio.
+The above plan will be implemented upon deliberation and approval at the 2018 Annual General Meeting.
+The profit distribution plan is in line with the Articles of Association and relevant deliberation procedures
+and fully protects legitimate interests of the minority shareholders of the Company. All the Independent
+Directors of the Company have expressed independent opinions of their agreement on the profit
+distribution plan.
+As stated in the 2018 audited financial statements of the Group prepared under CAS, the net profit
+attributable to shareholders of the parent company was RMB107,404 million and the net profit of the parent
+company was RMB46,402 million. Pursuant to the Articles of Association and other relevant requirements,
+the Company shall make an appropriation to the statutory surplus reserve based on 10% of the net profit of
+the parent company as shown in the financial statements under CAS before determining the profit available
+for distribution to shareholders. Appropriation to the statutory surplus reserve may cease to apply if the
+balance of the statutory surplus reserve has reached 50% or more of the registered capital of the Company.
+After making the above profit distribution and taking into account the retained profit carried forward from
+the previous year, in accordance with the Articles of Association and other applicable requirements, the
+profit available for distribution to shareholders of the Company was RMB72,250 million.
+The Group's business results for 2018 are set out in the section headed “FINANCIAL STATEMENTS."
+ANNUAL RESULTS AND PROFIT DISTRIBUTION
+The decision-making procedure and mechanism of the above profit distribution plans were complete, and
+the dividend payout standards and proportions were clear. The above profit distribution plans were in line
+with the Articles of Association, and the relevant deliberation procedures had fully protected legitimate
+interests of the minority shareholders. All the Independent Non-executive Directors of the Company have
+expressed independent opinions of their agreement on the profit distribution plans. Implementation of the
+above-mentioned distribution plans has been completed.
+The 2018 interim profit distribution plan of the Company was deliberated and approved at the 2nd
+meeting of the 11th Board of Directors of the Company held on August 21, 2018, according to which the
+Company paid in cash the 2018 interim dividend of RMB0.62 (tax inclusive) per share, in a total amount of
+RMB11,333,749,674.20, based on its total share capital of 18,280,241,410 shares.
+Annual Report 2018
+The 2017 annual profit distribution plan of the Company was deliberated and approved at the 2017 Annual
+General Meeting of the Company held on May 23, 2018, according to which the Company paid in cash the
+2017 final dividend of RMB1.00 (tax inclusive) per share, in a total amount of RMB18,280,241,410.00, based on
+its total share capital of 18,280,241,410 shares.
+Implementation of Profit Distribution Plans
+Ping An Insurance (Group) Company of China, Ltd.
+For dividend payouts of the Company over the past three years, please refer to the section headed
+"Liquidity and Capital Resources."
+Ping An Insurance (Group) Company of China, Ltd.
+June 17, 2013
+During the Reporting Period, all the members of the Supervisory Committee duly carried out their
+supervisory duties in a stringent manner and adhered to the principles of fairness and honesty to
+effectively protect the rights and interests of the shareholders, the Company and its employees in
+accordance with the relevant provisions of the Company Law of the People's Republic of China and the
+Articles of Association.
+FINANCIAL INSTRUMENTS RECORDED AT FAIR VALUE
+During the Reporting Period, there was no material non-equity investment that was required to be
+disclosed.
+Material Non-Equity Investment
+During the Reporting Period, there was no material equity investment that was required to be disclosed.
+Material Equity Investment
+Ping An is an integrated financial services group, and investment is one of its core businesses. The
+investment of insurance funds represents a majority of the equity investment of the Company. The
+investment of insurance funds is subject to relevant laws and regulations. For details of the asset allocation
+of the investment portfolio of insurance funds, please refer to relevant sections headed “Business Analysis."
+GENERAL ANALYSIS OF EXTERNAL INVESTMENT
+Significant Events
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+124
+March 12, 2019
+Shenzhen, PRC
+Chairman of the Supervisory Committee
+GU Liji
+By order of the Supervisory Committee
+In the coming year, the Supervisory Committee will further expand its approach to work, and will continue
+to carry out its duties in accordance with the relevant provisions of the Company Law of the People's
+Republic of China, the Articles of Association and the listing rules. The Supervisory Committee will adhere
+to the principles of honesty, maximize its supervisory efforts with the aim of protecting the interests of the
+Company and its shareholders, and perform supervisory duties honestly and diligently to achieve the best
+results in all respects.
+The Company held the 13th meeting of the 8th Supervisory Committee on March 20, 2018, at which all
+Supervisors deliberated and approved the Proposal on Deliberating Directors' Duty Performance Report
+and Independent Directors' Work Report for 2017, and appraised the composition of the Board of Directors,
+Directors' attendance records at meetings, participation in training sessions and provision of opinions.
+Supervisors present at the meeting concluded unanimously that in 2017 all Directors of the Company, in a
+sincere, loyal, diligent and conscientious manner, performed their duties and responsibilities as stipulated
+under relevant laws, regulations and the Articles of Association, proactively attended meetings of the
+Board of Directors and specialized committees and expressed their opinions. Specialized committees of the
+Board of Directors fully performed their duties and provided professional opinions and advice for the Board
+of Directors' decision making process.
+Appraisal of Directors' Performance of Duties
+The Supervisory Committee acknowledges that the Board of Directors strictly carried out the cash
+dividend policy and plans for shareholder returns, performed relevant decision-making procedures for
+cash dividends in strict compliance, and disclosed the cash dividend policy and its implementation truly,
+accurately and completely.
+Details of financial instruments recorded at fair value of the Company are set out in Note 52 to the
+consolidated financial statements.
+SALE OF MAJOR ASSETS AND EQUITIES
+During the Reporting Period, there was no sale of major assets and equities that was required to be
+disclosed.
+MAJOR SUBSIDIARIES AND ASSOCIATES OF THE COMPANY
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+126
+26
+During the Reporting Period, one third of the shares under the Plan for this phase were unlocked and
+vested in batches to 680 employees. As to the remaining 41 employees who did not qualify for the vesting,
+210,765 shares were forfeited.
+The share purchase was conducted by the manager of the Plan, China Merchants Securities Asset
+Management Co., Ltd. from March 17, 2016 to March 21, 2016 in the secondary market; 14,803,850 A shares
+of the Company in total were purchased for a total price of RMB481,733,046.11 (expenses inclusive) and an
+average price of RMB32.53 per share, accounting for 0.081% of the total share capital of the Company at that
+time. These shares were subject to a lock-up period from March 23, 2016 to March 22, 2017. For details of the
+share purchase, please refer to the Announcement regarding the Completion of Share Purchase under the
+2016 Key Employee Share Purchase Plan published by the Company on the websites of the HKEX and the
+SSE on March 22, 2016 and March 23, 2016 respectively.
+The participants were 773 key employees of the Company and its subsidiaries including the directors,
+employee representative supervisors, and senior management. The sources of funding were legitimate
+salaries and performance bonuses of the employees.
+Implementation in 2016
+During the Reporting Period, one third of the shares under the Plan for this phase were unlocked and
+vested in batches to 639 employees. As to the remaining 62 employees who did not qualify for the vesting,
+135,515 shares were forfeited. All shares under the Plan for this phase had been unlocked and vested as of
+the end of the Reporting Period.
+As the Company's profit distribution for 2014 included the conversion of capital reserve into share capital
+in a proportion of 10 shares for every 10 shares held, the total number of shares held under the Plan for this
+phase had changed to 8,100,506 shares.
+Implementation of the Cash Dividend Policy
+The share purchase was conducted by the manager of the Plan, China Merchants Securities Co., Ltd.
+(changed to China Merchants Securities Asset Management Co., Ltd. on September 9, 2015 due to
+establishment of the subsidiary) from March 20, 2015 to March 26, 2015 in the secondary market; 4,050,253
+A shares of the Company in total were purchased for a total price of RMB312,047,645 (expenses inclusive),
+accounting for 0.044% of the total share capital of the Company at that time. For details of the share
+purchase, please refer to the Announcement regarding the Completion of Share Purchase under the 2015
+Key Employee Share Purchase Plan published by the Company on the websites of the HKEX and the SSE
+on March 27, 2015 and March 30, 2015 respectively.
+Implementation in 2015
+As at the end of the Reporting Period, four phases of the Plan had been implemented.
+IMPLEMENTATION OF THE KEY EMPLOYEE SHARE PURCHASE PLAN OF THE COMPANY
+As deliberated at the 16th Meeting of the 9th Board of Directors held on October 28, 2014 and approved at
+the 1st Extraordinary General Meeting for 2015 held on February 5, 2015, the Key Employee Share Purchase
+Plan (the “Plan") of the Company has been officially implemented. Since the implementation of this Plan,
+the Company has had stable operations; the shareholders, the Company, and the employees have shared
+benefits and risks, providing a strong foundation for further improvement of the Company's governance
+structure as well as establishing and improving the long-term incentive and restraint mechanisms to
+facilitate long-term sustainable, healthy development of the Company.
+Significant Events
+CORPORATE GOVERNANCE
+125
+Ping An Insurance (Group) Company of China, Ltd.
+Details of Structured Entities controlled by the Company are set out in Note 4.(2) to the consolidated
+financial statements.
+STRUCTURED ENTITIES CONTROLLED BY THE COMPANY
+Details of major subsidiaries and associates of the Company are set out in Note 4.(1) and Note 32 to the
+consolidated financial statements respectively.
+The participants were 839 key employees of the Company and its subsidiaries including the directors,
+employee representative supervisors, and senior management. The sources of funding were legitimate
+salaries and performance bonuses of the employees.
+Report of the Supervisory
+Committee
+Certain members of the Supervisory Committee attended the meetings of the Board of Directors and the
+general meetings as non-voting participants, and did not have any objection to the reports and proposals
+submitted to the general meetings by the Board of Directors. The Supervisory Committee has monitored
+the implementation of the resolutions approved by the general meetings, and was of the opinion that the
+Board of Directors could duly implement the resolutions approved by the general meetings.
+In 2018, the Supervisory Committee has reviewed the Assessment and Evaluation Report on Internal Control
+of the Company for 2017 and the Work Report on the Internal Control of the Company for the First Half of
+2018, and was of the opinion that the Company has set up a relatively complete, reasonable and effective
+internal control system.
+5/5
+5/5
+Fintech & healthtech personnel 26.43
+ZHANG Wangjin
+Shareholder Representative Supervisor
+5/5
+5/5
+5/5
+5/5
+Supervisory
+Committee Meeting
+General Meeting
+Date of
+Appointment
+as Supervisors
+Meetings attended in person/
+Meetings required to attend
+June 28, 2016
+HUANG Baokui
+June 3, 2009
+GU Liji (Chairman)
+Independent Supervisors
+Members
+During the Reporting Period, the Supervisors did their best to participate in the general meetings and
+the meetings of the Supervisory Committee in person, as well as to attend the meetings of the Board of
+Directors as non-voting participants, and had no dissents over the supervised matters. The attendance
+records of each Supervisor at the meetings are as follows:
+ATTENDANCE RECORD OF SUPERVISORS
+Employee Representative Supervisors
+WANG Zhiliang
+PAN Zhongwu
+August 6, 2017
+Internal Control System
+The Supervisory Committee regarded the connected-party transactions of the Company to be fair and
+reasonable in the Reporting Period, and did not find any harm against the interests of the shareholders and
+the Company.
+Connected-Party Transactions
+Committee
+Report of the Supervisory
+CORPORATE GOVERNANCE
+123
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+An aggregate of 594,056,000 new H Shares were successfully allotted and issued by the Company
+under a general mandate on December 8, 2014 and the gross proceeds raised from the placing were
+HKD36,831,472,000. The proceeds raised from the placing were used to develop the main businesses and
+replenish the equity and working capital of the Company. The use of the proceeds raised was consistent
+with the use approved by the Board of Directors. As at December 31, 2018, HKD4,059 million from the
+placing was kept in the specific fund-raising account, and the rest had been used.
+Implementation of the Resolutions Approved by the General Meetings
+Use of Proceeds
+Authenticity of the Financial Statements
+During the Reporting Period, the Company operated and managed its businesses in accordance with
+the laws and regulations, and its operational results were objective and true. There was substantial
+development and improvement in the depth and breadth of internal control management, and the internal
+control system was complete, reasonable and effective. The Company's operational decision-making
+processes were legitimate. The Directors and other senior management were cautious, conscientious and
+diligent in the business operations and management processes, and they were not found to have breached
+any laws, regulations, or the Articles of Association or harmed the interests of the shareholders.
+Lawful Operation
+INDEPENDENT OPINIONS ON RELEVANT ISSUES FROM THE SUPERVISORY COMMITTEE
+INSPECTIONS AND REVIEWS AT BRANCHES OF SUBSIDIARIES
+In September 2018, certain members of the Supervisory Committee conducted on-site inspections and
+reviews at branches of subsidiaries including Ping An Life, Ping An Property & Casualty and Ping An
+Annuity, in Qinghai and Tibet. Opinions collected from the general staff were consolidated and an
+investigation report was submitted to the management of the Company. The senior management paid
+due attention to relevant issues and a feedback report by them was addressed to all the Directors and
+Supervisors.
+5/5
+5/5
+July 17, 2012
+5/5
+5/5
+PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers have issued the standard
+unqualified auditor's reports in accordance with the PRC and international auditing standards respectively
+on the Company's financial statements for 2018. The financial statements truly, fairly and accurately
+reflected the financial conditions and results of operations of the Company.
+Asset management personnel 2.63
+Ping An Insurance (Group) Company of China, Ltd.
+Insurance personnel 61.75
+By education
+(%)
+By profession
+(%)
+As at December 31, 2018, the Company had 376,900 employees, of which 232,752 were in the insurance
+business; 34,626 were in the banking business; 9,911 were in the asset management business; and 99,611
+were in the fintech & healthtech business. Of all the employees, 22,446 held a doctorate or master's
+degree; 196,524 held a bachelor's degree; 137,820 attained college education; and 20,110 had other education
+backgrounds.
+NUMBER OF EMPLOYEES, PROFESSION AND EDUCATION BACKGROUND
+The Company sets forth a clear three-year rotation plan and annual accountability objectives for the senior
+management in accordance with the business plan, conducts accountability appraisals twice a year in light
+of the objectives achieved and evaluates the senior management on the basis of comprehensive feedback.
+Accountability results are closely linked to the long-term and short-term rewards and appointment and
+removal of senior managers. The comprehensive evaluation results serve as an important reference in the
+development of senior managers.
+Banking personnel 9.19
+in issue
+(%)
+(%)
+9.51
+323,606,470
+Investment manager
+in issue
+Long position
+3.88
+of total
+shares
+Percentage
+H/A shares
+of total
+number of
+4.35
+Nature of
+interest
+Long position
+708,377,410
+(3)
+Interest of controlled
+corporations
+H
+JPMorgan Chase & Co.
+Percentage
+1.77
+security interest in shares
+Person having a
+786,797,037 Short position
+(3)
+Interest of controlled
+6.89
+16.90
+1,258,789,784
+Total:
+1.21
+2.98
+Lending pool
+221,672,394
+0.00
+0.00
+Long position
+32,012
+0.03
+0.07
+Long position
+5,101,498
+Approved lending agent
+Number of
+H/A Shares
+Trustee
+Notes
+substantial shareholder
+Shares
+26.41
+Long position
+1,966,603,275
+Party to s317 agreement
+H
+King Ace International
+Limited
+1.56
+3.84
+Short position
+11.24
+27.60
+2,055,311,275
+285,847,741
+Party to s317 agreement
+(1), (2)
+Total:
+corporations
+0.49
+1.19
+Long position.
+88,708,000
+10.76
+10.76
+Interest of controlled
+88,708,000
+Long position
+H/A
+10.56
+Name of
+Significant Events
+36
+136
+CORPORATE GOVERNANCE
+135
+Ping An Insurance (Group) Company of China, Ltd.
+1.56
+Capacity
+3.84
+11.24
+27.60
+2,055,311,275
+285,847,741
+(1), (2)
+(2)
+Party to s317 agreement
+Total:
+corporations
+Annual Report 2018
+0.49
+1.19
+Short position
+4.30
+19,673,000
+Investment manager
+Shenzhen Investment
+Holdings Co., Ltd.
+Approved lending agent
+Implementation in 2018
+0.81
+Long position
+60,225,545
+corporations
+Interest of controlled
+H
+Citigroup Inc.
+0.00
+0.01
+Short position
+545,000
+(5)
+2.26
+5.55
+Long position
+412,982,017
+Interest of controlled
+corporations
+H
+Total:
+Interest of controlled
+corporations
+A
+Annual Report 2018
+Implementation in 2017
+The participants were 1,157 key employees of the Company and its subsidiaries including the directors,
+employee representative supervisors, and senior management. The sources of funding were legitimate
+salaries and performance bonuses of the employees.
+The share purchase was conducted by the manager of the Plan, China Merchants Securities Asset
+Management Co., Ltd. from March 23, 2017 to March 27, 2017 in the secondary market; 16,419,990 A shares
+of the Company in total were purchased for a total price of RMB603,498,822.25 (expenses inclusive) and an
+average price of RMB36.74 per share, accounting for 0.090% of the total share capital of the Company at that
+time. These shares were subject to a lock-up period from March 29, 2017 to March 28, 2018. For details of the
+share purchase, please refer to the Announcement regarding the Completion of Share Purchase under the
+2017 Key Employee Share Purchase Plan published by the Company on the websites of the HKEX and the
+SSE on March 28, 2017 and March 29, 2017 respectively.
+During the Reporting Period, one third of the shares under the Plan for this phase were unlocked and
+vested in batches to 1,104 employees. As to the remaining 53 employees who did not qualify for the vesting,
+428,798 shares were forfeited.
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+5.27
+8.89
+Long position
+BlackRock, Inc.
+962,719,102
+0.40
+Short position
+2.61
+6.41
+2.28
+5.60
+Lending Pool
+416,914,509
+477,140,054
+29,597,482
+(6)
+Beneficial owner
+0.16
+(%)
+(%)
+in issue
+10.23
+25.12
+Long position
+1,870,597,412
+(4)
+Interest of controlled
+interest in shares
+0.27
+0.67
+Long position
+corporations
+50,223,057
+H
+UBS Group AG
+4.41
+10.83
+806,470,037
+Total:
+0.11
+0.26
+Short position
+26.41
+Person having a security
+corporations
+Total:
+(4)
+in issue
+Nature of
+interest
+Number of
+H/A Shares
+Notes
+Capacity
+Shares
+substantial shareholder
+H/A
+Name of
+H/A shares
+Interest of controlled
+corporations
+shares
+Percentage
+of total
+number of
+Percentage
+Interests and Short Positions of Other Substantial Shareholders
+11.49
+28.21
+Short position
+10.51
+25.79
+1,920,820,469
+2,100,861,881
+of total
+Long position
+Dhanin Chearavanont
+Party to s317 agreement
+Interest of controlled
+Pursuant to the applicable provisions of the Enterprise Income Tax Law of the People's Republic of China
+which came into effect on January 1, 2008 and its implementation rules, the Company shall be obligated
+to withhold 10% enterprise income tax when it distributes 2018 final dividend to non-resident enterprise
+holders of H shares, including Hong Kong Securities Clearing Company Nominees Limited, as listed on the
+Company's register of members of H shares on Thursday, May 30, 2019 (the "Record Date").
+If any resident enterprise (as defined in the Enterprise Income Tax Law of the People's Republic of China)
+listed on the Company's register of members of H shares which is duly incorporated in the PRC or under
+the laws of a foreign country (or a region) but with a PRC-based de facto management body does not
+I want the Company to withhold the said 10% enterprise income tax, it shall submit to Computershare Hong
+Kong Investor Services Limited at or before 4:30 p.m. on Friday, May 24, 2019 a legal opinion, issued by a
+PRC mainland qualified lawyer (inscribed with the seal of the applicable law firm), that verifies its resident
+enterprise status. The legal opinion shall be handed on by the Company to the applicable tax authorities for
+approval, and then excess portions of the tax amounts withheld can be refunded.
+Individual Income Tax Withholding of Overseas Individual Shareholders
+Upon the confirmation of the Company after having made consultation with the relevant tax authorities,
+and pursuant to the applicable provisions of the Individual Income Tax Law of the People's Republic
+of China and its implementation regulations, the individual resident shareholders outside the PRC shall
+pay individual income tax upon their receipt of the distributed dividends in respect of the shares issued
+by domestic non-foreign investment enterprises in Hong Kong, which shall be withheld by obligors on
+behalf of such individual shareholders by law. Those individual resident shareholders outside the PRC
+may, however, enjoy relevant preferential treatments in accordance with the provisions of applicable
+tax agreements signed between the countries or regions where they belong by virtue of residential
+identification and the PRC as well as the tax arrangements made between the Mainland China and Hong
+Kong (Macau).
+Pursuant to relative tax regulations, the Company shall generally be obligated to withhold individual
+income tax at the tax rate of 10% when it distributes the 2018 final dividend to individual holders of H shares
+appearing on the Company's register of members of H shares on the Record Date. However, if the tax
+regulations and relevant tax agreements state otherwise, the Company will withhold and pay the individual
+income tax based on the amount of the dividend at the relevant tax rate and in accordance with the
+procedures as stipulated.
+132
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+If individual holders appear on the Company's register of members of H shares and are citizens from the
+countries or regions applying a tax rate of less than 10% under tax agreements, they are not applicable in
+relation to the withheld individual tax at the rate of 10% by the Company, and the Company may handle
+applications on their behalf for preferential treatments as stipulated in relevant agreements pursuant to
+the Notice of the State Administration of Taxation on Issues about the Administrative Measures for Non-
+residents to Enjoy the Treatments of Tax Treaties (Notice of the State Administration of Taxation [2015] No.
+60). Qualified shareholders are required to submit to Computershare Hong Kong Investor Services Limited
+at or before 4:30 p.m. on Friday, May 24, 2019 a written authorization and relevant evidencing documents,
+which shall be handed on by the Company to the applicable tax authorities for approval, and then excess
+portions of the tax amounts withheld can be refunded.
+The Company will withhold the enterprise income tax as well as the individual income tax for shareholders
+as required by law on the basis of the Company's register of members of H shares on the Record Date. The
+Company assumes no liability and will not deal with any dispute over income tax withholding triggered by
+failure to submit proof materials within the stipulated time frame, and holders of H shares of the Company
+shall either personally or appoint a representative to attend to the procedures in accordance with the
+applicable tax regulations and relevant provisions of the PRC.
+Income Tax Withholding for H Shareholders via the Hong Kong Stock Connect Program
+For Mainland investors (including enterprises and individuals) investing in the Company's H Shares via the
+Hong Kong Stock Connect Program, China Securities Depository and Clearing Corporation Limited, as the
+nominee holding H Shares for investors via the Hong Kong Stock Connect Program, will receive the final
+dividend distributed by the Company and distribute such final dividend to the relevant investors through
+its depositary and clearing system. The final dividend to be distributed to the investors via the Hong
+Kong Stock Connect Program will be paid in Renminbi. Pursuant to the Notice on Tax Policies for Pilot
+Mechanism of Shanghai-Hong Kong Stock Connect Program (Cai Shui [2014] No. 81) and the Notice on Tax
+Policies for Pilot Mechanism of Shenzhen - Hong Kong Stock Connect Program (Cai Shui [2016] No. 127):
+For Mainland individual investors who invest in the H Shares of the Company via the Hong Kong Stock
+Connect Program, the Company will withhold individual income tax at the rate of 20% in the distribution of
+the final dividend. Individual investors may, by producing valid tax payment proofs, apply to the competent
+tax authority of China Securities Depository and Clearing Corporation Limited for tax refund relating to the
+withholding tax already paid abroad. For Mainland securities investment funds that invest in the H Shares
+of the Company via the Hong Kong Stock Connect Program, the Company will withhold individual income
+tax in the distribution of the final dividend pursuant to the above provisions;
+For Mainland enterprise investors that invest in the H Shares of the Company via the Hong Kong Stock
+Connect Program, the Company will not withhold income tax in the distribution of the final dividend and
+the Mainland enterprise investors shall declare and pay the tax on their own.
+Income Tax Withholding for A Shareholders via the Shanghai Stock Connect Program
+For Hong Kong investors (including enterprises and individuals) investing in the Company's A Shares
+via the Shanghai Stock Connect Program, the final dividend will be paid in Renminbi by the Company
+through the Shanghai Branch of China Securities Depository and Clearing Corporation Limited to Hong
+Kong Securities Clearing Company Limited, and the Company will withhold income tax at the rate of 10%
+as stipulated in the Notice on Tax Policies for Pilot Mechanism of Shanghai-Hong Kong Stock Connect
+Program (Cai Shui [2014] No. 81).
+For investors via the Shanghai Stock Connect Program who are tax residents of other countries or regions
+(excluding Hong Kong), which have entered into a tax treaty with the PRC stipulating a dividend tax rate
+of less than 10%, those enterprises or individuals may, or may entrust a withholding agent to, apply to the
+competent tax authorities of the Company for the entitlement of the rate under such tax treaty. Upon
+approval by the tax authorities, the paid amount in excess of the tax payable based on the tax rate under
+such tax treaty will be refunded.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 133
+CORPORATE GOVERNANCE
+Significant Events
+All investors are requested to read this part carefully. Shareholders are recommended to consult their
+tax advisors for tax effects regarding their holding and disposing of the shares of the Company, involving
+the PRC, Hong Kong and other countries and regions. The Company will announce detailed arrangement
+regarding the income tax withholding when it distributes 2018 final dividend to holders of A shares on the
+website of SSE separately.
+FULFILLMENTS OF UNDERTAKINGS
+Enterprise Income Tax Withholding of Overseas Non-Resident Enterprises
+INCOME TAX WITHHOLDING
+During the Reporting Period, the Company had no failure to abide by any effective judicial ruling.
+INTEGRITY CONDITIONS OF THE COMPANY
+The Company has fulfilled its obligation to disclose information on external guarantee and honestly
+provided chartered accountants with all the details about the Company's external guarantee, in strict
+compliance with the relevant requirements under the SSE Listing Rules and the Articles of Association.
+ENTRUSTMENT, UNDERWRITING, LEASE, ENTRUSTED ASSET MANAGEMENT, ENTRUSTED LOAN AND
+OTHER MATERIAL CONTRACTS
+No matter relating to entrustment, underwriting, lease or other material contracts of the Company was
+required to be disclosed during the Reporting Period.
+During the Reporting Period, the Company engaged in no entrusted asset management or entrusted
+lending outside the normal business scope. For details of the Company's entrusted asset management and
+entrusted lending, refer to the "Notes to Consolidated Financial Statements."
+SEIZURE, DISTRAINMENT OR FREEZE OF MAJOR ASSETS
+During the Reporting Period, the Company had no event of seizure, distrainment or freeze of major assets
+that was required to be disclosed.
+MATERIAL LITIGATIONS AND ARBITRATIONS
+During the Reporting Period, the Company had no material litigations or arbitrations that were required to
+be disclosed.
+CHANGES IN ACCOUNTING POLICIES OR ACCOUNTING ESTIMATES, CORRECTIONS OF MATERIAL
+ACCOUNTING MISTAKES
+Details of changes in accounting policies and accounting estimates of the Company during the Reporting
+Period are set out in note 2.(2) to the consolidated financial statements.
+Undertakings in Respect of the Major Asset Restructuring with Shenzhen Development Bank
+During the Reporting Period, there was no material accounting mistake made by the Company.
+Information on the Company's auditors and the remuneration paid to the auditors is set out in the sections
+titled "Report of the Board of Directors" and "Corporate Governance Report."
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+131
+CORPORATE GOVERNANCE
+Significant Events
+APPOINTMENT OF INTERNAL CONTROL AUDITOR
+Information on the Company's internal control auditors and the remuneration paid to such auditors is set
+out in the sections titled "Report of the Board of Directors" and "Corporate Governance Report."
+PUNISHMENTS AND RECTIFICATIONS
+During the Reporting Period, neither the Company nor the Directors, Supervisors, or senior management
+of the Company were investigated by competent authorities, subjected to coercive measures by judicial
+authorities or disciplinary authorities, transferred to judicial authorities or held accountable for criminal
+liabilities, investigated or punished, barred from the market or disqualified by the CSRC, subjected to
+major administrative punishments by environmental protection, work safety, tax or other administrative
+authorities, or denounced by any stock exchanges publicly.
+APPOINTMENT OF AUDITOR
+The Company has strictly observed the approval procedures and internal control policies regarding
+external guarantee as set out in the Articles of Association, and there was no irregular external
+guarantee;
+(1) The Company undertakes that, after the completion of the major asset restructuring with Shenzhen
+Development Bank, and during the period when the Company remains as the controlling shareholder
+of Shenzhen Development Bank, and in respect of the businesses or commercial opportunities similar
+to those of Shenzhen Development Bank that the Company and the enterprises under its control
+intend to carry out or have substantially obtained whereby the assets and businesses arising from
+such businesses or commercial opportunities may possibly form potential competition with those of
+Shenzhen Development Bank, the Company and the enterprises under its control shall not engage in
+the businesses identical or similar to those carried out by Shenzhen Development Bank, so as to avoid
+direct or indirect competition with the operations of Shenzhen Development Bank.
+(3) The Company undertakes that, after the completion of the major asset restructuring and during the
+period when the Company remains as the controlling shareholder of Shenzhen Development Bank, the
+Company shall maintain the independence of Shenzhen Development Bank and ensure that Shenzhen
+Development Bank is independent from the Company and the enterprises under its control in respect
+of personnel, assets, finance, organization and business.
+Group Company Limited
+Interest of controlled
+corporations
+Number of
+H/A Shares
+1,966,603,275
+Nature of
+interest
+in issue
+in issue
+(%)
+(%)
+Long position
+26.41
+10.76
+Party to s317 agreement
+Total:
+(1), (2)
+88,708,000
+2,055,311,275
+Long position
+1.19
+0.49
+27.60
+11.24
+Interest of controlled
+corporations
+H
+Charoen Pokphand
+Notes
+Capacity
+As at December 31, 2018, the above undertakings were still being performed and there was no breach of the
+above undertakings.
+Undertaking in Respect of the Issuance of Ping An Convertible Bonds
+During the period of issuing Ping An Convertible Bonds by the Company, in terms of certain subsidiaries
+engaging in construction of properties for self-use purpose and retirement communities, the Company
+undertakes that, it complies and will strictly comply with relevant regulations in relation to the insurance
+funds used in real estate investment and the principle that the insurance funds should only be applied
+for specific property development purpose without the motive of property speculation or sale in an
+inappropriate form. It will not develop or sell commercial housing by means of investment in retirement
+communities or real estate for self-use purpose.
+As at December 31, 2018, the above undertaking was still being performed and there was no breach of the
+above undertaking.
+134
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Undertaking in Respect of the Subscription for 210,206,652 New Shares of Ping An Bank Through
+Non-Public Issuance
+In relation to the subscription for 210,206,652 new shares of Ping An Bank through non-public issuance, the
+Company undertakes that it shall not transfer the shares within 36 months since the date of listing of the
+new shares (i.e. May 21, 2015). Such shares shall not be disposed of or transferred among its non-connected
+or connected parties during the lock-up period. In addition, no arrangement of any other disposal of
+interests shall be entered into with respect to such shares during the lock-up period.
+As at December 31, 2018, the above undertaking had been fulfilled.
+(2) The Company undertakes that, after the completion of the major asset restructuring with Shenzhen
+Development Bank, and in respect of the transactions between the Company and the enterprises
+under its control and Shenzhen Development Bank which constitute the connected transactions of
+Shenzhen Development Bank, the Company and the enterprises under its control shall enter into
+such transactions with Shenzhen Development Bank by following the principle of "openness, fairness
+and justness" at fair and reasonable market prices, and shall go through the decision-making process
+according to the requirements of the relevant laws and regulations and regulatory documents, and
+shall perform their obligations of information disclosure as required by law. The Company undertakes
+that the Company and the enterprises under its control shall not procure any illegal interests or make
+Shenzhen Development Bank undertake any illicit obligations through the transactions with Shenzhen
+Development Bank.
+INFORMATION DISCLOSED UNDER H SHARES REGULATORY REQUIREMENTS
+As far as is known to any Directors or Supervisors of the Company, as at December 31, 2018, the following
+persons (other than the Directors, Supervisors and chief executive of the Company) had interests or short
+positions in the shares or underlying shares of the Company which shall be disclosed to the Company
+pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or recorded in the register required to
+be kept by the Company pursuant to Section 336 of the SFO:
+Interests and short positions of substantial shareholders who are entitled to exercise or control the
+exercise of 10% or more of the voting power at any general meetings of shareholders of the Company
+Percentage
+of total
+number of
+H/A shares
+Percentage
+of total
+shares
+Name of
+substantial shareholder
+H/A
+Shares
+Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying
+Shares of the Company
+During the Reporting Period, the total guarantee withdrawal provided by the Company and its
+subsidiaries amounted to RMB27,705 million. As at December 31, 2018, the total guarantee balance
+of the Company and its subsidiaries was RMB44,140 million, representing approximately 7.9% of the
+Company's net assets. The sum did not exceed 50% of the net assets as stated in the consolidated
+financial statements of the latest fiscal year of the Company;
+4.
+3.
+The Number of Options
+Exercise price
+(per Autohome
+Share, US$)
+Balance
+as at
+January 1,
+2018
+Granted
+during the
+Reporting
+Period
+Lapsed
+during the
+Reporting
+Period
+Exercised
+during the
+Reporting
+Period
+Balance
+as at
+December 31,
+2018
+CORPORATE GOVERNANCE
+Type of grantees
+Employee
+Exercise period
+Not exceeding 10
+years from the
+date of grant
+22.19-83.27
+611,526
+355,545
+3,750
+70,039
+893,282
+SHARE INCENTIVE SCHEME OF SHANGHAI JAHWA OF 2018 ("SHANGHAI JAHWA SHARE INCENTIVE
+SCHEME")
+The 2017 Annual General Meeting held by the Company on May 23, 2018 deliberated and approved the
+Shanghai Jahwa Share Incentive Scheme, involving the grant of options ("Shanghai Jahwa Options”) to,
+or for the benefit of, specified participants to subscribe for ordinary shares of Shanghai Jahwa ("Shanghai
+Jahwa Shares").
+The purpose of Shanghai Jahwa Share Incentive Scheme is to further improve Shanghai Jahwa's
+corporate governance structure, promote the establishment and improvement of its incentive and
+restraint mechanism, encourage the initiative and commitment of its directors, senior management and
+key employees, so as to effectively align the shareholders' interests, Shanghai Jahwa's interests, and
+operators' individual interests, and make all parties stay focused on and strive for the long-term sustainable
+development of Shanghai Jahwa.
+As at December 31, 2018, the Autohome Options granted pursuant to the Autohome 2016 Share Incentive
+Plan are as follows:
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+128
+H
+1.56
+3.84
+Short position
+285,847,741
+(1)
+The participants were 1,296 key employees of the Company and its subsidiaries including the directors,
+employee representative supervisors, and senior management. The sources of funding were legitimate
+salaries and performance bonuses of the employees.
+The share purchase was conducted by the manager of the Plan, China Merchants Securities Asset
+Management Co., Ltd. on April 27, 2018 in the secondary market; 9,666,900 A shares of the Company in total
+were purchased for a total price of RMB592,698,901.19 (expenses inclusive) and an average price of RMB61.29
+per share, accounting for 0.053% of the total share capital of the Company at that time. These shares are
+subject to a lock-up period from May 2, 2018 to May 1, 2019. For details of the share purchase, please refer
+to the Announcement regarding the Completion of Share Purchase under the 2018 Key Employee Share
+Purchase Plan published by the Company on the websites of the HKEX and the SSE on May 1, 2018 and May
+2, 2018 respectively. During the Reporting Period, there was no change in equity as a result of disposal by
+holders of the Plan.
+The manager of the Plan is China Merchants Securities Asset Management Co., Ltd., and was not changed
+during the Reporting Period.
+Ping An Insurance (Group) Company of China, Ltd.
+Pursuant to the terms of the Shanghai Jahwa Share Incentive Scheme, the incentive participants of the
+Shanghai Jahwa Share Incentive Scheme comprise the following persons, and shall exclude independent
+directors and supervisors, as well as shareholders individually or in aggregate holding 5% or more of the
+shares of Shanghai Jahwa or the de facto controllers and their spouses, parents or children: directors
+and senior management of Shanghai Jahwa, and the core management personnel and core technical
+personnel who have direct influence on the overall results and sustainable development of Shanghai
+Jahwa. Such personnel refer to those who report directly to the Chief Executive Officer and those who
+are independently responsible for different units and businesses of Shanghai Jahwa, including branding,
+research and development, supply chain, financing, human resources and strategic investment.
+CORPORATE GOVERNANCE
+IMPLEMENTATION OF SHARE INCENTIVE SCHEME OF THE COMPANY AND ITS EFFECTS
+During the Reporting Period, the Company did not implement any share incentive scheme based on the
+Company's shares.
+AMENDED AND RESTATED 2016 SHARE INCENTIVE PLAN OF AUTOHOME INC. ("AUTOHOME 2016
+SHARE INCENTIVE PLAN")
+The Annual General Meeting held by the Company on June 16, 2017 deliberated and approved the
+Autohome 2016 Share Incentive Plan with respect to the grant of options (“Autohome Options”) to the
+directors, consultants, and employees of Autohome Inc. to purchase Class A ordinary shares of Autohome
+Inc. ("Autohome Shares"), restricted shares or restricted stock units and share appreciation rights.
+The purpose of the Autohome 2016 Share Incentive Plan is intended to provide the relevant participants
+with an incentive for outstanding performance to generate superior returns to Autohome Inc.'s
+shareholders. The Autohome 2016 Share Incentive Plan is also intended to provide flexibility to Autohome
+Inc. in its ability to motivate, attract, and retain its directors, employees, and consultants upon whose
+judgment, interest, and special effort the successful conduct of Autohome Inc.'s operation is largely
+dependent.
+Pursuant to the terms of the Autohome 2016 Share Incentive Plan, Autohome Inc.'s board of directors or
+its compensation committee authorized by the board of directors ("Autohome Committee") may grant
+Autohome incentive awards to eligible participants, including the employees, consultants and all directors
+of Autohome Inc., based on their past, present and expected commitment and contribution to Autohome
+Inc. and/or the related entities, as the Autohome Committee may determine.
+The total number of Autohome Shares which may be issued upon exercise of all Autohome Options to be
+granted under the Autohome 2016 Share Incentive Plan and any other share option schemes of Autohome
+Inc. must not in aggregate exceed 10% of the issued and outstanding Autohome Shares as of June 16,
+2017, on which the shareholders of the Company approved the Autohome 2016 Share Incentive Plan,
+unless further shareholders' approval from the shareholders of Autohome Inc. and the Company have
+been obtained. According to the Autohome 2016 Share Incentive Plan, the maximum aggregate number of
+Autohome Shares issuable pursuant to all awards under this plan is 4,890,000, representing approximately
+4.14% of the total issued and outstanding Autohome Shares as at the date of this report. Unless approved
+by the shareholders of Autohome Inc. and the Company in the manner set out in the Autohome 2016 Share
+Incentive Plan, the total number of Autohome Shares issued and to be issued upon the exercise of the
+Autohome Options granted and to be granted to any participant (including both exercised and outstanding
+Autohome Options) in any 12-month period up to and including the date of grant shall not exceed 1% of
+the issued and outstanding Autohome Shares as at the date of grant.
+The exercise price per Autohome Share subject to an Autohome Option shall be determined by the
+Autohome Committee and set forth in the award agreement which may be a fixed or variable price related
+to the fair market value of the Autohome Shares, to the extent not prohibited by the applicable laws.
+Autohome Inc., as a company listed on the New York Stock Exchange, files its annual financial results with
+the U.S. Securities and Exchange Commission under the relevant regulatory rules of the U.S. Considering
+the consistency of information disclosure, the Company would not herein disclose the value of the
+Autohome Options granted to the participants during the Reporting Period and the relevant accounting
+policies.
+The Autohome Committee has the discretion to fix any minimum period(s) for which an Autohome Option
+or any part thereof has to be held before the exercise of the subscription rights attaching thereto. The
+Autohome 2016 Share Incentive Plan will expire on the tenth anniversary of the effective date, being March
+21, 2027.
+28
+Significant Events
+The total number of Shanghai Jahwa Shares which may be issued upon exercise of all Shanghai Jahwa
+Options to be granted under the Shanghai Jahwa Share Incentive Scheme and any other share option
+schemes of Shanghai Jahwa must not in aggregate exceed 10% of the issued and outstanding Shanghai
+Jahwa Shares as of May 23, 2018, on which the shareholders of the Company approved the Shanghai Jahwa
+Share Incentive Scheme. According to the Shanghai Jahwa Share Incentive Scheme, the maximum number
+of Shanghai Jahwa Shares to be issued is 4,250,000, representing approximately 0.63% of the total issued
+shares of Shanghai Jahwa as at the date of this report. Unless otherwise approved by a special resolution
+at the general meeting of Shanghai Jahwa, the cumulative total number of Shanghai Jahwa Shares to
+be granted to any of the incentive participant under the fully effective Shanghai Jahwa Share Incentive
+Scheme shall not exceed 1% of the total share capital of Shanghai Jahwa.
+The exercise price per Shanghai Jahwa Share of a Shanghai Jahwa Option shall be determined by the
+board of directors of Shanghai Jahwa. For details of the value of Shanghai Jahwa Options and related
+accounting policies, please refer to the announcement published by Shanghai Jahwa on the website of SSE
+(www.sse.com.cn) dated July 25, 2018.
+The board of directors of Shanghai Jahwa has the discretion to fix any minimum period(s) for which a
+Shanghai Jahwa Option or any part thereof has to be held before the exercise of the subscription rights
+attaching thereto. The Shanghai Jahwa Share Incentive Scheme is valid from the date of grant of Shanghai
+Jahwa Options and expires on the date of all Shanghai Jahwa Options granted to participants being
+exercised or cancelled, and not exceeding 68 months.
+Total external guarantee incurred during the Reporting Period
+Total external guarantee balance as at the end of the Reporting Period
+Guarantee of the Company and its subsidiaries in favor of its subsidiaries
+Total guarantee in favor of its subsidiaries incurred during the Reporting Period
+Total guarantee balance in favor of its subsidiaries as at the end of the Reporting Period
+Total guarantee of the Company
+(including the guarantee in favor of its subsidiaries)
+11,913
+44,140
+Total guarantee
+44,140
+Total guarantee as a percentage of the Company's net assets (%)
+7.9
+External guarantee of the Company and its subsidiaries
+(excluding the guarantee in favor of its subsidiaries)
+Including: Direct or indirect guarantee for the companies with a total liabilities to total
+assets ratio over 70% (as at December 31, 2018)
+The amount by which the total guarantee balance of the Company and
+its subsidiaries exceeded 50% of the Company's net asset
+Notes: (1) The data set out in the table above does not include those arising from financial guarantee businesses conducted by Ping
+An Bank (the controlled subsidiary) and other subsidiaries of the Company in strict compliance with the scope of business
+approved by regulatory authorities.
+(2) During the Reporting Period, the total guarantee incurred was the guarantee withdrawal of RMB27,705 million less the guarantee
+repayment of RMB15,792 million.
+130
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+INDEPENDENT OPINIONS OF INDEPENDENT NON-EXECUTIVE DIRECTORS ON EXTERNAL GUARANTEE
+OF THE COMPANY
+According to the relevant requirements of the Notice Concerning the Regulation on the Flow of Funds
+Between Listed Companies and Their Connected Parties and the Provision of Guarantees by Listed
+Companies to External Parties as well as the Notice Regarding the Regulation on the Provision of
+External Guarantee by Listed Companies set out by the CSRC, the Independent Non-executive Directors
+of the Company conducted a prudent review of the Company's external guarantee in 2018. Their specific
+statements and independent opinions are set out as follows:
+1. During the Reporting Period, the Company did not provide any guarantee to its controlling
+shareholder and other connected parties in which the Company holds less than 50% shares, or any
+non-legal entities or individuals;
+2.
+41,596
+1,966,603,275
+(in RMB million)
+The above transaction would not be regarded as a connected transaction of the Company as defined under
+the HKEX Listing Rules.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+129
+Significant Events
+As at December 31, 2018, the details and movements of the Shanghai Jahwa Share Incentive Scheme in
+relation to the Shanghai Jahwa Options are as follows:
+Exercise price
+(per Shanghai
+Jahwa Share,
+RMB)
+Balance
+as at
+January 1,
+2018
+Type of
+grantees
+Employee
+Exercise period
+Not exceeding 68
+MATERIAL CONTRACTS AND THEIR PERFORMANCE
+Guarantee
+months from the
+date of grant
+The Number of Options
+Granted
+during the
+Reporting
+Period
+Lapsed
+during the
+Reporting
+Period
+3,400,000
+Exercised
+during the
+Reporting
+Period
+Balance
+as at
+December 31,
+2018
+-- 3,400,000
+DAY-TO-DAY CONNECTED TRANSACTIONS
+The 2nd meeting of the 11th Board of Directors was convened on August 21, 2018 by the Company,
+during which the Resolution regarding Continuing Day-to-day Connected Transactions between Ping
+An Group and Connected Parties was considered and approved. Pursuant to the Resolution, the Group
+was authorized to enter into connected transactions at fair market price with Ping An Good Doctor,
+OneConnect, Ping An HealthKonnect, Lufax Holding and the connected parties under their control
+("Connected Parties") respectively within the ordinary course of business. The annual aggregated amount
+of connected transactions entered into between the Group and the Connected Parties shall not exceed
+5% of the latest audited net assets of the Group for the year. A transaction that falls within the scope
+of the authorization limit may no longer require the corresponding approval procedures and disclosure
+obligations. For details please refer to "Continuing Day-to-day Connected Transactions Announcement"
+published by the Company on Shanghai Securities News, China Securities Journal, Securities Times,
+Securities Daily and the website of SSE (www.sse.com.cn) on August 22, 2018.
+35.57
+0.33
+127
+100.00
+BlackRock Luxembourg Holdco S.à r.l.
+100.00
+N
+Long position
+36,577,341
+BlackRock Asset Management Ireland
+Limited
+BlackRock Investment Management
+Ireland Holdings Limited
+100.00
+Y
+Long position
+36,577,341
+BLACKROCK (Luxembourg) S.A.
+BlackRock Luxembourg Holdco S.à r.l.
+100.00
+BlackRock Investment Management Ireland
+Holdings Limited
+Y
+16,907,500
+36,000
+BlackRock Investment Management (UK)
+Limited
+BlackRock Finance Europe Limited
+100.00
+N
+Long position
+15,867,280
+BlackRock Investment Management (UK)
+Limited
+BlackRock Finance Europe Limited
+100.00
+Y
+Long position
+22,019,345
+BlackRock Investment Management(UK)
+Limited - German Branch - Frankfurt
+BlackRock
+Long position
+Short position
+BlackRock Investment Management
+(UK) Limited
+36,000
+Long position
+Short position
+BlackRock Advisors (UK) Limited
+BlackRock Finance Europe Limited
+100.00
+Y
+Long position
+538,500
+BlackRock International Limited
+BlackRock Group Limited
+100.00
+N
+Long position
+4,961,593
+BlackRock International Limited
+BlackRock Group Limited
+53,529,341
+100.00
+Long position
+5,387,000
+Black Rock Group Limited-Luxembourg
+Branch
+BlackRock Group Limited
+100.00
+N
+Long position
+53,529,341
+Short position
+36,000
+BlackRock Luxembourg Holdco S.à r.l.
+Black Rock Group Limited-
+Luxembourg Branch
+100.00
+N
+Y
+740,500
+100.00
+Long position
+Y
+Long position
+44,500
+BlackRock Investment Management
+(Taiwan) Limited
+BlackRock Lux Finco S.à r.l.
+100.00
+Y
+Long position
+2,000
+Phoenix Acquisition B.V.
+BR Jersey International Holdings L.P.
+100.00
+N
+Long position
+100.00
+203,168
+Phoenix Acquisition B.V
+99.90
+Y
+Long position
+203,168
+144
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+(6)
+The entire interests of BlackRock, Inc. in the Company included 668,500 H shares (Long position) and 173,000 H shares (Short
+position) which were held through derivatives, the category of which were cash settled unlisted derivatives.
+Citigroup Inc. was deemed to be interested in a total of 60,225,545 H shares (Long position) and 29,597,482 H shares (Short position) in
+the Company by virtue of its control over several corporations.
+According to the disclosure form filed by Citigroup Inc. on September 5, 2018, the following interests in H shares of the Company
+were held by Citigroup Inc. through its controlled corporations, the details of which are as follows:
+CORPORATE GOVERNANCE
+Percentage
+Black Rock Mexico Operadora
+N
+BlackRock UK Holdco Limited
+44,500
+326,000
+BlackRock Asset Management
+Deutschland AG
+BlackRock Investment Management(UK)
+Limited - German Branch - Frankfurt
+BlackRock
+100.00
+Y
+Long position
+326,000
+BlackRock Fund Managers Limited
+BlackRock Investment Management
+(UK) Limited
+100.00
+Y
+Long position
+15,541,280
+BlackRock Life Limited
+BlackRock Asset Management
+(Schweiz) AG
+BlackRock International Limited
+Y
+Long position
+4,961,593
+BlackRock (Singapore) Limited
+BlackRock (Singapore) Holdco Pte. Ltd.
+100.00
+Y
+Long position
+1,641,500
+BlackRock UK Holdco Limited
+BlackRock Luxembourg Holdco S.à r.l.
+100.00
+N
+Long position
+100.00
+of control
+Long position
+100.00
+Long position
+103,788,559
+Short position
+36,000
+BlackRock Canada Holdings LP
+BlackRock Holdco 3, LLC
+99.90
+N
+Long position
+745,000
+BlackRock Canada Holdings ULC
+BlackRock Canada Holdings LP
+100.00
+N
+N
+Long position
+BlackRock Asset Management Canada
+Limited
+BlackRock Canada Holdings ULC
+100.00
+Y
+Long position
+745,000
+BlackRock Australia Holdco Pty. Ltd.
+BR Jersey International Holdings L.P.
+100.00
+N
+Long position
+3,000,000
+BlackRock Investment Management
+(Australia) Limited
+BlackRock Australia Holdco Pty. Ltd.
+745,000
+100.00
+100.00
+BlackRock Holdco 3, LLC
+BlackRock International Holdings, Inc.
+86.00
+N
+Long position
+Short position
+158,659,834
+36,000
+BlackRock Lux Finco S.à r.l.
+BlackRock HK Holdco Limited
+100.00
+N
+Long position
+28,055,779
+BlackRock Trident Holding Company
+Limited
+BlackRock Lux Finco S.à r.l.
+BR Jersey International Holdings L.P.
+100.00
+Long position
+28,053,779
+BlackRock Japan Holdings GK
+BlackRock Trident Holding
+Company Limited
+100.00
+N
+Long position
+28,053,779
+BlackRock Japan Co., Ltd.
+BlackRock Japan Holdings GK
+100.00
+Y
+Long position
+28,053,779
+N
+Y
+Y
+3,000,000
+Long position
+Short position
+103,043,559
+36,000
+Black Rock Group Limited
+BlackRock Cayman West Bay
+IV Limited
+90.00
+N
+Long position
+Short position
+103,043,559
+36,000
+BlackRock Finance Europe Limited
+Black Rock Group Limited
+100.00
+N
+Long position
+39,165,625
+N
+Annual Report 2018
+CORPORATE GOVERNANCE
+Significant Events
+Percentage
+Direct
+of control
+interest
+Nature of
+Number of
+Name of controlled corporation
+BlackRock (Netherlands) B.V.
+Name of controlling shareholder
+BlackRock Finance Europe Limited
+(%)
+(Y/N)
+interest
+shares
+Ping An Insurance (Group) Company of China, Ltd. 143
+Long position
+100.00
+BlackRock Cayman West Bay IV Limited
+BlackRock (Singapore) Holdco Pte. Ltd.
+BR Jersey International Holdings L.P.
+100.00
+N
+Long position
+51,668,107
+BlackRock HK Holdco Limited
+BlackRock (Singapore) Holdco Pte. Ltd.
+100.00
+N
+Long position
+50,026,607
+BlackRock Asset Management North Asia
+Limited
+BlackRock HK Holdco Limited
+BlackRock Cayman West Bay
+Finco Limited
+100.00
+Long position
+21,970,828
+BlackRock Cayman 1 LP
+BlackRock Holdco 3, LLC
+100.00
+N
+Long position
+Short position
+103,043,559
+36,000
+BlackRock Cayman West Bay Finco Limited
+BlackRock Cayman 1 LP
+100.00
+N
+Long position
+Short position
+103,043,559
+36,000
+Y
+BR Jersey International Holdings L.P.
+Name of controlled corporation
+Name of controlling shareholder
+Citigroup Inc.
+Citicorp Banking Corporation
+Citibank (Switzerland) AG
+224,500
+0
+Long position
+Short position
+N
+100.00
+Citigroup Inc.
+Citicorp Banking Corporation
+12,010,996
+2,784,160
+Long position
+Short position
+Y
+92.00
+Citigroup Global Markets Holdings
+Bahamas Limited
+Citigroup Global Markets Limited
+100.00
+2,784,160
+12,010,996
+Long position
+N
+49.50
+Citigroup Global Markets Holdings Bahamas Citigroup Financial Products Inc.
+Limited
+12,010,996
+2,784,160
+Long position
+Short position
+N
+50.20
+Citigroup Global Markets Holdings Bahamas Citigroup Global Markets (International)
+Limited
+Finance AG
+32,420
+0
+Short position
+Long position
+Y
+Short position
+100.00
+Y
+224,500
+0
+Direct
+Percentage
+Significant Events
+Ping An Insurance (Group) Company of China, Ltd. 145
+Annual Report 2018
+0
+80,860
+Long position
+Short position
+N
+100.00
+Citigroup International Luxembourg Limited Citi Overseas Investments Bahamas Inc.
+80,860
+0
+Long position
+Short position
+N
+Long position
+Short position
+100.00
+Citibank Overseas Investment
+Citi Overseas Investments Bahamas Inc.
+80,860
+0
+Long position
+Short position
+N
+100.00
+Citibank, N.A.
+Citibank Overseas Investment Corporation
+97,298
+0
+Long position
+Short position
+N
+100.00
+Citicorp LLC
+Citibank, N.A.
+Corporation
+of control
+Citigroup Financial Products Inc.
+37,657,969
+24,494,103
+562,700,456
+1,808,800
+53,539,200
+Number of shares
+93,922,500
+100,784,500
+Long position
+Short position
+Long position
+Short position
+Long position
+Short position
+Long position
+Short position
+Long position
+Short position
+Nature of interest
+Convertible instruments
+Listed derivatives -
+Unlisted derivatives -
+Cash settled
+Unlisted derivatives -
+Physically settled
+Cash settled
+155,825,818
+Listed derivatives -
+Derivatives
+The entire interests of JPMorgan Chase & Co. in the Company included a lending pool of 221,672,394 H shares (Long position).
+Besides, 693,372,998 H shares (Long position) and 729,871,154 H shares (Short position) were held through derivatives as follows:
+0
+32,012
+Long position
+Short position
+N
+100.00
+0
+723,000
+Long position
+Short position
+N
+100.00
+shares
+interest
+Listed derivatives -
+Physically settled
+Citigroup Global Markets Inc.
+29,892,732
+365,914,411
+53,807,225
+Short position
+Long position
+Y
+100.00
+Citigroup Financial Products Inc.
+Citigroup Global Markets Hong Kong
+Limited
+392,893
+400,741
+Long position
+Short position
+Y
+UBS Group AG
+UBS Bank (Canada)
+1,660,675,543
+2,056,397,106
+Short position
+Long position
+5,048,510
+Y
+shares
+Number of
+Nature of
+Interest
+(Y/N)
+(%)
+Direct
+interest
+Percentage
+of control
+UBS Group AG
+Name of controlling
+shareholder
+UBS AG
+Name of controlled corporation
+According to the disclosure form filed by UBS Group AG on January 3, 2019, the following interests in H shares were held by UBS
+Group AG through its controlled corporations, the details of which are as follows:
+UBS Group AG was deemed to be interested in a total of 1,870,597,412 H shares (Long position) and 2,100,861,881 H shares (Short
+position) in the Company by virtue of its control over several corporations.
+(4)
+100.00
+Citicorp LLC
+interest
+Name of controlled corporation
+100.00
+N
+Long position
+12,558,152
+Short position
+2,784,160
+Citigroup Global Markets Overseas Finance
+Limited
+Citigroup Global Markets (International)
+Finance AG
+51.86
+N
+Long position
+547,157
+Short position
+0
+Citigroup Financial Products Inc.
+Citigroup Global Markets Overseas Finance
+Limited
+48.14
+N
+Long position
+547,157
+Short position
+0
+Citigroup Global Markets Hong Kong
+Holdings Limited
+Citigroup Global Markets Overseas
+Finance Limited
+100.00
+N
+Long position
+Short position
+547,157
+0
+Citigroup First Investment Management
+Limited
+Citigroup Global Markets Switzerland
+Holding GmbH
+Citigroup Global Markets Overseas
+Finance Limited
+Citigroup Global Markets (International)
+Finance AG
+Short position
+(%)
+Direct
+interest
+(Y/N)
+Nature of
+interest
+Number of
+100.00
+N
+Long position
+Short position
+shares
+426,274,119
+1,918,478
+Citibank, N.A.
+Citicorp LLC
+100.00
+Y
+Long position
+Short position
+22,278,263
+426,176,821
+Citigroup Global Markets Holdings Inc.
+Citigroup Inc.
+100.00
+N
+Long position
+50,248,542
+Short position
+22,278,263
+Citigroup Financial Products Inc.
+Citigroup Global Markets Holdings Inc.
+100.00
+N
+Long position
+50,248,542
+1,918,478
+Nature of
+100.00
+Long position
+100.00
+Citibank, N.A.
+Citicorp Trust South Dakota
+0
+6,238
+Long position
+Short position
+Y
+100.00
+Citibank, N.A.
+Citicorp Trust Delaware, National
+Association
+0
+80,860
+Long position
+Short position
+Y
+Y
+100.00
+Cititrust (Bahamas) Limited
+0
+Short position
+Limited
+80,860
+Long position
+N
+100.00
+Number of
+shares
+interest
+(Y/N)
+(%)
+Name of controlling shareholder
+Citigroup Participation Luxembourg Limited Citigroup International Luxembourg
+Citigroup Participation Luxembourg
+Limited
+Y
+Long position
+Short position
+547,157
+Short position
+0
+Citigroup Global Markets Holdings Inc.
+Citigroup Inc.
+13,420,162
+11,697,021
+20,138,346
+10,345,000
+15,782,100
+181,492
+305,670
+Number of shares
+Long position
+Short position
+Short position
+10,200
+Long position
+Long position
+Short position
+Long position
+Nature of interest
+Unlisted derivatives -
+Cash settled
+Physically settled
+Unlisted derivatives -
+Physically settled
+Listed derivatives -
+convertible instruments
+Listed derivatives -
+Derivatives
+The entire interests and short positions of Citigroup Inc. in the Company included a lending pool of 416,914,509 H shares (Long
+position). Besides, 49,522,100 H shares (Long position) and 25,003,389 H shares (Short position) were held through derivatives as
+follows:
+0
+Short position
+(Y/N)
+158,659,834
+36,000
+N
+100.00
+UBS Group AG
+UBS Asset Management Trust Company
+28,003,000
+250,000
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Asset Management (Singapore) Ltd
+0
+681,500
+Long position
+Short position
+Y
+100.00
+Y
+UBS Group AG
+0
+1,085,500
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Asset Management (Japan) Ltd
+250,000
+15,341,666
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Asset Management
+(Hong Kong) Ltd.
+UBS Asset Management Life Limited
+0
+Long position
+Short position
+0
+UBS Limited
+0
+345,931
+Long position
+Short position
+Company S.A.
+Y
+100.00
+UBS Group AG
+UBS Third Party Management
+0
+13,399,000
+Long position
+Short position
+Y
+100.00
+3,432,500
+UBS Group AG
+0
+72,413,694
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Fund Management
+(Luxembourg) S.A.
+0
+21,966,066
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Asset Management (UK) Limited
+UBS Fund Management
+(Switzerland) AG
+UBS Group AG
+Short position
+Long position
+UBS Group AG
+UBS Trustees (Singapore) Limited
+0
+Short position
+42,000
+Long position
+Y
+100.00
+UBS Group AG
+UBS Trustees (Jersey) Limited
+0
+Short position
+12,000
+Long position
+100.00
+Y
+UBS Group AG
+UBS Trustees (Cayman) Limited
+0
+Short position
+137,000
+Long position
+Y
+100.00
+Notes:
+(1)
+CP Group Ltd. was deemed to be interested in a total of 1,966,603,275 H shares (Long position) and 285,847,741 H shares (Short
+position) in the Company by virtue of its control over several corporations.
+According to the disclosure form filed by CP Group Ltd. on January 2, 2019, the following interests in H shares were held by CP
+Group Ltd. through its controlled corporations, the details of which are as follows:
+Name of controlled corporation
+CPG Overseas Company Limited
+Name of controlling shareholder
+Charoen Pokphand Group Company
+Limited
+100.00
+635,724
+Y
+14,000
+Y
+100.00
+UBS Group AG
+UBS Asset Management
+(Deutschland) GmbH
+0
+Short position
+3,159,000
+Long position
+Y
+100.00
+UBS Group AG
+UBS Asset Management (Canada) Inc.
+0
+Short position
+Long position
+468,500
+Y
+100.00
+UBS Group AG
+UBS Asset Management (Australia) Ltd
+0
+Short position
+3,384,330
+Long position
+Y
+100.00
+UBS Group AG
+UBS Asset Management (Americas) Inc.
+0
+Short position
+Long position
+Percentage
+2,655,698
+Y
+230,622,844
+468,000
+Long position
+Short position
+N
+100.00
+BlackRock Financial Management, Inc.
+BlackRock Holdco 4, LLC
+12,554,593
+Long position
+Y
+100.00
+BlackRock Holdco 2, Inc.
+BlackRock Financial Management, Inc.
+545,000
+394,990,678
+BlackRock Holdco 6, LLC
+Long position
+Short position
+100.00
+BlackRock Holdco 2, Inc.
+BlackRock Financial Management, Inc.
+545,000
+407,545,271
+Long position
+Short position
+N
+100.00
+BlackRock, Inc.
+Trident Merger, LLC
+BlackRock Holdco 2, Inc.
+5,436,746
+Long position
+Y
+N
+100.00
+BlackRock Holdco 4, LLC
+N
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+142
+41,000
+5,708,000
+Long position
+Short position
+N
+100.00
+BlackRock Financial Management, Inc.
+BlackRock Capital Holdings, Inc..
+146,630,000
+Long position
+Y
+100.00
+90.00
+BlackRock Delaware Holdings Inc.
+83,992,844
+468,000
+Long position
+Short position
+Y
+100.00
+BlackRock Delaware Holdings Inc.
+BlackRock Institutional Trust Company,
+National Association
+230,622,844
+468,000
+Long position
+Short position
+N
+100.00
+BlackRock Holdco 6, LLC
+BlackRock Delaware Holdings Inc.
+230,622,844
+468,000
+Long position
+Short position
+BlackRock Fund Advisors
+100.00
+5,436,746
+N
+Physically settled
+Unlisted derivatives -
+Cash settled
+Listed derivatives -
+Physically settled
+Listed derivatives -
+Number of shares
+Derivatives
+Besides, 1,800,357,847 H shares (Long position) and 1,613,511,777 H shares (Short position) were held through derivatives as follows:
+42,044,775
+Short position
+42,044,775
+Long position
+Y
+Unlisted derivatives -
+100.00
+UBS Securities LLC
+Number of
+shares
+Nature of
+Interest
+interest
+(Y/N)
+(%)
+Direct
+Percentage
+of control
+Name of controlling
+shareholder
+Name of controlled corporation
+Significant Events
+Ping An Insurance (Group) Company of China, Ltd. 141
+Annual Report 2018
+1,915,848
+1,900,000
+Long position
+Short position
+UBS Group AG
+Long position
+Cash settled
+Nature of interest
+100.00
+shares
+Number of
+Nature of
+interest
+Direct
+interest
+(Y/N)
+(%)
+BlackRock, Inc.
+Name of controlling shareholder
+BlackRock Investment Management, LLC
+Trident Merger, LLC
+Name of controlled corporation
+of control
+Percentage
+According to the disclosure form filed by BlackRock, Inc. on January 3, 2019, the following interests in H shares were held by
+BlackRock, Inc. through its controlled corporations, the details of which are as follows:
+(5)
+BlackRock, Inc. was deemed to be interested in a total of 412,982,017 H shares (Long position) and 545,000 H shares (Short position)
+in the Company by virtue of its control over several corporations.
+490,010,587
+934,029,722
+1,247,756,204
+2,487,950
+10,070,850
+36,035,300
+60,103,106
+Short position
+Long position
+Short position
+Long position
+Short position
+Long position
+Short position
+Long position
+633,375,905
+Long position
+Short position
+Direct
+interest
+31,000
+0
+JPMorgan Asset Management (Taiwan)
+Limited
+J.P. Morgan Europe Limited, Oslo Branch
+JPMorgan Asset Management
+(Asia) Inc.
+UBS Group AG
+UBS Trustees (Bahamas) Limited
+20,000
+Short position
+859,000
+Long position
+Y
+100.00
+shares
+Number of
+Long position
+Short position
+Nature of
+Interest
+(%)
+interest
+of control
+UBS Group AG
+Name of controlling
+shareholder
+UBS Switzerland AG
+Name of controlled corporation
+CORPORATE GOVERNANCE
+Direct
+Percentage
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+140
+0
+(Y/N)
+103,500
+Y
+J.P. Morgan Overseas Capital LLC
+Percentage
+of control
+Direct
+interest
+Name of controlled corporation
+JPMorgan Chase Bank, N.A. - Taipei
+Branch
+Name of controlling shareholder
+JPMorgan Chase Bank, National
+Association
+(%)
+(Y/N)
+Nature of
+interest
+Number of
+100.00
+Y
+Long position
+shares
+3,550,100
+Short position
+0
+100.00
+J.P. Morgan Bank Luxembourg S.A.
+- Amsterdam Branch
+100.00
+Y
+Long position
+1,953,000
+Short position
+0
+J.P. Morgan Securities LLC
+J.P. Morgan Broker-Dealer Holdings Inc.
+100.00
+Y
+Long position
+Short position
+1,863,088
+1,311,000
+J.P. Morgan Whitefriars LLC
+J.P. Morgan Bank Luxembourg S.A.
+According to the disclosure form filed by JPMorgan Chase & Co. on January 3, 2019, the following interests in H shares were held by
+JPMorgan Chase & Co. through its controlled corporations, the details of which are as follows:
+Long position
+Short position
+100.00
+UBS Group AG
+UBS Europe SE (Luxembourg Branch)
+61,000
+0
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Europe SE
+0
+Short position
+102,501
+Long position
+Y
+100.00
+100.00
+Percentage
+of control
+interest
+(%)
+(Y/N)
+Nature of
+interest
+Number of
+shares
+100.00
+Y
+Long position
+Short position
+5,708,000
+41,000
+BlackRock International Holdings, Inc.
+BlackRock Financial Management, Inc.
+100.00
+Direct
+Y
+Y
+49,500
+UBS Group AG
+UBS Swiss Financial Advisers AG
+0
+154,000
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS La Maison de Gestion
+2,500
+0
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+Long position
+UBS Gestión S.G.I.I.C., SA
+103,154
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Financial Services Inc.
+4,680
+0
+Long position
+Short position
+Y
+100.00
+UBS Group AG
+UBS Europe SE (Spain Branch)
+0
+Short position
+0
+of control
+(3) JPMorgan Chase & Co. was deemed to be interested in a total of 708,377,410 H shares (Long position) and 786,797,037 H shares (Short
+position) in the Company by virtue of its control over several corporations.
+38
+100.00
+Y
+Long position
+9,969,500
+CT Bright Group Company Limited
+(Formerly known as Chia Tai Resources
+Holdings Limited)
+CPG Overseas Company Limited
+100.00
+N
+Long position
+1,932,987,407
+Choice Great Investments Limited
+Project Perfect Limited
+Chia Tai Giant Far Limited
+CT Bright Group Company Limited
+Jumbo Kingdom Ventures Limited
+100.00
+Long position
+23,646,368
+Choice Great Investments Limited
+100.00
+Y
+Long position
+23,646,368
+CT Bright Group Company Limited
+100.00
+N
+Long position
+1,909,341,039
+Chia Tai Primrose Holdings Limited
+Chia Tai Giant Far Limited
+N
+100.00
+Epic Success Developments Limited
+Long position
+(%)
+(Y/N)
+Nature of
+interest
+Number of
+shares
+100.00
+N
+Long position
+1,966,603,275
+Active Business Holdings Limited
+CPG Overseas Company Limited
+100.00
+N
+Long position
+9,969,500
+33,615,868
+100.00
+N
+Long position
+23,646,368
+Spring Height International
+Limited
+Express Ascend Limited
+Jumbo Kingdom Ventures Limited
+Spring Height International Limited
+Active Business Holdings Limited
+100.00
+Y
+Long position
+23,646,368
+100.00
+N
+Active Business Holdings Limited
+Significant Events
+N
+1,909,341,039
+100.00
+Y
+Long position
+4,893,000
+Excel Trade Developments Limited
+Chia Tai Primrose Investment Limited
+100.00
+Y
+Long position
+71,211,068
+Golden Magic Holdings Limited
+Chia Tai Primrose Investment Limited
+100.00
+Y
+Chia Tai Primrose Investment Limited
+Long position
+New Orient Ventures Limited
+Chia Tai Primrose Investment Limited
+100.00
+Y
+Long position
+714,663,997
+(2)
+The entire interests of CP Group Ltd. in the Company included 285,847,741 H shares (Short position) which were held through
+derivatives, the category of which was through physically settled unlisted derivatives. In addition, CP Group Ltd. was also deemed
+to be interested in 88,708,000 H shares (Long position) by virtue of section 317 of the SFO.
+Boom Dragon Limited and Long Growth Global Limited held 88,000,000 H shares (Long position) and 708,000 H shares (Long position)
+in the Company respectively; the two companies were wholly owned by King Ace International Limited, which was in turn wholly
+owned by Dhanin Chearavanont. In addition, King Ace International Limited and Dhanin Chearavanont were also deemed to be
+interested in 1,966,603,275 H shares (Long position) and 285,847,741 H shares (Short position) by virtue of section 317 of the SFO.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+137
+CORPORATE GOVERNANCE
+138
+33,359,691
+Long position
+Oriental Power Developments Limited
+Long position
+Chia Tai Primrose Investment Limited
+Chia Tai Primrose Holdings Limited
+100.00
+N
+Long position
+1,909,341,039
+Easy Boom Developments Limited
+Chia Tai Primrose Investment Limited
+(7) Percentage figures may not add up to the totals due to rounding.
+Y
+Long position
+285,847,741
+Short position
+285,847,741
+30,819,856
+Business Fortune Holdings Limited
+100.00
+Y
+Long position
+717,306,596
+Ewealth Global Limited
+King Beyond Global Limited
+Chia Tai Primrose Investment Limited
+100.00
+Y
+Long position
+51,239,090
+Chia Tai Primrose Investment Limited
+100.00
+Y
+Chia Tai Primrose Investment Limited
+Name of controlled corporation
+BlackRock Advisors, LLC
+(%)
+Nature of
+1,760,000
+0
+J.P. Morgan Securities LLC
+100.00
+Y
+Long position
+Short position
+20,000
+20,000
+Copthall Mauritius Investment Limited
+J.P. Morgan Holdings (Hong Kong)
+Limited
+100.00
+Y
+Long position
+Short position
+723,000
+0
+J.P. Morgan Europe (UK), Copenhagen
+Br, filial af J.P. Morgan Europe Ltd,
+Storbritannien
+J.P. Morgan Structured Products B.V.
+J.P. MORGAN EUROPE LIMITED
+Long position
+Short position
+100.00
+Y
+JPMorgan Asset Management
+(Asia) Inc.
+33,700,240
+19,673,000
+JPMORGAN CHASE BANK, N.A.
+- LONDON BRANCH
+J.P. Morgan Investment Management Inc.
+JPMorgan Chase Bank, National
+Association
+100.00
+Y
+Long position
+Short position
+78,167,751
+0
+JPMorgan Asset Management
+Holdings Inc.
+100.00
+Y
+Long position
+Short position
+149,842,430
+0
+JPMorgan Asset Management (Japan)
+Limited
+J.P. Morgan Prime Inc.
+100.00
+Y
+Long position
+Short position
+392,500
+0
+(%)
+(Y/N)
+interest
+shares
+100.00
+Y
+Long position
+Short position
+2,026,000
+0
+100.00
+Y
+Long position
+Short position
+2,006,500
+0
+JPMorgan Chase Bank, N.A. - Sydney
+Branch
+JPMorgan Chase Bank, National
+Association
+100.00
+Number of
+Nature of
+interest
+of control
+J.P. Morgan International
+Finance Limited
+100.00
+Y
+Long position
+16
+Short position
+66
+Short position
+Annual Report 2018
+Name of controlled corporation
+J.P. Morgan Europe Limited, Helsingin
+sivuliike
+Name of controlling shareholder
+J.P. MORGAN EUROPE LIMITED
+J.P. Morgan Bank Luxembourg,
+Copenhagen Br, filial af J.P. Morgan
+Bank Luxembourg S.A.
+J.P. Morgan Bank Luxembourg S.A.
+Percentage
+Direct
+Ping An Insurance (Group) Company of China, Ltd.
+Y
+Long position
+100.00
+JPMORGAN ASSET MANAGEMENT (UK)
+LIMITED
+JPMORGAN ASSET MANAGEMENT
+HOLDINGS (UK) LIMITED
+100.00
+Y
+Long position
+Short position
+44,826,900
+0
+J.P. Morgan Chase Bank Berhad.
+JPMorgan Chase Bank, National
+Association
+JF Asset Management Limited
+J.P. Morgan International
+100.00
+Y
+Long position
+0
+Finance Limited
+Short position
+0
+13,060,000
+210,285
+Y
+Number of
+100.00
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+146
+No further significant events of the Company were required to be disclosed during the Reporting Period.
+OTHER SIGNIFICANT EVENTS
+The Company is not a key pollutant discharging unit announced by the environmental protection
+department. For more information on environmental protection, please refer to the Company's 2018
+Sustainability Report.
+ENVIRONMENTAL PROTECTION
+Save as disclosed above, the Directors and Supervisors of the Company are not aware of any other
+person (other than the Directors, Supervisors and chief executive of the Company) having any interest
+or short position in the shares and underlying shares of the Company as at December 31, 2018 which shall
+be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or
+recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.
+100.00
+Y
+Long position
+Short position
+3,337,000
+0
+J.P. MORGAN EUROPE LIMITED
+100.00
+Long position
+Short position
+JPMorgan Chase & Co.
+100.00
+Y
+Long position
+Short position
+2,917,000
+0
+JPMorgan Chase Holdings LLC
+100.00
+Y
+Long position
+Short position
+882,000
+0
+J.P. Morgan Bank Luxembourg S.A.
+- Stockholm Bankfilial
+J.P. Morgan Bank Luxembourg S.A.
+100.00
+Y
+Long position
+Short position
+9,450,907
+0
+Highbridge Capital Management, LLC
+JPMorgan Asset Management
+Holdings Inc.
+Y
+49.00
+JPMORGAN ASSET MANAGEMENT
+(UK) LIMITED
+J.P. Morgan GT Corporation
+Long position
+96,897,473
+Short position
+62,045,055
+JPMorgan Asset Management
+(Asia) Inc.
+99.99
+Y
+Long position
+Y
+64,767,500
+0
+JF International Management Inc.
+JPMorgan Asset Management
+(Asia) Inc.
+100.00
+Y
+Long position
+Short position
+161,500
+0
+China International Fund Management
+Co., Ltd.
+Short position
+Long position
+Short position
+Name of controlling shareholder
+BlackRock Capital Holdings, Inc.
+0
+0
+J.P. MORGAN SECURITIES PLC
+J.P. MORGAN CAPITAL
+HOLDINGS LIMITED
+100.00
+N
+Long position
+Short position
+4,599,030
+0
+J.P. MORGAN CAPITAL
+HOLDINGS LIMITED
+JPMORGAN ASSET MANAGEMENT
+HOLDINGS (UK) LIMITED
+JPMORGAN ASSET MANAGEMENT
+INTERNATIONAL LIMITED
+J.P. Morgan International
+Finance Limited
+100.00
+N
+Long position
+Short position
+714,525,234
+710,360,916
+JPMORGAN ASSET MANAGEMENT
+INTERNATIONAL LIMITED
+4,599,030
+100.00
+Long position
+Short position
+100.00
+Short position
+0
+JPMorgan Asset Management (Asia) Inc.
+JPMorgan Asset Management
+Holdings Inc.
+100.00
+N
+Long position
+Short position
+70,026,000
+0
+JPMorgan Asset Management
+Holdings Inc.
+JPMorgan Chase Holdings LLC
+100.00
+N
+Long position
+Short position
+301,312,570
+19,673,000
+J.P. MORGAN EUROPE LIMITED
+J.P. MORGAN SECURITIES PLC
+N
+N
+Long position
+Short position
+47,743,900
+20,000
+20,000
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+CORPORATE GOVERNANCE
+Significant Events
+Name of controlled corporation
+7,834,786
+J.P. Morgan Holdings (Hong Kong)
+Limited
+J.P. Morgan Equity Holdings, Inc.
+Name of controlling shareholder
+J.P. Morgan International
+Finance Limited
+JPMorgan Chase Holdings LLC
+Percentage
+Direct
+of control
+interest
+Long position
+Short position
+N
+100.00
+J.P. Morgan Broker-Dealer Holdings Inc.
+0
+JPMorgan Asset Management
+100.00
+N
+Holdings Inc.
+Long position
+Short position
+47,743,900
+0
+31,000
+JPMORGAN ASSET MANAGEMENT (UK)
+LIMITED
+100.00
+N
+MANAGEMENT
+Long position
+Short position
+2,917,000
+0
+HOLDINGS (UK) LIMITED
+J.P. Morgan Securities LLC
+JPMORGAN ASSET
+Long position
+139
+100.00
+32,012
+0
+JPMorgan Chase Bank, N.A. - Hong Kong
+Branch
+JPMorgan Chase Bank, National
+Association
+Y
+Long position
+Short position
+12,606,527
+0
+J.P. MORGAN SECURITIES PLC
+J.P. MORGAN CAPITAL HOLDINGS
+LIMITED
+100.00
+Y
+Long position
+Short position
+709,926,204
+710,360,916
+J.P. Morgan (Suisse) SA
+JPMorgan Chase Bank, National
+Association
+Long position
+Short position
+J.P. Morgan Bank Luxembourg S.A.
+Y
+J.P. Morgan Equity Holdings, Inc.
+N
+J.P. Morgan Bank Luxembourg S.A.
+J.P. MORGAN EUROPE LIMITED
+100.00
+Y
+Long position
+Short position
+1,970,245
+0
+J.P. Morgan International
+Finance Limited
+100.00
+Y
+J.P. Morgan Europe Limited (UK),
+Stockholm Bankfilial
+Long position
+23,260,320
+Short position
+0
+J.P. Morgan Trust Company of Delaware
+100.00
+J.P. Morgan International
+Finance Limited
+100.00
+Y
+Short position
+755,623,477
+723,420,982
+J.P. Morgan Broker-Dealer Holdings Inc.
+JPMorgan Chase Holdings LLC
+100.00
+N
+Long position
+100.00
+Long position
+Short position
+JPMorgan Chase Holdings LLC
+JPMorgan Chase & Co.
+100.00
+N
+Long position
+Short position
+304,109,670
+21,004,000
+J.P. Morgan Overseas Capital LLC
+J.P. Morgan International
+Finance Limited
+1,331,000
+N
+1,883,088
+JPMorgan Chase Bank, National
+Association
+Short position
+100.00
+Long position
+N
+100.00
+JPMorgan Chase & Co.
+J.P. Morgan International
+Finance Limited
+0
+3,673,500
+857,782,641
+723,420,982
+100.00
+Long position
+J.P. Morgan International Finance
+Limited
+0
+Short position
+N
+Long position
+Short position
+13,410,407
+22
+Derivative financial assets
+Accounts receivable
+Premium receivables
+21
+67,150
+72,061
+45,694
+22,798
+99,296
+273,513
+20
+Ping An Insurance (Group) Company of China, Ltd.
+21,911
+Consolidated Statement of Financial Position
+As at 31 December 2018
+(in RMB million)
+Assets
+Notes
+31 December 2018
+92,951
+31 December 2017
+other financial institutions
+18
+457,524
+483,891
+Balances with the Central Bank
+19
+305,986
+Financial assets held under resold agreements
+Cash and amounts due from banks and
+16,192
+222,639
+23
+27
+2,075,151
+Debt financial assets at fair value through other
+comprehensive income
+28
+310,901
+824,939
+Equity financial assets at fair value through other
+29
+121,859
+Fixed maturity investments
+Equity investments
+31
+Investments in associates and jointly controlled entities
+comprehensive income
+Reinsurers' share of insurance liabilities
+26
+1,929,842
+16,671
+15,633
+Policy loans
+111,219
+83,203
+Finance lease receivable
+1,660,864
+Loans and advances to customers
+Financial assets at fair value through profit or loss
+Financial assets at amortized cost
+2222
+24
+165,214
+112,028
+25
+122,589
+Shadow accounting adjustments
+13,602
+2018
+Notes
+Credit risks provision of debt instruments at
+fair value through other comprehensive income
+Available-for-sale financial assets
+fair value through other comprehensive income
+Changes in the fair value of debt instruments at
+Items that may be reclassified subsequently to profit or loss:
+Other comprehensive income
+Profit for the year
+(in RMB million)
+For the year ended 31 December 2018
+Consolidated Statement of Comprehensive Income
+FINANCIAL STATEMENTS
+153
+Ping An Insurance (Group) Company of China, Ltd.
+4.99
+6.01
+17
+32
+13,048
+10,890
+120,452
+99,978
+Earnings per share attributable to ordinary equity
+2017
+holders of the parent:
+Annual Report 2018
+RMB
+RMB
+17
+6.02
+4.99
+- Diluted
+120,452
+99,978
+11,263
+4,280
+Other comprehensive income for the year, net of tax
+2,137
+21,881
+Total comprehensive income for the year
+122,589
+Income tax relating to components of other
+comprehensive income
+121,859
+Owners of the parent
+- Non-controlling interests
+154
+Annual Report 2018
+108,987
+110,672
+Attributable to:
+11,187
+10,623
+Items that will not be reclassified to profit or loss:
+Changes in the fair value of equity instruments at
+fair value through other comprehensive income
+Shadow accounting adjustments
+767
+-
+(5,596)
+38,653
+(4,288)
+(924)
+Exchange differences on translation of foreign operations
+(19,121)
+1,139
+jointly controlled entities
+390
+93
+Income tax relating to components of other
+comprehensive income
+(1,608)
+(11,653)
+Share of other comprehensive income of associates and
+Statutory deposits for insurance operations
+16,975
+Investment properties
+Customer deposits and payables to brokerage customers
+45,622
+52,591
+Policyholder dividend payable
+114,108
+120,688
+Insurance payables
+28,775
+31,416
+Income tax payable
+8,522
+9,779
+Accounts payable
+133,981
+189,028
+43
+17,950
+Notes
+31 December 2018
+31 December 2017
+42
+22
+803,154
+Bonds payable
+780,530
+89,088
+14,060
+Assets sold under agreements to repurchase
+24
+22
+22,247
+Financial liabilities at fair value through profit or loss.
+Derivative financial liabilities
+Insurance contract liabilities
+45
+Investment contract liabilities for policyholders
+Total liabilities
+Total equity and liabilities
+6,459,317
+7,142,960
+5,905,158
+6,493,075
+The financial statements on pages 153 to 315 were approved and authorized for issue by the Board of
+Directors on 12 March 2019 and were signed on its behalf.
+348,463
+MA Mingzhe
+156
+Annual Report 2018
+SUN Jianyi
+Director
+YAO Jason Bo
+Director
+Ping An Insurance (Group) Company of China, Ltd.
+Director
+Due to banks and other financial institutions
+259,110
+18,476
+Deferred tax liabilities
+48
+Other liabilities
+49
+4444% F
+2,114,344
+25,891
+1,952,695
+556,875
+2,211,887
+451,283
+1,932,969
+46
+52,747
+50,309
+47
+Liabilities
+(in RMB million)
+As at 31 December 2018
+49,323
+47,067
+36
+58,450
+60,981
+45,187
+40,108
+40,141
+261,275
+Policyholder account assets in respect of insurance
+contracts
+38
+32,344
+38,775
+155,686
+Policyholder account assets in respect of investment
+contracts
+38,242
+12,250
+Property and equipment
+35
+Intangible assets
+Deferred tax assets
+48
+Other assets
+34
+37
+30
+2,376,638
+630,676
+154,895
+86,207
+12,446
+WA W w wwww w
+33
+38
+4,109
+Equity attributable to owners of the parent
+Non-controlling interests
+556,508
+473,351
+40
+127,135
+114,566
+237,190
+Total equity
+587,917
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+155
+FINANCIAL STATEMENTS
+Consolidated Statement of Financial Position
+683,643
+3,964
+334,509
+217,881
+Total assets
+7,142,960
+6,493,075
+Equity and liabilities
+Equity
+Share capital
+40
+Reserves
+244
+39
+18,280
+18,280
+40
+203,719
+Retained profits
+107,404
+- Basic
+120,452
+Key Audit Matter
+Independent Auditor's Report
+50
+150
+FINANCIAL STATEMENTS
+149
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Based on the work performed, the inputs, assumptions
+and methodologies adopted in ECL provisioning by
+the Group for "loans and advances to customers" and
+"financial assets at amortized cost" are considered
+acceptable.
+We also tested the accuracy of ECL data inputs
+during the period on a sampling basis, by reviewing
+the counterparties' credit information such as credit
+exposure, credit risk ratings, loss rates, overdue
+status, collateral information, and other relevant
+information.
+We tested the ECL model measurement to check
+whether it is consistent with the Group's ECL model
+methodologies on a sampling basis.
+We evaluated the overall reasonableness of macro-
+economic scenario-settings and weightings against
+industry benchmarks.
+We evaluated ECL model methodologies and the
+detailed application of key ECL model parameters
+and assumptions, which includes possibility of
+default, loss given default, exposure at default,
+discount rate, etc., and assessed the reasonableness
+of key management's judgements involved.
+We evaluated the reasonableness of staging
+determination against the Group's historical credit
+loss experience and industry practice.
+We evaluated whether the ECL models built
+appropriately cover the Group's "loans and
+advances to customers" and "financial assets at
+amortized cost".
+With the assistance of our credit modelling specialists,
+we performed the following procedures:
+We tested management's key controls over
+formulation of forward-looking adjustment,
+including selection of macroeconomic indicators
+and determination of weightings to various
+scenario.
+We tested the design and operating effectiveness
+of the Group's ECL controls, including the controls
+over model selection, internal credit rating and
+staging determination, forecasts of contractual cash
+flows, etc.
+The procedures we performed included:
+How our audit addressed the Key Audit Matter
+4)
+3) Application of model assumptions
+Formulating forward-looking adjustment
+Staging determination
+2)
+1) Selecting appropriate ECL models
+We identified impairment assessment under
+IFRS 9 as a key audit matter, as it is complex
+and significant management judgment was
+involved in:
+As at 31 December 2018, the Group's "loans
+and advances to customers" and "financial
+assets at amortized cost" as presented on the
+consolidated balance sheet represented 56 % of
+total assets and the amounts of expected credit
+loss ('ECL') provision for loans and advances
+to customers and financial assets at amortized
+cost were RMB54,187 million and RMB13,305
+million respectively.
+Valuation of policyholders' reserves and claim
+Refer to note 2(12), 25 and 27 to the
+consolidated financial statements.
+reserves
+As at 31 December 2018, the Group had
+significant life insurance contract liabilities
+(policyholders' reserve) and non-life insurance
+contract liabilities (claim reserves) represented
+23% of the total liabilities. Significant
+judgements were involved in assessing the
+ultimate total settlement values of insurance
+contract liabilities. Economic assumptions, such
+as investment returns and associated discount
+rates, and operating assumptions such as
+mortality, persistency (including consideration
+of policyholder behaviour) and loss ratio are
+the key assumptions used to estimate these
+insurance contract liabilities. Therefore, we
+identified valuation of policyholders' reserves
+and chaim reserves as key audit matter.
+Independent Auditor's Report
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 151
+Annual Report 2018
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
+as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose.
+We do not assume responsibility towards or accept liability to any other person for the contents of this
+report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
+accordance with HKSAS will always detect a material misstatement when it exists. Misstatements can arise
+from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
+be expected to influence the economic decisions of users taken on the basis of these consolidated financial
+statements.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Audit and Risk Management Committee are responsible for overseeing the Group's financial reporting
+process.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's
+ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
+the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
+operations, or have no realistic alternative but to do so.
+The directors of the Company are responsible for the preparation of the consolidated financial statements
+that give a true and fair view in accordance with IFRSS and the disclosure requirements of the Hong Kong
+Companies Ordinance, and for such internal control as the directors determine is necessary to enable the
+preparation of consolidated financial statements that are free from material misstatement, whether due to
+fraud or error.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other
+information, we are required to report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF DIRECTORS AND AUDIT AND RISK MANAGEMENT
+COMMITTEE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent with
+the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
+materially misstated.
+Our opinion on the consolidated financial statements does not cover the other information and we do not
+express any form of assurance conclusion thereon.
+The directors of the Company are responsible for the other information. The other information comprises
+all of the information included in the annual report other than the consolidated financial statements and our
+auditor's report thereon.
+OTHER INFORMATION
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Based on the work performed, the key valuation
+assumptions and methodologies adopted by the
+management are considered acceptable.
+We performed analysis of the movements in life
+insurance contract liabilities during the year,
+including consideration of whether the movements
+were in line with the assumptions adopted by the
+Group, our understanding of developments in the
+business, and our experience derived from market
+practice.
+We tested the mathematical accuracy of the
+calculation.
+We tested the accuracy and completeness of policy
+data input into the actuarial models.
+For the non-life insurance contract liabilities, we
+performed independent modelling on selected
+classes of business. We compared our results
+to those booked by management and evaluated
+significant variances, including consideration of
+retrospective analysis result.
+For the life insurance contract liabilities, we
+performed independent model point testing
+for newly modelled products and tested the
+appropriateness of changes made to the actuarial
+models during the year.
+We evaluated assumptions used in the actuarial
+models for non-life insurance contract liabilities,
+such as ultimate loss ratio, claim adjustment
+expense and risk adjustment to company specific
+and industry historical data, where applicable.
+We evaluated assumptions used in the actuarial
+models for the valuation of life insurance contract
+liabilities; specifically we assessed economic and
+operating assumptions by reference to relevant
+company specific and industry historical data, and
+for future development by reference to market
+trends and market volatility, where applicable.
+We assessed the Group's methodology for
+calculating the insurance contract liabilities against
+recognized actuarial practices.
+We involved our actuarial specialists and performed
+following procedures in this area:
+How our audit addressed the Key Audit Matter
+Refer to note 2. (30), 3. (4), 45 and 51. (1) to the
+consolidated financial statements
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS (CONTINUED)
+Impairment assessment of loans and advances
+to customers and financial assets at amortized
+cost
+Ping An Insurance (Group) Company of China, Ltd.
+We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional
+Accountants ('the Code'), and we have fulfilled our other ethical responsibilities in accordance with the
+Code.
+Independence
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
+our opinion.
+We conducted our audit in accordance with Hong Kong Standards on Auditing ('HKSAs') issued by
+the Hong Kong Institute of Certified Public Accountants ('HKICPA'). Our responsibilities under those
+standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report.
+99,978
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
+position of the Group as at 31 December 2018, and of its consolidated financial performance and its
+consolidated cash flows for the year then ended in accordance with International Financial Reporting
+Standards (IFRSS') and have been properly prepared in compliance with the disclosure requirements of the
+Hong Kong Companies Ordinance.
+Our opinion
+the notes to the consolidated financial statements, which include a summary of significant accounting
+policies.
+the consolidated statement of cash flows for the year then ended; and
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of comprehensive income for the year then ended;
+•
+•
+•
+the consolidated statement of income for the year then ended;
+•
+the consolidated statement of financial position as at 31 December 2018;
+•
+'Company') and its subsidiaries (the 'Group') set out on pages 153 to 315, which comprise:
+The consolidated financial statements of Ping An Insurance (Group) Company of China, Ltd. (the
+What we have audited
+OPINION
+(incorporated in the People's Republic of China with limited liability)
+Ping An Insurance (Group) Company of China, Ltd.
+To the Shareholders of
+Independent Auditor's Report
+Annual Report 2018
+Key Audit Matter
+Ping An Insurance (Group) Company of China, Ltd.
+FINANCIAL STATEMENTS
+Annual Report 2018
+148
+Based on the work performed, management's
+judgements and methodologies adopted in classification
+of "financial assets at amortized cost" are considered
+acceptable.
+We evaluated appropriateness of business model
+assessment for these financial instruments under
+various business lines, and tested the supporting
+evidence on a sampling basis.
+We evaluated the design of SPPI testing logic
+and re-performed SPPI testing on a sampling
+basis by examing the contracts of these financial
+instruments.
+We tested the design effectiveness and operating
+effectiveness of key controls over SPPI testing.
+We understood and evaluated the Group's
+methodologies and processes of the solely payment
+of principal and interest ('SPPI') testing and
+business model assessment.
+We reviewed the Group's accounting policies in
+relation to the classification of these financial assets,
+and performed the following procedures to assess the
+appropriateness of the classification:
+How our audit addressed the Key Audit Matter
+Determining business models for debt
+portfolios under the Group's diverse
+business activities.
+Interpreting contract terms for SPPI
+testing purpose;
+2)
+1)
+We identified the classification of these
+financial instruments under IFRS 9 as a key
+audit matter as it is complex and requires
+considerable management judgment in:
+As at 31 December 2018, the Group's "financial
+assets at amortized cost" as presented on the
+consolidated balance sheet represented 29% of
+total assets.
+Refer to note 2(12) and 27 to the consolidated
+financial statements.
+cost
+Classification of financial assets at amortized
+Key Audit Matter
+Valuation of policyholders' reserves and claim reserves
+Impairment assessment of loans and advances to customers and financial assets at amortized cost
+Classification of financial assets at amortized cost
+•
+Key audit matters identified in our audit are summarised as follows:
+Key audit matters are those matters that, in our professional judgment, were of most significance in our
+audit of the consolidated financial statements of the current period. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+Independent Auditor's Report
+147
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional
+scepticism throughout the audit. We also:
+88,546
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and
+obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
+not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
+as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
+internal control.
+13
+Net impairment losses on financial assets
+(6,599)
+(9,086)
+Fees and commission expenses on non-insurance operations
+(72,501)
+(86,931)
+7
+Interest expenses on banking operations
+(114,587)
+(130,394)
+Commission expenses on insurance operations
+(427,243)
+(439,596)
+Claims and policyholders' benefits
+9,415
+10,108
+12
+Less: Reinsurers' share and policyholders' benefits
+(436,658)
+(449,704)
+12
+Gross claims and policyholders' benefits
+974,570
+1,082,146
+Total revenue
+43,813
+(52,105)
+49,892
+Loan loss provisions, net of reversals
+(40,814)
+•
+134,740
+(34,762)
+(42,699)
+15
+163,151
+14
+(839,830)
+(918,995)
+(21,665)
+(28,420)
+Non-controlling interests.
+Owners of the parent
+Attributable to:
+Profit for the year
+Income tax
+Profit before tax
+Total expenses
+Other expenses
+(11,167)
+(18,227)
+(145,126)
+(128)
+(1,709)
+(946)
+(151,581)
+Interest expenses on non-banking operations
+General and administrative expenses
+Foreign exchange losses
+Net impairment losses on other assets
+14, 25
+11
+9
+7,145
+605,035
+719,556
+6
+2017
+Notes
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
+effectiveness of the Group's internal control.
+2018
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and,
+based on the audit evidence obtained, whether a material uncertainty exists related to events or
+conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we
+conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to
+the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
+to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
+auditor's report. However, future events or conditions may cause the Group to cease to continue as a
+going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the underlying
+transactions and events in a manner that achieves fair presentation.
+Other revenues and other gains
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
+business activities within the Group to express an opinion on the consolidated financial statements.
+We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+We communicate with Audit and Risk Management Committee regarding, among other matters, the planned
+scope and timing of the audit and significant audit findings, including any significant deficiencies in internal
+control that we identify during our audit.
+(19,417)
+We also provide Audit and Risk Management Committee with a statement that we have complied with
+relevant ethical requirements regarding independence, and to communicate with them all relationships and
+other matters that may reasonably be thought to bear on our independence, and where applicable, related
+safeguards.
+The engagement partner on the audit resulting in this independent auditor's report is Yeung Sheung Yuen.
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 12 March 2019
+152
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Consolidated Statement of Income
+For the year ended 31 December 2018
+(in RMB million)
+Gross written premiums
+Less: Premiums ceded to reinsurers
+Net written premiums
+From the matters communicated with Audit and Risk Management Committee, we determine those matters
+that were of most significance in the audit of the consolidated financial statements of the current period
+and are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences of
+doing so would reasonably be expected to outweigh the public interest benefits of such communication.
+(17,420)
+Change in unearned premium reserves
+700,139
+Interest revenue from banking operations
+7
+161,714
+147,386
+Interest revenue from non-banking operations
+8
+88,376
+Fees and commission revenue from non-insurance operations
+6,728
+9
+44,407
+Investment income
+10
+31,974
+63,725
+Share of profits and losses of associates and
+jointly controlled entities
+18,074
+46,277
+7,966
+Reinsurance commission revenue
+587,615
+(22,436)
+(14,625)
+Net earned premiums
+572,990
+677,703
+6
+The remeasurement effects are mainly from the change of impairment provision by the adoption of IFRS 9.
+Reclassification
+effects (i)
+(22,513)
+(178)
+(11,109)
+(i)
+The reclassification effects have not taken into account of the remeasurement effects.
+(ii)
+Remeasurement
+effects (iii)
+1 January 2018
+238,762
+A portion of placements at other institutions, notes, forfeiting and retail loans are held for under business model of both for sale
+and collection of contractual principals and interests. Therefore, those financial assets are classified in the FVOCI measurement
+category under IFRS 9.
+(iii)
+(11,226)
+261,275
+Fair value gain/(loss) that would have been recognized during
+Ping An Insurance (Group) Company of China, Ltd.
+Applying the expected credit risk model resulted in the recognition of impairment provisions of financial
+assets on 1 January 2018 is as follow:
+Impairment provisions
+Loans and advances to customers (1)
+Financial assets at amortized cost (2)
+Debt financial assets at fair value through other
+comprehensive income
+Fixed maturity investments
+Equity investments
+Other financial assets
+Total
+31 December 2017
+1 January 2018
+44,322
+47,763
+31 December 2017
+(1,238)
+Annual Report 2018
+7,659
+the year if the financial asset had not been reclassified
+163
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+(a) IFRS 9 Financial Instruments
+Impact of adoption (continued)
+For those AFS been reclassified to financial assets at AC and financial assets at FVPL been reclassified
+to equity financial assets at fair value through other comprehensive income category, the following
+table shows their fair value as at 31 December 2018 and the fair value gain or loss that would have been
+recognized if these financial assets had not been reclassified as part of the transition to IFRS 9:
+31 December 2018
+From AFS (IAS 39) to AC (IFRS 9)
+Fair value as at 31 December 2018
+Fair value gain/(loss) that would have been recognized during
+the year if the financial asset had not been reclassified
+From FVPL (IAS 39) to FVOCI (IFRS 9)
+Fair value as at 31 December 2018
+842
+(24,428)
+Loans and advances to customers
+1,607,260
+To loans and advances to customers
+- To financial assets at AC
+To financial assets at FVPL
+-
+Measured at AC
+Measured at FVOCI (ii)
+Loans and advances to customers
+8,422
+To equity financial assets at FVOCI
+To financial assets at FVPL
+-
+Equity investments
+Equity investments
+(8)
+Following the adoption of IFRS 9, the adjustments to the carrying amount of each financial statement item
+are illustrated as follows (continued):
+Impact of adoption (continued)
+(a) IFRS 9 Financial Instruments
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+(254,316)
+(208,307)
+(1,914,015)
+1 January 2018
+measured at FVOCI (ii)
+(10) Other assets
+Other assets
+-
+(3,899)
+(49,705)
+1,660,864
+24,428
+24,428
+1,631,688
+(3,899)
+(25,277)
+1,660,864
+1 January 2018
+Remeasurement
+effects (iii)
+(358)
+(24,919)
+Reclassification
+effects (i)
+(415,447)
+(215,229)
+(630,676)
+630,676
+1 January 2018
+Remeasurement
+effects (iii)
+effects (i)
+31 December 2017
+Reclassification
+- To financial assets at AC
+- To debt financial assets at FVOCI
+To financial assets at FVPL
+31 December 2017
+530
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+27,373
+(7) Fixed maturity investments
+- From LR
+- From HTM
+- From AFS
+From fixed maturity investments
+- From other assets
+From Loans and advances to customers
+Financial assets at amortized cost
+166
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
+not quoted in an active market. It includes policy loans. Loans and receivables acquired by the Group
+are initially recognized at cost, being the fair value of the consideration paid for the acquisition of the
+investment. All transaction costs directly attributable to the acquisition are also included in the cost
+of the investment. Subsequent to initial recognition, these investments are carried at amortized cost,
+using the effective interest method less any provision for impairment. Gains and losses are recognized
+in the statement of income when the investments are derecognized or impaired, as well as through the
+amortization process. Policy loans originated by the Group are carried at amortized cost.
+Held-to-maturity financial assets are non-derivative financial assets that comprise fixed or determinable
+payments and maturities of which the Group has the positive intention and ability to hold until maturity.
+Investments intended to be held for an undefined period are not included in this classification. These
+investments are initially recognized at cost, being the fair value of the consideration paid for the acquisition
+of the investment. All transaction costs directly attributable to the acquisition are also included in the cost
+of the investment. Subsequent to initial recognition, these investments are carried at amortized cost using
+the effective interest method and less any provision for impairment. The amortized cost is computed as the
+amount initially recognized minus principal repayments, plus or minus the cumulative amortization using
+the effective interest method of any difference between the initially recognized amount and the maturity
+amount. This calculation includes all fees and points paid or received between parties to the contract that
+are an integral part of the effective interest rate, transaction costs and all other premiums and discounts.
+Gains and losses are recognized in the statement of income when the investments are derecognized or
+impaired, as well as through the amortization process.
+Financial assets at fair value through profit or loss include derivative financial instruments.
+These financial instruments are initially recorded at fair value. Subsequent to initial recognition, they
+are remeasured at fair value. Fair value adjustments and realized gains and losses are recognized in the
+statement of income.
+the financial asset contains an embedded derivative that needs to be separately recorded.
+the assets and liabilities are part of a group of financial assets, financial liabilities or both which are
+managed and their performance evaluated on a fair value basis, in accordance with a documented risk
+management or investment strategy; or
+the designation eliminates or significantly reduces the inconsistent treatment that would otherwise
+arise from measuring the assets or liabilities or recognizing the gains or losses on them on a different
+basis; or
+Financial instruments at fair value through profit or loss have two sub-categories namely financial
+instruments held for trading and those designated at fair value through profit or loss at inception. Financial
+instruments typically bought with the intention to sell in the near future are classified as held for trading. A
+financial instrument can only be designated at inception as at fair value through profit or loss and cannot
+be subsequently changed. For financial instruments designated at fair value through profit or loss, the
+following criteria must be met:
+Classification and measurement of financial assets (continued)
+Impact of adoption (continued)
+(a) IFRS 9 Financial Instruments
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+Fixed maturity investments
+- To financial assets at AC
+- To financial assets at FVPL
+To debt financial assets at FVOCI
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+2,376,638
+31 December 2017
+Reclassification
+1,947,974
+1 January 2018
+215,229
+(72)
+(1,997)
+(2,069)
+1,914,015
+FINANCIAL STATEMENTS
+11,109
+(2,069)
+Remeasurement
+effects (iii)
+effects (i)
+1,950,043
+31 December 2017
+Reclassification
+8,897
+206,332
+215,229
+215,229
+Annual Report 2018
+162
+24,919
+Ping An Insurance (Group) Company of China, Ltd. 165
+Annual Report 2018
+All regular way purchases and sales of financial assets are recognized on the trade date, i.e., the date the
+Group commits to purchase or sell the asset. Regular way purchases or sales of financial assets require
+delivery of assets within the time frame generally established by regulation or convention in the market
+place.
+44,322
+1 January 2018
+effects
+effects (i)
+31 December 2017
+Remeasurement
+Reclassification
+Measured at financial assets at FVOCI
+Measured at financial assets at AC
+advances to customers
+Impairment provisions of loans and
+(512)
+(1) Impairment provisions of loans and advances to customers
+Impact of adoption (continued)
+(a) IFRS 9 Financial Instruments
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+164
+57,330
+78,349
+615
+111
+Following the adoption of IFRS 9, the adjustments to the impairment provisions of each financial statement
+item are illustrated as follows:
+6,543
+3,953
+(512)
+The classification depends on the purpose for which the investments were acquired or originated. Financial
+assets are classified as at fair value through profit or loss where the Group's documented investment
+strategy is to manage financial investments on a fair value basis, because the related liabilities are also
+managed on this basis. The available-for-sale and held-to-maturity categories are used when the relevant
+liabilities (including shareholders' funds) are relatively passively managed and/or carried at amortized cost.
+Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit
+or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets, as
+appropriate.
+Classification and measurement of financial assets
+8,422
+2,069
+5,841
+512
+2,069
+6,353
+Accounting policies applied until 31 December 2017,
+(i) The reclassification effects has not taken into account of the remeasurement effects.
+44,322
+1 January 2018
+effects (i)
+31 December 2017
+Remeasurement
+Reclassification
+- From fixed maturity investments
+From Loans and advances to customers
+Impairment provisions of financial assets
+at amortized cost
+(2) Impairment provisions of financial assets at amortized cost
+47,763
+47,709
+54
+54
+3,899
+effects
+1,539
+1,234,143
+678,333
+(1) Cash and amounts due from banks and other financial institutions
+· From financial assets at FVPL
+Appropriations to general reserves
+798
+8,165
+(798)
+(8,165)
+Dividend paid to non-controlling
+interests
+Disposal of subsidiaries
+(2,084) (2,084)
+(704) (704)
+Equity transactions with
+non-controlling interests
+Contributions from non-controlling
+interests
+Share purchase scheme
+Other equity instruments issued by
+subsidiaries
+Others
+As at 31 December 2017
+Annual Report 2018
+(4,150)
+301
+(46)
+(2,525) (6,675)
+808
+1,109
+(46)
+4,486
+Appropriations to surplus reserves
+(19,194)
+(19,194)
+Dividend declared (Note 16)
+of foreign
+operations
+Retained
+profits
+Non-
+controlling
+interests
+Total
+equity
+1,253
+176,259
+103,012 486,461
+Profit for the year
+89,088
+10,890
+99,978
+4,486
+Other comprehensive income
+Total comprehensive income
+for the year
+25,564
+(3,187) 92
+25,564
+(3,187)
+92
+(885)
+297
+21,881
+(885)
+89,088
+11,187 121,859
+for the year
+on translation
+2,319
+46,089
+(6,675)
+Acquisition of subsidiaries
+(142)
+(104)
+Disposal of subsidiaries
+1,206
+(976)
+Interest received
+Dividends received
+102,604
+124,094
+46,890
+37,980
+3,743
+2,757
+(26,281)
+(18,156)
+(240,426)
+(354,767)
+Rentals received
+Increase in policy loans
+Net cash flows used in investing activities
+Cash flows from financing activities
+Capital injected into subsidiaries by non-controlling interests
+3,220
+5,595
+Proceeds from bonds issued
+(42)
+Acquisition of non-controlling interests in subsidiaries
+1,960,127
+(2,435,128)
+(1,711,291)
+(6,416) 9,114
+12,164
+44,964
+368
+237,190
+386 2,705
+114,566 587,917
+Ping An Insurance (Group) Company of China, Ltd.
+157
+FINANCIAL STATEMENTS
+158
+58
+Consolidated Statement of Cash Flows
+For the year ended 31 December 2018
+18,280 111,598
+(in RMB million)
+Purchases of investment properties, property and
+equipment, and intangible assets
+Notes
+2018
+2017
+55
+206,260
+121,283
+(10,663)
+(19,257)
+Proceeds from disposal of investment properties,
+property and equipment, and intangible assets
+Proceeds from disposal of investments
+3,573
+1,349,977
+571
+Purchases of investments
+Net cash flows from operating activities
+Cash flows from investing activities
+Surplus
+reserve General
+funds reserves
+11,366 36,799
+(3,229) 6,749
+20,525
+237,190
+114,566 587,917
+Change in accounting policy (Note 2)
+(36,513)
+1,439
+32,300
+(2,021) (4,795)
+As at 1 January 2018
+18,280 111,598
+9,576
+(4,977) 9,114 12,164
+44,964
+368
+269,490
+112,545 583,122
+Profit for the year
+for the year
+107,404
+13,048 120,452
+Other comprehensive income
+Total comprehensive income
+for the year
+(3,688)
+3,742
+(6) Financial assets at amortized cost
+(3,688)
+3,742
+368
+44,964
+12,164
+(6,416) 9,114
+Consolidated Statement of Changes in Equity
+For the year ended 31 December 2018
+For the year ended 31 December 2018
+Reserves
+Financial
+assets at
+Share
+Share
+(in RMB million)
+capital premium
+FVOCI
+reserves
+Shadow
+accounting
+adjustments
+Surplus
+Others
+390
+reserve
+funds
+Exchange
+differences
+on translation
+of foreign
+Non-
+Retained
+controlling
+Total
+operations
+profits
+interests
+equity
+As at 31 December 2017
+18,280 111,598
+46,089
+General
+reserves
+1,139
+554 2,137
+1,139
+5
+5
+2,996
+2,996
+-
+10,227
+70
+10,297
+18,280 111,598
+4,173
+(1,235) 19,718 12,164
+55,794
+1,507
+224
+334,509
+For the year ended 31 December 2017
+Reserves
+Available-
+for-sale
+Exchange
+differences
+Shadow
+(in RMB million)
+Share
+Share
+capital premium
+investment
+accounting
+reserves
+adjustments Others
+As at 1 January 2017
+18,280 115,447
+127,135 683,643
+860,782
+224
+(125)
+107,404
+13,602 122,589
+Dividend declared (Note 16)
+-
+(33,270)
+(33,270)
+Appropriations to general reserves
+10,830
+-
+(10,830)
+Transfer of gain on disposal of equity
+investments at fair value through
+other comprehensive income to
+(143)
+retained profits
+Dividend paid to non-controlling
+interests
+Equity transactions with
+non-controlling interests
+Contributions from non-controlling
+interests
+Share purchase scheme
+Other equity instruments issued by
+subsidiaries
+Others
+As at 31 December 2018
+1,715
+(2,177) (2,177)
+(18)
+(1,715)
+953,639
+390
+repurchase of insurance operations, net
+To cash and amounts due from banks
+and other financial institutions measured
+at FVOCI (ii)
+(2) Statutory deposits for insurance operations
+(3,900)
+31 December 2017
+Reclassification
+effects (i)
+Remeasurement
+effects (iii)
+12,250
+(4)
+Statutory deposits for insurance operations
+(3) Financial assets at fair value through profit or loss
+Reclassification
+31 December 2017
+effects (i)
+Remeasurement
+effects (iii)
+Financial assets at fair value through
+profit or loss
+From fixed maturity investments
+693,799
+(1,410)
+254,316
+(1,294)
+- From available for sale ('AFS')
+31,539
+- From financial assets at FVPL
+63,801
+- From Held-to-maturity ('HTM')
+9,625
+-
+(23,500)
+To financial assets at fair value through
+profit or loss ('FVPL')
+3,893
+455,994
+348,463
+The Group's retained profits was increased by RMB32,300 million upon initial adoption of IFRS 9 on 1
+January 2018, opening balances of reserves was decreased by RMB35,074 million, non-controlling interests
+was decreased by RMB2,021 million and total net asset was decreased by RMB4,795 million respectively.
+160
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+(a) IFRS 9 Financial Instruments
+Impact of adoption (continued)
+Following the adoption of IFRS 9, the adjustments to the carrying amount of each financial statement item
+are illustrated as follows:
+Remeasurement
+effects (iii)
+31 December 2017
+Reclassification
+(211)
+effects (i)
+1 January 2018
+Cash and amounts due from banks and other
+financial institutions
+483,891
+(23,500)
+(504)
+459,887
+Measured at fair value through other
+comprehensive income ('FVOCI')
+3,900
+Measured at amortized cost ('AC')
+483,891
+(27,400)
+(7)
+(497)
+Remeasurement
+effects (iii)
+- From Loans and receivables ('LR')
+149,351
+(1,083)
+31 December 2017
+Reclassification
+effects (i)
+Remeasurement
+effects (iii)
+1 January 2018
+Debt financial assets at fair value through
+other comprehensive income
+From fixed maturity investments
+- From AFS
+- From LR
+219,533
+22
+208,307
+22
+188,793
+Debt financial assets at fair value through other comprehensive income
+19,514
+11,226
+219,555
+From other assets
+(5) Equity financial assets at fair value through other comprehensive income
+31 December 2017
+Reclassification
+effects (i)
+Remeasurement
+effects (iii)
+1 January 2018
+Equity financial assets at fair value through
+other comprehensive income
+- From equity investments
+- From AFS
+Increase in assets sold under agreements to
+22
+347,876
+(4)
+Impact of adoption (continued)
+From equity investments
+415,447
+(116)
+- From AFS
+346,895
+(116)
+- From financial assets at FVPL
+68,552
+From loans and advances to customers
+358
+- From other assets
+178
+- From cash and amounts due from banks
+Following the adoption of IFRS 9, the adjustments to the carrying amount of each financial statement item
+are illustrated as follows (continued):
+and other financial institutions
+Annual Report 2018
+1 January 2018
+12,246
+1 January 2018
+692,389
+Ping An Insurance (Group) Company of China, Ltd.
+161
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+(a) IFRS 9 Financial Instruments
+23,500
+50,309
+25,891
+effects (i)
+(2,376,638)
+50,295
+For the year ended 31 December 2018
+1. CORPORATE INFORMATION
+Ping An Insurance (Group) Company of China, Ltd. (the 'Company') was registered in Shenzhen, the
+People's Republic of China (the 'PRC') on 21 March 1988. The business scope of the Company includes
+investing in financial and insurance enterprises, as well as supervising and managing various domestic and
+overseas businesses of subsidiaries, and controlled funds. The Company and its subsidiaries are collectively
+referred to as the Group. The Group mainly provides integrated financial products and services and is
+engaged in life insurance, property and casualty insurance, trust, securities, banking and other businesses.
+The registered office address of the Company is 47th, 48th, 109th, 110th, 111th and 112th Floors, Ping An
+Finance Centre, No. 5033 Yitian Road, Futian District, Shenzhen, Guangdong Province, China.
+These consolidated financial statements are presented in millions of Renminbi ('RMB') unless otherwise
+stated.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+(1) BASIS OF PREPARATION
+The consolidated financial statements have been prepared in accordance with IFRS which comprise
+standards and interpretations approved by the IASB and IFRS Interpretations Committee applicable to
+companies reporting under IFRS. The financial statements have been prepared under the historical cost
+convention, except for financial assets and financial liabilities (including derivative instruments) measured
+at fair value and insurance contract liabilities, which have been measured primarily based on actuarial
+methods.
+The preparation of financial statements in conformity with IFRS requires the use of certain critical
+accounting estimates. It also requires management to exercise its judgment in the process of applying the
+Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
+assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES
+Changes in accounting policies
+To the extent that a topic is not covered explicitly by IFRS, the IFRS framework permits reference to
+another comprehensive body of accounting principles, and therefore the Group has chosen to refer to the
+accounting practices currently adopted by insurance companies reporting under Accounting Standards for
+Business Enterprises.
+The accounting policies adopted are consistent with those of the annual financial statements for the year
+ended 31 December 2017, except for the adoption of new and amended standards as set out in below.
+A number of new or amended International Financial Reporting Standards ("IFRS") became applicable for
+the current reporting period and the Group had to change its accounting policies and make adjustments as
+a result of adopting the following standards:
+Notes to Consolidated Financial Statements
+IFRS 9 Financial Instruments, and
+Except for the impact of adopting IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with
+Customers and the other standards have no significant impact on the annual consolidated financial
+statements for the year ended 31 December 2018.
+IFRS 9 replaces the provisions of IAS 39 that relate to the classification and measurement of financial
+assets, impairment of financial assets and hedge accounting.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+159
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+Changes in accounting policies (continued)
+The adoption of IFRS 9 Financial Instruments from 1 January 2018 resulted in changes in accounting policies
+and adjustments to the amounts recognized in the financial statements. The new accounting policies are
+set out in note 2(11) - (17).
+(a) IFRS 9 Financial Instruments - Impact of adoption
+IFRS 15 Revenue from Contracts with Customers.
+As IFRS 9 was generally adopted without restating comparative information, the reclassifications and the
+adjustments arising from the new impairment rules are therefore not reflected in the restated balance sheet
+as at 31 December 2017, but are recognized in the opening balance sheet on 1 January 2018.
+Ping An Insurance (Group) Company of China, Ltd.
+308,664
+Proceeds from borrowings
+25,709
+47,382
+166,538
+51,615
+Repayment of borrowings
+Interest paid
+Dividends paid
+Others
+Net cash flows from financing activities
+(986,646)
+348,046
+(1,147,255)
+(25,308)
+(35,693)
+(16,109)
+Annual Report 2018
+(21,278)
+4,335
+31,264
+178,588
+Decrease in cash and cash equivalents
+(2,902)
+(54,896)
+Cash and cash equivalents at beginning of the year
+2,262
+308,664
+(3,992)
+367,552
+Cash and cash equivalents at end of the year
+54
+308,024
+989
+The impact on the Group's balance sheet as at 1 January 2018 is as follows:
+Net foreign exchange differences
+Note
+40,141
+Other assets
+10
+238,762
+261,275
+Equity
+Include:
+583,122
+587,917
+Reserves
+Retained profits
+Non-controlling interests
+Liabilities
+41,687
+Include:
+Investment contract liabilities for policyholders
+Other liabilities
+182,807
+217,881
+269,490
+237,190
+112,545
+114,566
+5,903,634
+5,905,158
+(in RMB million)
+Assets
+1,932,969
+1,932,228
+Insurance contract liabilities
+99,296
+Deferred tax liabilities
+Deferred tax assets
+31 December 2017
+6,486,756
+99,295
+1 January 2018
+6,493,075
+Include:
+Cash and amounts due from banks and other
+financial institutions
+Statutory deposits for insurance operations
+1 2 3
+459,887
+12,246
+692,389
+483,891
+12,250
+4
+219,555
+Financial assets at fair value through profit or loss
+Debt financial assets at fair value through other
+comprehensive income
+Financial assets at amortized cost
+1,631,688
+1,660,864
+Equity financial assets at fair value through other
+comprehensive income.
+Financial assets held under resold agreements
+630,676
+2,376,638
+1,947,974
+7
+215,229
+56989
+Loans and advances to customers
+Equity investments
+Fixed maturity investments
+When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
+classification and designation in accordance with the contractual terms, economic circumstances and
+pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in
+host contracts by the acquiree. If the business combination is achieved in stages, the previously held equity
+interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognized in profit
+or loss.
+IFRS 17, 'Insurance Contracts', was published on 18 May 2017. IFRS 17 established principles for the
+recognition, measurement, presentation and disclosure of insurance contracts issued. It replaces IFRS
+4, which currently permits a wide variety of practices. IFRS 17 requires a current measurement model,
+where estimates are remeasured in each reporting period. The measurement is based on the building
+blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin
+representing the unearned profit of the contract. The new standard is currently mandatorily effective for
+financial years commencing on or after 1 January 2021, however in November 2018, IASB proposed to defer
+IFRS 17 until the financial period beginning on or after 1 January 2022. The Group has started to assess the
+impact of IFRS 17.
+(4) BUSINESS COMBINATIONS AND GOODWILL
+Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition
+date. Contingent consideration classified as an asset or a liability that is a financial instrument and within
+the scope of IFRS 9 is measured at fair value with changes in fair value either recognized in profit or loss or
+as a change to other comprehensive income. If the contingent consideration is not within the scope of IFRS
+9, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as
+equity is not remeasured and subsequent settlement is accounted for within equity.
+There are no other IFRSS or IFRIC interpretations that are not yet effective that would be expected to have
+a material impact on the Group.
+Business combinations that are not under common control are accounted for using the acquisition method.
+The cost of an acquisition is measured at the acquisition date fair value which is the sum of the acquisition
+date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners
+of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For
+each business combination, the Group elects whether to measure the non-controlling interests in the
+acquiree that are present ownership interests and entitle their holders to a proportionate share of net
+assets in the event of liquidation at fair value or at the proportionate share of the acquiree's identifiable
+net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related
+costs are expensed as incurred.
+(3) ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS
+(CONTINUED)
+FINANCIAL STATEMENTS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+170
+Ping An Insurance (Group) Company of China, Ltd. 169
+Annual Report 2018
+(3) ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS
+The Group has not applied the following new and revised standards, which have been issued but are not
+yet effective.
+Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred,
+the amount recognized for non-controlling interests and any fair value of the Group's previously held
+equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum
+of this consideration and other items is lower than the fair value of the net assets acquired, the difference
+is, after reassessment, recognized in profit or loss as a gain on bargain purchase.
+IFRS 16, 'Leases' addresses the definition of a lease, recognition and measurement of leases and establishes
+principles for reporting useful information to users of financial statements about the leasing activities of
+both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted
+on balance sheet for lessees. The standard replaces IAS 17 ‘Leases', and related interpretations. The
+new standard will be effective for financial years commencing on or after 1 January 2019. The Group has
+completed the assessment of the impact of IFRS 16, which would not be expected to have material impact
+on the Group.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill
+is tested for impairment annually or more frequently if events or changes in circumstances indicate that
+the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31
+December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the
+acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating units,
+that are expected to benefit from the synergies of the combination, irrespective of whether other assets or
+liabilities of the Group are assigned to those units or groups of units.
+Derecognizes the carrying amount of any non-controlling interest;
+Ping An Insurance (Group) Company of China, Ltd.
+Ping An Insurance (Group) Company of China, Ltd.
+Material judgement is required in determining long term insurance contract liabilities and in choosing
+discount rates/investment return, mortality, morbidity, lapse rates, policy dividend, and expenses
+assumptions relating to long term life insurance contracts. Such assumptions should be determined based
+on current information available at the end of the reporting date. The Group has changed the above
+assumptions based on current information available as at 31 December 2018 and updated estimate for
+future cash flows, with the corresponding impact on long term life insurance contract liabilities taken
+into statement of income of the current year. As a result of such changes in assumptions, long term life
+insurance and long term health insurance policyholders' reserves were decreased by RMB3,002 million as at
+31 December 2018 and the profit before tax for the year 2018 was increased by RMB3,002 million (2017: long
+term life insurance and long term health insurance policyholders' reserves were increased by RMB32,193
+million as at 31 December 2017 and the profit before tax for the year 2017 was decreased by RMB32,193
+million).
+Annual Report 2018
+Reclassifies the Group's share of components previously recognized in other comprehensive income to
+profit or loss or retained earnings, as appropriate.
+Recognizes any surplus or deficit in profit or loss; and
+Recognizes the fair value of any investment retained;
+Recognizes the fair value of the consideration received;
+Derecognizes the cumulative translation differences recorded in equity;
+Annual Report 2018
+Derecognizes the assets (including goodwill) and liabilities of the subsidiary;
+Total comprehensive income within a subsidiary is still attributed to the non-controlling interest even if it
+results in a deficit balance.
+Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
+control, and continue to be consolidated until the date when such control ceases. The financial statements
+of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
+accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from
+intra-group transactions and dividends, are eliminated on consolidation in full, unless the transaction
+provides evidence of an impairment of the transferred asset.
+The consolidated financial statements comprise the financial statements of the Company and its
+subsidiaries as at 31 December 2018 and for the year then ended.
+(5) BASIS OF CONSOLIDATION
+Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and
+part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
+of is included in the carrying amount of the operation when determining the gain or loss on the disposal.
+Goodwill disposed in these circumstances is measured based on the relative value of the disposed
+operation and the portion of the cash-generating unit retained.
+Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
+cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating
+unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognized. An
+impairment loss recognized for goodwill is not reversed in subsequent periods.
+(4) BUSINESS COMBINATIONS AND GOODWILL (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
+transaction. If the Group loses control over a subsidiary, it:
+Changes in accounting estimates
+As at the end of each reporting period, the Group evaluates each of the available-for-sale equity
+instruments to determine whether the investments are impaired. If objective evidence of impairment exists,
+the Group records an impairment loss in the statement of income equal to the difference between the
+cost of the instrument and the current fair value, adjusted for losses recorded in previous periods. Any
+unrealized gains or losses previously recognized in the available-for-sale financial assets reserve is removed
+and recognized in the statement of income as part of the calculation of impairment loss described above.
+(b) IFRS 15, 'Revenue from contracts with customers'
+FINANCIAL STATEMENTS
+167
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+For equity instruments, a significant or prolonged decline in the fair value of an equity instrument bellow
+the cost is objective evidence of impairment. In conducting an impairment analysis, the Group considers
+quantitative and qualitative evidence. More specifically, the Group collectively considers the magnitude of
+the decline in fair value relative to the cost, volatility, and the duration of the decline in evaluating whether
+a decline in fair value is significant. The Group considers the period and consistency of the decline in
+evaluating whether a decline in fair value is prolonged. The Group generally considers a decline of 50% or
+more as significant and a period of 12 months or longer is considered to be prolonged.
+Available-for-sale financial assets
+The Group assesses at the end of the reporting period the carrying amount of financial assets. If there is
+any objective evidence that a financial asset is impaired, the Group provides for such impairment losses.
+The objective evidence which indicates impairment of financial assets represents events actually occurring
+after initial recognition of financial assets which have an impact on the financial assets' estimated future
+cash flows, and the impact can be reliably measured.
+Impairment of financial assets
+Notes to Consolidated Financial Statements
+For a financial asset reclassified from the available-for-sale category, the fair value at the date of
+reclassification becomes its new amortized cost and any previous gain or loss on that asset that has been
+recognized in equity is amortized to profit or loss over the remaining life of the investment using the
+effective interest rate ('EIR'). Any difference between the new amortized cost and the expected cash flows
+is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently determined
+to be impaired, then the amount recorded in equity is reclassified to the statement of income.
+After initial recognition, available-for-sale financial assets are subsequently measured at fair value, with
+unrealized gains or losses recognized as other comprehensive income in the capital reserve until the asset
+is derecognized, at which time, the cumulative gain or loss is recognized in investment income, or until
+the investment is determined to be impaired, when the cumulative loss is recognized in the statement of
+income in investment income and removed from the capital reserve.
+Available-for-sale financial investments include equity and debt securities. Equity investments classified
+as available-for-sale are those, which are neither classified as held for trading nor designated at fair
+value through profit or loss. Debt securities in this category are those that are intended to be held for
+an indefinite period of time and which may be sold in response to needs for liquidity or in response to
+changes in the market conditions.
+Classification and measurement of financial assets (continued)
+Impact of adoption (continued)
+(a) IFRS 9 Financial Instruments
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+171
+Reclassification of financial assets with fixed or determinable payments and fixed maturity from available
+for sale to held-to-maturity is permitted when the Group has the ability and intention to hold the financial
+asset until maturity.
+IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users
+of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising
+from an entity's contracts with customers. Revenue is recognized when a customer obtains control of a
+good or service and thus has the ability to direct the use and obtain the benefits from the good or service.
+The standard replaces IAS 18 ‘Revenue' and IAS 11 'Construction contracts' and related interpretations. The
+standard is effective for financial years commencing on 1 January 2018. The Group has applied IFRS 15 and
+completed the assessment of the impact which has no material impact on the Group for the year ended 31
+December 2018.
+For the year ended 31 December 2018
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument
+that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset
+that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of
+loss is measured as the difference between the asset's carrying amount and the present value of estimated
+future cash flows discounted at the current market rate of return for a similar financial asset. Impairment
+losses on these assets are not reversed.
+Impact of adoption (continued)
+(a) IFRS 9 Financial Instruments
+Financial assets carried at cost
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+168
+After the Group recognizes an impairment loss of financial assets carried at amortized cost, if there is
+objective evidence that the financial assets' value restores and the restoration can be related objectively to
+an event occurring after the impairment was recognized, the previously recognized impairment loss shall
+be reversed and recognized in profit or loss. However, the reversal shall not result in a carrying amount of
+the financial asset that exceeds what the amortized cost would have been had the impairment not been
+recognized at the date the impairment was reversed.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For a financial asset that is individually significant, the Group assesses the asset individually for impairment,
+and recognizes the amount of impairment in profit or loss. For a financial asset that is not individually
+significant, the Group assesses the asset individually for impairment or includes the asset in a group of
+financial assets with similar credit risk characteristics and collectively assesses them for impairment. If
+it is determined that no objective evidence of impairment exists for an individually assessed financial
+asset, whether the financial asset is individually significant or not, the financial asset is included in a
+group of financial assets with similar credit risk characteristics and collectively assessed for impairment.
+Financial assets for which an impairment loss is individually recognized are not included with similar risk
+characteristics in the collective assessment for impairment.
+Financial assets carried at amortized cost
+If after an impairment loss has been recognized on an available-for-sale debt instrument, and the fair
+value of the debt instrument increases in a subsequent period whereby the increase can be objectively
+related to an event occurring after the impairment losses were recognized, the impairment loss is reversed
+which is recognized in profit or loss. Impairment losses recognized for equity instruments classified as
+available-for-sale are not reversed through profit or loss.
+Impairments do not establish a new cost basis and, accordingly, to the extent an impairment loss has been
+previously recorded due to the significant or prolonged criteria described above, any subsequent losses,
+including any portion attributable to foreign currency changes, are also recognized in profit or loss until the
+asset is derecognized.
+Adverse changes relative to the investee's technology, market, customer base, macroeconomic
+indicators relative to the business, significant legal or regulatory matters.
+Significant financial difficulty of the investee, including failure to comply with contractual obligations,
+financial restructuring, deterioration of going concern expectations;
+The Group also considers qualitative evidence that includes, but is not necessarily limited to the following:
+Available-for-sale financial assets (continued)
+(a) IFRS 9 Financial Instruments Impact of adoption (continued)
+If financial assets carried at amortized cost are impaired, the carrying amount of the financial assets is
+reduced to the present value of estimated future cash flows (excluding future credit losses that have not
+been incurred) and the reduction is recognized as an impairment loss in the statement of income. The
+present value of estimated future cash flows shall be calculated with the financial asset's original effective
+interest rate and the related collateral value shall also be taken into account.
+FINANCIAL STATEMENTS
+(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
+For the year ended 31 December 2018
+Ping An Insurance (Group) Company of China, Ltd.
+The Group subsequently measures all equity investments at fair value. Where the Group's management
+has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
+reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
+Dividends, representing a return on such investments continue to be recognized in profit or loss when the
+Group's right to receive payments is established.
+Equity instruments
+FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL.
+The gains or losses arisen from fair value changes on the debt investments measured at FVPL are
+recognized in profit or loss.
+FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
+where the assets' cash flows represent solely payments of principal and interest, and that are not
+designated as FVPL are measured at FVOCI. Movements in the carrying amount are taken through
+OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange
+gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the
+cumulative gain or loss on the instrument's amortized cost previously recognized in OCI is reclassified
+from equity to profit or loss. Interest income from these financial assets is included in interest income
+using the effective interest rate method. Such assets held by the group mainly include debt financial
+assets at FVOCI and loans and advances to customers measured at FVOCI, etc.
+Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows.
+represent solely payments of principal and interest, and that are not designated at FVPL are measured
+at amortized cost. Interest income from these financial assets is included in interest income using the
+effective interest rate method. Any gain or loss arising from derecognition or impairment is recognized
+directly in profit or loss. Such assets held by the group mainly include cash and amounts due from
+banks and other financial institution, balances with the central bank, accounts receivable, financial
+assets at AC, loans and advances to customers measured at AC, etc.
+debt instruments:
+Debt instruments are those instruments that meet the definition of a financial liability from the issuer's
+perspective, such as loans, government and corporate bonds, etc. Subsequent measurement of
+debt instruments depends on the Group's business model for managing the asset and the cash flow
+characteristics of the asset. There are three measurement categories into which the Group classifies its
+Debt instruments
+Classification and Measurement (continued)
+(12) FINANCIAL ASSETS (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+The Group determines the classification of debt investments according to its business model and the
+contractual cash flow characteristics of the financial assets. The investments shall be classified as FVPL
+if the cash flows cannot pass solely payments of principal and interest on the principal amount ("SPPI”)
+testing. Otherwise, the classification finally depends on the business model. For investments in equity
+instruments, investments are classified as FVPL in general, except those designated as the equity
+investment at FVOCI.
+those to be measured at fair value through profit or loss ("FVPL").
+175
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+176
+The Group recognizes or reverses the loss allowance through profit or loss. For debt instruments measured
+at FVOCI, impairment gains or losses are included in the net impairment losses on financial assets and
+corresponding by reduce the accumulated changes in fair value included in the OCI reserve of equity.
+For account receivables, the Group refers to historical experience of credit loss, combines with current
+situation and forward-looking information, formulate the lifetime expected credit loss of the financial
+assets.
+For the financial Instruments in Stage 1 and Stage 2, the Group calculates the interest income based on its
+gross carrying amount (ie amortized cost) before adjusting for impairment provision using the effective
+interest method. For the financial instruments in Stage 3, the interest income is calculated based on the
+carrying amount of the asset, net of the impairment provision, using the effective interest method. Financial
+assets that are originated or purchased credit impaired are financial assets that are impaired at the time of
+initial recognition, and the impairment provision for these assets is the expected credit loss for the entire
+lifetime.
+Stage 3: If the financial instrument is credit-impaired, the financial instrument is then moved to 'Stage 3'.
+The impairment provisions is measured based on expected credit losses on lifetime basis.
+Stage 2: If a significant increase in credit risk ('SICR') since initial recognition is identified, the financial
+instrument is moved to ‘Stage 2' but is not yet deemed to be credit-impaired. The impairment
+provisions is measured based on expected credit losses on lifetime basis.
+those to be measured at fair value through other comprehensive income ("FVOCI"); or
+Stage 1: A financial instrument that is not credit-impaired on initial recognition is classified in 'Stage 1' and
+has its credit risk continuously monitored by the Group. The impairment provisions is measured
+at an amount equal to the 12-month expected credit losses for the financial assets which are not
+considered to have significantly increased in credit risk since initial recognition.
+iii) Establishing the number and relative weightings of forward-looking scenarios for the associated ECL.
+ii) Determining criteria for significant increase in credit risk;
+Choosing appropriate models and assumptions for the measurement of ECL including exposure at
+default (EAD), probability of default (PD), loss given default (LGD), etc.;
+The Group assesses on a forward looking basis the expected credit losses associated with its debt
+instruments carried at amortized cost, FVOCI, with the exposure arising from loan commitments and
+financial guarantee contracts that are not in the scope of 'Insurance Contracts'. A number of significant
+judgements are also required in applying the accounting requirements for measuring ECL, such as:
+Expected credit loss refers to the weighted average amount of credit loss of financial instruments based
+on the probability of default. Credit loss refers to the difference between all contractual cash flows
+receivable and all cash flows that the entity expects to receive, discounted at the original effective interest
+rate.
+Impairment
+(12) FINANCIAL ASSETS (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the financial assets subject to ECL measurement, the Group assesses the significant increase in credit
+risk since initial recognition or whether an asset is considered to be credit impaired, 'Three-stage' expected
+credit loss models are established and staging definition are set for each of these financial assets class.
+Incorporating forward-looking information, expected credit losses for financial assets are recognized into
+the different stages.
+those to be measured at amortized cost ("AC");
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Classification and Measurement
+(9) JOINTLY CONTROLLED ENTITIES
+The results of associates are included in the Group's statement of income to the extent of dividends
+received and receivable. The Group's investments in associates are treated as non-current assets and are
+stated at cost less any impairment losses.
+Upon application of the equity method, the Group determines whether it is necessary to recognize an
+additional impairment loss on the Group's investments in its associates. The Group determines at each
+reporting date whether there is any objective evidence that the investment in the associate is impaired. If
+this is the case, the Group calculates the amount of impairment as the difference between the recoverable
+amount of the associate and its carrying value and recognizes the amount in the statement of income.
+Upon loss of significant influence over the associate, the Group measures and recognizes any remaining
+investment at its fair value. Any differences between the carrying amount of the associate upon loss of
+significant influence and the fair value of the remaining investment, as well as the gain on disposal of the
+associates, are recognized in profit or loss.
+The financial statements of the associates are prepared for the same reporting period as the parent
+company. Where necessary, adjustments are made to bring the accounting policies in line with those of the
+Group.
+(8) ASSOCIATES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+172
+The Group has assessed the nature of its jointly controlled entities and determined them to be joint
+ventures. The Group has rights to the net assets of these jointly controlled entities. The Group's
+investments in its jointly controlled entities are accounted for using the equity method of accounting, less
+any impairment losses. Refer to Note 2. (8) for details of the equity method of accounting.
+An associate is an entity, not being a subsidiary or a jointly controlled entity, in which the Group has a long
+term interest of generally not less than 20% of the equity voting rights and over which it is in a position to
+exercise significant influence.
+The Group holds beneficiary certificates in its trust products, debt investment plans, equity investment
+plans and asset funding plans.
+The Group has determined that all of its trust products, debt investment plans, equity investment plans
+and asset funding plans, which are not controlled by the Group, are unconsolidated structured entities.
+Trust products, equity investment plans and asset funding plans are managed by affiliated or unaffiliated
+trust companies or asset managers and invest the funds raised in loans or equities of other companies.
+Debt investment plans are managed by affiliated or unaffiliated asset managers and its major investment
+objectives are infrastructure funding projects. Trust products, debt investment plans, equity investment
+plans and asset funding plans finance their operations by issuing beneficiary certificates which entitle the
+holders to agreed stake according to contractual terms in the respective trust products', debt investment
+plans', equity investment plans' and asset funding plans' income.
+The Group determines whether it is an agent or a principal in relation to those structured entities in which
+the Group acts as an asset manager on management's judgement. If an asset manager is agent, it acts
+primarily on behalf of others and so does not control the structured entity. It may be principal if it acts
+primarily for itself, and therefore controls the structured entity.
+A structured entity is an entity that has been designed so that voting or similar rights are not the dominant
+factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks
+only, and the relevant activities are directed by means of contractual or related arrangements.
+(7) STRUCTURED ENTITIES
+A subsidiary is an entity (including structured entities) over which the Group has control. The Group
+controls an entity when the Group has power over an entity, is exposed to, or has rights to, variable returns
+from its involvement with the entity and has the ability to affect these returns through its power over
+the entity. The results of subsidiaries are included in the Company's statement of income to the extent of
+dividends received and receivable. The Company's investments in subsidiaries are stated at cost less any
+impairment losses.
+The Group classifies its financial assets in the following measurement categories, which depends on the
+Group's business model for managing the financial assets and the contractual terms of the cash flows:
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(6) SUBSIDIARIES
+(8) ASSOCIATES
+(10) FOREIGN CURRENCIES
+The Group's investments in associates are stated in the consolidated financial statement of financial
+position at the Group's share of net assets under the equity method of accounting, less any impairment
+losses. The Group's share of post-acquisition profit or loss is recognized in the income statement, and its
+share of post-acquisition movements in other comprehensive income is recognized in other comprehensive
+income with a corresponding adjustment to the carrying amount of the investment. When the Group's
+share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
+receivables, the Group does not recognize further losses, unless it has incurred legal or constructive
+obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from
+transactions between the Group and its associates are eliminated to the extent of the Group's investments
+in the associates, except where unrealized losses provide evidence of an impairment of the asset
+transferred. Goodwill arising from the acquisition of associates is included in the carrying amount of the
+investment and is neither amortized nor individually tested for impairment.
+Foreign currency transactions recorded by the entities in the Group are initially recorded using their
+respective functional currency rates prevailing at the dates of the transactions. Monetary assets and
+liabilities denominated in foreign currencies are translated at the functional currency rates of exchange
+ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items
+are recognized in the statement of income.
+The Group shall recognize a financial asset or a financial liability in its statement of financial position when,
+and only when, it becomes a party to the contractual provisions of the instrument.
+These financial statements are presented in RMB, which is the Company's functional and presentation
+currency. Each entity in the Group determines its own functional currency and items included in the
+financial statements of each entity are measured using that functional currency.
+At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
+asset not at fair value through profit or loss, transaction costs that are incremental and directly attributable
+to the acquisition or issue of the financial asset. Transaction costs of financial assets carried at FVPL are
+expensed in profit or loss.
+Recognition
+(12) FINANCIAL ASSETS
+For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on
+hand, demand deposits, current accounts with the Central Bank and short term highly liquid investments
+including assets purchased under reverse repurchase agreements and others which are readily convertible
+into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short
+maturity of generally within three months when acquired.
+For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are
+translated into RMB at the exchange rates for their functional and currencies ruling at the dates of the
+cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are
+translated into RMB at the weighted average exchange rate for the year.
+The functional currency of most of overseas subsidiaries is the Hong Kong dollar. At the end of the
+reporting period, the assets and liabilities of these overseas subsidiaries are translated into the presentation
+currency of the Company at the exchange rates prevailing at the end of the reporting period and their
+statements of income are translated into RMB at the average exchange rate for the year. The resulting
+exchange differences are recognized in other comprehensive income and accumulated in the exchange
+differences on translation of foreign operations reserve. On disposal of a foreign operation, the component
+of other comprehensive income relating to that particular foreign operation is recognized in the statement
+of income.
+(10) FOREIGN CURRENCIES (CONTINUED)
+(11) CASH AND CASH EQUIVALENTS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+174
+FINANCIAL STATEMENTS
+173
+Ping An Insurance (Group) Company of China, Ltd.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Annual Report 2018
+Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
+the exchange rates as at the dates of initial transactions. Non-monetary items measured at fair value in a
+foreign currency are translated using the exchange rates at the date when the fair value was determined.
+The gain or loss on change arising on translation of a non-monetary item measured at fair value is treated
+in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference
+on the item whose fair value gain or loss is recognized in other comprehensive income or profit or loss is
+also recognized in profit or loss and other comprehensive income, respectively).
+Trademarks are initially stated at cost and subsequently amortized on the straight-line basis over the
+estimated useful lives.
+Software and others (including patents and know-how, customer relationships and
+contract rights, etc.)
+Trademarks
+The estimated useful lives of intangible assets are set as below:
+Prepaid land premiums
+Expressway operating rights
+Estimated useful lives
+Core deposits
+20 - 30 years
+183
+50 years,
+indefinite
+20 years
+10 40 years
+228 years
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+(d) Trademarks
+30
+Prepaid land premiums are prepaid under PRC law for fixed periods. Prepaid land premiums are initially
+stated at cost and subsequently amortized on the straight-line basis over the lease terms. All lands related
+to the Group's prepaid land premiums are located in Mainland China.
+1% - 10%
+0% - 10%
+1% - 10%
+Expenditures on acquiring the expressway operating rights are capitalized as intangible assets and
+subsequently amortized on the straight-line basis over the contract terms.
+Equipment, furniture and fixtures
+Motor vehicles
+Estimated residual values
+Estimated useful lives
+For the year ended 31 December 2018
+Over the shorter of economic
+useful lives and terms of the leases
+20-40 years
+3 - 15 years
+510 years
+The useful lives and depreciation methods are reviewed periodically to ensure that the method and period
+of depreciation are consistent with the expected pattern of economic benefits from the items of property
+and equipment.
+Fully depreciated assets are retained in the financial statements until they are no longer in use and no
+further charge for depreciation is made in respect of these assets.
+(22) CONSTRUCTION IN PROGRESS
+Construction in progress mainly represents costs incurred in the construction of building premises, as well
+as the cost of equipment pending installation, less any impairment losses.
+No provision for depreciation is made on construction in progress until such time the relevant assets are
+completed and ready for use.
+182
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(23) INTANGIBLE ASSETS (OTHER THAN GOODWILL)
+Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
+assets acquired in a business combination is the fair value as at the date of acquisition. The useful
+lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
+are subsequently amortized on the straight-line basis over the useful economic life and assessed for
+impairment whenever there is an indication that the intangible asset may be impaired. The amortization
+period and the amortization method for an intangible asset with a finite useful life are reviewed at least at
+each financial year end.
+Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the
+cash-generating unit level. Such intangible assets are not amortized. The useful life of an intangible asset
+with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to
+be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on
+a prospective basis.
+(a) Core deposits
+Core deposits are accounts that a financial institution expects to maintain for an extended period of time
+due to ongoing business relationships. The intangible asset value associated with core deposits reflects
+the present value of additional cash flow resulted from the use of the deposits at a lower cost alternative
+source of funding in the future periods.
+(b) Expressway operating rights
+(c) Prepaid land premiums
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+According to the 'Administrative Regulations on the Insurance Guarantee Fund' (CIRC [2008] No.2), the
+Group calculates the insurance guarantee fund as follows:
+Foreclosed assets are initially recognized at fair value. The difference between the initial fair value and the
+sum of the related loan principal, interest receivable and impairment provision is taken into the statement
+of income. At the end of the reporting period, the foreclosed assets are measured at the lower of their
+carrying value and net recoverable amount. When the carrying value of the foreclosed assets is higher than
+the net recoverable amount, a provision for the decline in value of foreclosed assets is recognized in the
+statement of income in 'General and administrative expenses'.
+185
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(28) INSURANCE CONTRACTS
+Insurance contracts are those contracts under which the Group has accepted significant insurance risk from
+the policyholders by agreeing to compensate the policyholders if a specified uncertain future event (the
+insured event) adversely affects the policyholders. Insurance contracts are classified as direct insurance
+contracts and reinsurance contracts. The significance of insurance risk as determined by the Group is
+mainly dependent on the magnitude of its potential effect.
+Some insurance contracts contain both an insurance component and a deposit component. The Group
+chooses to unbundle those components, if the insurance component and the deposit component are
+distinct and separately measurable. The unbundled insurance component is accounted for according to
+IFRS 4 and the unbundled deposit component is accounted for according to relevant accounting policies.
+If the insurance component and the deposit component are not distinct and separately measurable, the
+whole contract is accounted for as an insurance contract.
+(29) SIGNIFICANT INSURANCE RISK TESTING
+For other insurance contracts issued by the Group, tests are performed to determine if the contracts
+contain significant insurance risk, and contracts of similar nature are grouped together for this purpose.
+When performing the significant insurance risk test, the Group makes judgments in sequence as to whether
+the contract transfers insurance risk, whether the contract has commercial substance, and whether the
+transferred insurance risk is significant.
+(30) INSURANCE CONTRACT LIABILITIES
+The insurance contract liabilities of the Group include long term life insurance policyholders' reserves,
+unearned premium reserves and claim reserves.
+When measuring insurance contract liabilities, the Group classifies insurance contracts whose insurance
+risks are of similar nature as a measurement unit. Property and casualty and short term life insurance
+policies are grouped into certain measurement units by lines of business. For long term life insurance
+policies, the Group mainly considers the characteristics of the policies, including product type, gender, age,
+and durations of policies, when determining the measurement units.
+Insurance contract liabilities are measured based on a reasonable estimate of amount of payments when
+the Group fulfills the relevant obligations under the insurance contracts, which represents the difference
+between expected future cash outflows and inflows under such contracts, i.e., the expected future net cash
+outflows.
+Expected future cash outflows represent reasonable cash outflows which are necessary for the
+Group to fulfill the obligations under the insurance contracts (including benefits attributable to the
+policyholders), and mainly include:
+Guaranteed benefits under the insurance contracts, including claims, mortality benefits, disability
+benefits, morbidity benefits, survival benefits and maturity benefits;
+Non-guaranteed benefits under the insurance contracts arising from constructive obligations,
+including policyholder dividends, etc.;
+Reasonable expenses necessary for policy administration and claims handling, including policy
+maintenance expenses, claim expenses, etc.
+Expected future cash inflows represent cash inflows arising from assuming liabilities under the
+insurance contracts, including premium income and other charges.
+186
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+The revenue and premium income used in the calculation of the insurance guarantee fund is the amount
+agreed in the insurance policies.
+No additional provision is required when the accumulated insurance guarantee fund balances of Ping An
+Life Insurance Company of China, Ltd. ('Ping An Life'), Ping An Annuity Insurance Company of China, Ltd.
+('Ping An Annuity') and Ping An Health Insurance Company of China, Ltd. ('Ping An Health') reach 1% of
+their respective total assets. For Ping An Property & Casualty Insurance Company of China, Ltd. ('Ping An
+Property & Casualty'), no additional provision is required when the accumulated balance reaches 6% of its
+total assets. Insurance guarantee fund levy is charged to expenses as incurred.
+(25) INVENTORIES
+The Group's inventories comprise raw materials, product in progress, finished goods, other supplemental
+materials, etc. and lands purchased that have been set to be used to build properties for sale by real estate
+subsidiaries. Inventory is initially measured at cost which includes purchasing cost, processing cost and
+other costs which made the inventory to the present place and status.
+The actual cost of inventory is priced based on moving weighted average method.
+At the end of the reporting period, inventory is measured at the lower of its cost and net realizable value. If
+the net realizable value is lower than cost, inventory impairment provisions are allotted.
+Net realizable value is the estimated selling price in the ordinary course of business less the estimated
+costs of completion and the estimated costs necessary to make the sale and related taxes. Estimates of net
+recoverable amount are based on the most reliable evidence available at the time the estimates are made,
+also taking into consideration the purpose for which the inventory is held and the influence of events after
+the end of the reporting period.
+Inventory impairment provisions should be accrued when the cost of individual inventory item is higher
+than its net realizable value.
+After allotting inventory impairment provisions, if the influencing factors of previous inventory impairment
+provisions have disappeared, and hence the net realizable value of the inventories are higher than their
+book values, the previous written down amount should be recovered and the reversed amount which is
+within the amount of original allotted inventory impairment provisions should be included in current profit
+and loss.
+(26) IMPAIRMENT OF NON-FINANCIAL ASSETS
+The Group assesses at each reporting date whether there is an indication that a non-financial asset other
+than deferred tax assets may be impaired. If any such indication exists, or when annual impairment testing
+for a non-financial asset is required, the Group makes an estimate of the asset's recoverable amount. A
+non-financial asset's recoverable amount is the higher of the asset's or cash-generating unit's fair value
+less costs to sell and its value in use and is determined for an individual asset, unless the asset does not
+generate cash inflows that are largely independent of those from other assets or groups of assets, in which
+case the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where
+the carrying amount of a non-financial asset exceeds its recoverable amount, the asset is considered
+impaired and is written down to its recoverable amount. In assessing value in use, the estimated future
+cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
+assessments of the time value of money and the risks specific to the asset. In determining fair value less
+costs to disposal, an appropriate valuation model is used. These calculations are corroborated by valuation
+multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
+184
+(24) FORECLOSED ASSETS
+Annual Report 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(26) IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)
+For non-financial assets other than goodwill, an assessment is made at each reporting date as to whether
+there is any indication that previously recognized impairment losses may no longer exist or may have
+decreased. If such an indication exists, the Group makes an estimate of the recoverable amount. A
+previously recognized impairment loss is reversed only if there has been a change in the estimates used to
+determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case,
+the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
+exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
+been recognized for the asset in prior years. Such a reversal is recognized in the statement of income.
+Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
+indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable
+amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. The
+recoverable amount is the higher of its fair value less costs to disposal and its value-in-use, determined
+on an individual asset (or cash-generating unit) basis, unless the individual asset (or cash-generating unit)
+does not generate cash flows that are largely independent from those of other assets or groups of assets
+(or groups of cash-generating units). Impairment losses recognized in relation to goodwill are not reversed
+for subsequent increases in its recoverable amount.
+Intangible assets with indefinite useful lives are tested for impairment annually at each year end either
+individually or at the cash-generating unit level, as appropriate.
+(27) INSURANCE GUARANTEE FUND
+Buildings
+0.8% of the premium income for non-investment type property insurance, 0.08% of the consideration
+received for investment type property insurance with guaranteed return, and 0.05% of the
+consideration received for investment type property insurance without guaranteed return;
+0.15% of the consideration received for life insurance with guaranteed return, and 0.05% of the
+consideration received for life insurance without guaranteed return;
+0.8% of the premium income for short term health insurance, and 0.15% of the premium income for long
+term health insurance; and
+0.8% of the premium income for non-investment type accident insurance; 0.08% of the consideration
+received for investment type accident insurance with guaranteed return, and 0.05% of the
+consideration received for investment type accident insurance without guaranteed return.
+Ping An Insurance (Group) Company of China, Ltd.
+Leasehold improvements
+Ping An Insurance (Group) Company of China, Ltd. 181
+The cost of an item of property and equipment comprises its purchase price and any directly attributable
+costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred
+after items of property and equipment have been put into operation, such as repairs and maintenance, is
+normally charged to the statement of income in the year in which it is incurred. In situations where it can
+be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits
+expected to be obtained from the use of an item of property and equipment, and where the cost of the
+item can be measured reliably, the expenditure is capitalized as an additional cost of that asset or as a
+replacement.
+(13) FINANCIAL LIABILITIES (CONTINUED)
+Financial liabilities at fair value through profit or loss (continued)
+The Group may, at initial recognition, designate a financial liability as measured at fair value through profit
+or loss when one of the following criteria is met:
+(a) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
+arise from measuring assets or liabilities or recognizing the gains and losses on them on different
+bases; or
+(b) a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
+accordance with a documented risk management or investment strategy, and information about the
+group is provided internally on that basis to the entity's key management personnel; or
+(c)
+a contract contains one or more embedded derivatives, with the host being not an asset within the
+scope of IFRS 9, and the embedded derivative(s) do(es) significantly modify the cash flows;
+Once designated as at fair value through profit or loss at initial recognition, the financial liabilities shall not
+be reclassified to other financial liabilities in subsequent periods. Financial liabilities designated at FVPL are
+subsequently measured at fair value. Any changes in fair value are recognized in profit or loss, except for
+changes in fair value arising from changes in the Group's own credit risk which are recognized in the OCI.
+Changes in fair value due to changes in the Group's own credit risk are not subsequently reclassified to
+profit or loss upon derecognition of the liabilities.
+Other financial liabilities
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+The Group measures other financial liabilities subsequently at amortized cost, using the effective interest
+method, the other financial liabilities of the Group mainly include customer deposits and payables to
+brokerage customers, short term borrowings, long term borrowings and bonds payable, etc.
+Financial guarantee contracts issued by the Group are those contracts that require a payment to be made
+to reimburse the holder for a loss, which incurs because the specified debtor fails to make a payment when
+due in accordance with the terms of a debt instrument. The Group initially measures such contracts at fair
+value. The fair value at inception is likely to equal the premium received. This amount is recognized ratably
+over the period of the contract to fees and commission income. Subsequently, the liabilities arising from
+the financial guarantee contracts are measured at the higher of the premium received on initial recognition
+less income recognised in accordance with the principles of IFRS 15, and the amount of loss allowance
+calculated as described in note 2.(12).
+However, for contracts that include both a loan and an undrawn commitment and the Group cannot
+separately identify the expected credit losses on the undrawn commitment component from those on the
+loan component, the expected credit losses on the undrawn commitment are recognized together with
+the loan allowance for the loan. To the extent that the combined expected credit losses exceed the gross
+carrying amount for the loan, the expected credit losses are recognized as a provision.
+Apart from the above financial guarantee contracts issued by the Group's banking operations with are
+accounted for under IFRS 9, the Group has also regarded certain financial guarantee contracts as insurance
+contracts and has elected to apply the accounting policies on insurance contracts (Note 2.(28)) to such
+financial guarantee contracts.
+178
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(14) DERIVATIVE FINANCIAL INSTRUMENTS
+The Group's derivative financial instruments mainly include interest rate swaps, forward currency contracts
+and swap transaction, credit swap and stock index futures, etc. Such derivative financial instruments are
+initially recognized at fair value on the date of which the related derivative contracts are entered into
+and are subsequently measured at fair value. All derivatives are carried as assets when the fair values are
+positive and as liabilities when the fair values are negative.
+Depreciation is calculated on the straight-line basis to write off the cost of each item of property and
+equipment to its residual value over its estimated useful life. The principal assumptions used for this
+purpose are as follows:
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(12) FINANCIAL ASSETS (CONTINUED)
+Derecognition
+Financial assets are derecognized when:
+(a) the contractual rights to receive the cash flows from the financial assets have expired;
+(b) they have been transferred and the Group transfers substantially all the risks and rewards of
+ownership;
+(c) they have been transferred and the Group neither transfers nor retains substantially all the risks and
+rewards of ownership and the Group has not retained control.
+When the equity financial assets measured at FVOCI is derecognised, the cumulative gain or loss previously
+recognized in OCI is reclassified from equity to retained profits. When the other financial assets is
+derecognised, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit
+or loss.
+The Group writes off financial assets, in whole or in part, when it has exhausted all practical recovery
+efforts and has concluded there is no expectation of recovery. Indicators that there is no reasonable
+expectation of recovery include: (a) ceasing enforcement activity, and (b) where the Group's recovery
+method is foreclosing on collateral and the value of the collateral is such that there is no reasonable
+expectation of recovering in full.
+(13) FINANCIAL LIABILITIES
+At initial recognition, the Group classifies a financial liability as at fair value through profit or loss or
+other financial liabilities. The Group measures a financial liability at its fair value plus, in the case of a
+financial liability not at fair value through profit or loss, transaction costs that are incremental and directly
+attributable to the acquisition or issue of the financial liability. Transaction costs of financial liabilities
+carried at FVPL are expensed in profit or loss.
+When all or part of the current obligations of a financial liability have been discharged, the Group
+derecognises the portion of the financial liability or obligation that has been discharged. The difference
+between the carrying amount of the derecognised liability and the consideration is recognised in profit or
+loss.
+Financial liabilities at fair value through profit or loss
+Financial liabilities at fair value through profit or loss include financial liabilities held for trading and other
+financial liabilities designated as such at initial recognition. Financial liabilities held for trading are the
+financial liabilities that:
+are incurred principally for the purpose of repurchasing it in the near term;
+(b) on initial recognition are part of a portfolio of identified financial instruments that are managed
+together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
+(c) are derivatives (except for a derivative that is a designated and effective hedging instrument or a
+financial guarantee contract).
+Such financial liabilities held for trading shall subsequently measured at fair value. All the related realized
+and unrealized gains/(losses) are recognized in profit/(loss) in the current period.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+177
+The gains or losses arisen from fair value changes of derivatives are recognized in profit or loss.
+An embedded derivative is a component of a hybrid contract that also includes a non-derivative host-with
+the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone
+derivative.
+Financial guarantee contracts
+a.
+Ping An Insurance (Group) Company of China, Ltd.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(18) FINANCE LEASE RECEIVABLE AND UNEARNED FINANCE INCOME
+A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of
+the leased asset to the lessee. At the commencement of the lease term, the Group recognizes the minimum
+lease payments receivable by the Group, the initial direct costs and the unguaranteed residual value in the
+finance lease receivable. The difference between (a) the aggregate of the minimum lease payments and
+the unguaranteed residual value and (b) the aggregate of their present values is recognized as unearned
+finance lease income. Finance lease receivable net of unearned finance lease income which represents the
+Group's net investment in the finance lease is presented as finance lease receivable in the consolidated
+statement of financial position. Unearned finance lease income is allocated over the lease term based on
+a pattern reflecting a constant periodic return on the Group's net investment in the finance lease, and is
+recognized as 'other revenues and other gains'.
+The Group incorporates forward looking information in estimating the expected credit loss for finance lease
+receivable. Refer to note 13 and note 24 for details.
+(19) PRECIOUS METALS
+The Group's precious metals represent gold and other precious metals. Precious metals that are not related
+to the Group's precious metals trading activities are initially measured at acquisition cost and subsequently
+measured at the lower of cost and net recoverable amount. Precious metals acquired by the Group for
+trading purposes are initially measured at fair value and subsequent changes in fair value are recorded in
+statement of income.
+(20) INVESTMENT PROPERTIES
+The useful life and depreciation methods are reviewed periodically to ensure that the method and period of
+depreciation are consistent with the expected pattern of economic benefits from the individual investment
+properties.
+Fully depreciated assets are retained in the financial statements until they are no longer in use and no
+further charge for depreciation is made in respect of these assets.
+If a hybrid contract contains a host that is not an asset within the scope of IFRS 9, an embedded derivative
+shall be separated from the host and accounted for as a derivative if, and only if:
+Investment properties are interests in land and buildings that are held to earn rental income and/
+or for capital appreciation, rather than for use in the production or supply of goods or services or for
+administrative purposes.
+Investment properties are initially measured at cost, which is the fair value of the consideration given to
+acquire them, including transaction costs. Subsequently, all investment properties are stated at cost less
+accumulated depreciation and accumulated impairment losses.
+Depreciation is computed on a straight-line basis, after taking into account the estimated residual value (1%
+to 10% of original cost), over the estimated useful lives. The estimated useful lives of investment properties
+vary from 20 to 40 years.
+Annual Report 2018
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(21) PROPERTY AND EQUIPMENT
+Property and equipment, other than construction in progress, are stated at cost less accumulated
+depreciation and any impairment losses. An item of property and equipment is derecognized upon disposal
+or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or
+retirement recognized in the statement of income in the year the asset is derecognized is the difference
+between the net sales proceeds and the carrying amount of the relevant asset.
+Annual Report 2018
+180
+Transfers to, or from, investment properties are made when, and only when, there is evidence of a change
+in use or the investment property is sold.
+The Group enters into purchases of assets under reverse repurchase agreements. Assets purchased under
+such agreements are not recognized. The amounts advanced under these agreements are recognized and
+presented as financial assets held under resold agreements'. The Group may not take physical possession
+of assets purchased under such agreements. In the event of default by the counterparty to repurchase the
+asset, the Group has the right to the underlying assets. The difference between the purchasing price and
+reselling price is recognized as interest income over the term of the agreement using the effective interest
+method.
+Sale of assets under repurchase agreements and purchase of assets under reverse repurchase agreements
+conducted in the bank and securities businesses are included in the operating activities of consolidated
+statement of cash flows and sale of assets under repurchase agreements and purchase of assets under
+reverse repurchase agreements conducted in the insurance business are included in the financing and
+investing activities of consolidated statement of cash flows.
+b.
+C.
+the economic characteristics and risks of the embedded derivative are not closely related to the
+economic characteristics and risks of the host;
+a separate instrument with the same terms as the embedded derivative would meet the definition of a
+derivative; and
+the hybrid contract is not measured at fair value with changes in fair value recognized in profit or
+loss (i.e. a derivative that is embedded in the hybrid contract at fair value through profit or loss is not
+separated).
+For the above assets, the Group may bifurcate the embedded derivative and measured it at fair value
+through profit or loss, or designate the entire hybrid instrument to be measured at fair value through profit
+or loss.
+(15) FAIR VALUE OF FINANCIAL INSTRUMENTS
+The fair value of a financial instrument that is traded in an active market is determined by reference to
+quoted market bid prices for assets and offer prices for liabilities, at the close of business at the end of the
+reporting period. If quoted market prices are not available, reference can also be made to broker or dealer
+price quotations.
+For financial instruments where there is no active market, the fair value is determined by using valuation
+techniques. Such techniques should be appropriate in the circumstances for which sufficient data is
+available, and the inputs should be consistent with the objective of estimating the price at which an orderly
+transaction to sell the asset or to transfer the liability would take place between market participants at the
+measurement date under current market conditions, and maximize the use of relevant observable inputs
+and minimize the use of unobservable inputs.
+Annual Report 2018
+(17) ASSETS PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS AND ASSETS SOLD
+UNDER REPURCHASE AGREEMENTS
+179
+Ping An Insurance (Group) Company of China, Ltd.
+Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
+statement of financial position when there is a legally enforceable right to offset the recognized
+amounts and there is an intention to settle on a net basis or realize the assets and settle the liabilities
+simultaneously. The legally enforceable right must not be contingent on future events and must be
+enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the
+Group or the counterparty.
+(16) OFFSETTING OF FINANCIAL INSTRUMENTS
+Determining whether to classify financial instruments into level 3 of the fair value hierarchy is generally
+based on the significance of the unobservable factors involved in valuation methodologies.
+Assets sold under repurchase agreements continue to be recognized but a liability is recognized and
+presented as 'assets sold under agreements to repurchase' for the proceeds from selling such assets. The
+Group may be required to provide additional collateral based on the fair value of the underlying assets and
+such non-cash collateral assets continue to be recognized on the balance sheet. The difference between
+the selling price and repurchasing price is recognized as interest expense over the term of the agreement
+using the effective interest method.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(15) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Such techniques include using recent prices in arm's length transactions, reference to the current
+market value of another instrument which is substantially the same, discounted cash flow analysis and/
+or option pricing models. For discounted cash flow techniques, estimated future cash flows are based on
+management's best estimates and the discount rate used is a market related rate for similar instruments.
+Certain financial instruments, including derivative financial instruments, are valued using pricing models
+that consider, among other factors, contractual and market prices, correlation, time value of money, credit
+risk, yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different
+pricing models and assumptions could produce materially different estimates of fair values.
+The Group's internet users (2) increased 23.4% from the beginning of 2018
+to 538 million. Yearly active users (3) reached 252 million. On average, each
+internet user used 2.37 online services.
+The Company continued to pursue innovative
+business models in fintech and healthtech.
+The fintech and healthtech business
+recorded RMB6,770 million in operating profit
+attributable to shareholders of the parent
+company, accounting for 6.0% of the Group's
+operating profit attributable to shareholders
+of the parent company.
+The Group's retail customers (1) grew by 11.0% from the beginning of
+the year to 184 million. In 2018, the Company acquired 40.78 million new
+customers, 35.6% of whom were sourced from internet users within the
+Group's five ecosystems. Operating profit per customer gained 18.1%
+year on year to RMB531. Contracts per customer rose by 9.1% from the
+beginning of 2018 to 2.53.
+The Group's retail business operating profit rose 31.1% year on year to
+RMB97,729 million, accounting for 86.8% of the Group's operating profit
+attributable to shareholders of the parent company (up 8.1 pps year on
+year). Retail profit growth was mainly driven by steady increases in retail
+customers and operating profit per customer.
+Customer Development
+ABOUT US
+Ping An Insurance (Group) Company of China, Ltd. 7
+The Company launched the Ping An Rural
+Communities Support comprising the Village
+Officer Program, Village Doctor Program and
+Village Teacher Program for smart poverty
+alleviation via industry promotion, health
+care and education support. As of the end
+of 2018, the Company had implemented the
+Ping An Rural Communities Support in nine
+provinces or autonomous regions across
+China. We input RMB5,394 million for poverty
+alleviation, and built or upgraded over 400
+rural clinics, trained 5,702 village doctors, built
+or upgraded 391 rural schools, and trained
+4,819 village teachers.
+Ping An empowers China's smart city.
+initiative by building "1+N" platforms in
+over 100 Chinese cities including Beijing,
+Shanghai and Shenzhen as well as countries
+and regions involved in the Belt and
+Road Initiative. The platforms cover fields
+including fiscal management, government,
+transportation, life, health care, customs
+control, education, agriculture, judicial
+activities, environmental protection, and
+community governance.
+The Company strengthened its technological
+capabilities. As of December 31, 2018,
+Ping An's technology patent applications
+increased by 9,021 from the beginning of the
+year to 12,051, more than most international
+financial institutions. The applications include
+3,397 filed under the Patent Cooperation
+Treaty (PCT) and abroad. Focusing on AI,
+blockchain and cloud computing, Ping An
+won several international awards in fields
+including fintech, medical imaging and smart
+city services.
+in its strategic transformation toward retail
+banking. In 2018, retail banking accounted for
+53.0% and 69.0% of the Bank's revenue and
+net profit, up 8.9 pps and 1.4 pps year on
+year respectively. Ping An Bank continued
+to de-risk itself. The Bank's deviation of
+non-performing loans was 97%, down 46
+pps from the beginning of 2018. The balance
+and proportion of loans more than 90 days
+overdue both decreased from the beginning
+of 2018.
+Operating profit after tax of the life and
+health insurance business rose 35.1% year
+on year to RMB71,345 million. The annual
+operating ROEV reached 30.8%. Value of
+new business (NBV) rose 7.3% year on year
+to RMB72,294 million as we optimized our
+business mix amid industry restructuring.
+NBV grew by 16.9% year on year in the
+second half of 2018.
+10
+Annual Report 2018
+Ping An Property & Casualty's premium
+income grew by 14.6% year on year to
+RMB247,444 million. The combined ratio
+was 96.0%, which improved by 0.2 pps
+year on year. In 2018, Ping An Property &
+Casualty processed 96.4% of the onsite auto
+claim investigations within 5-10 minutes via
+the upgraded "510 City Superfast Onsite
+Investigation" services.
+Customer development yielded good results.
+The operating profit of retail business rose
+by 31.1% year on year to RMB97,729 million,
+accounting for 86.8% of the operating profit
+attributable to shareholders of the parent
+company. Retail customers grew by 11.0%
+from the beginning of 2018 to 184 million. In
+2018, the Company acquired 40.78 million new
+customers, 35.6% of whom were sourced
+from internet users within the Group's five
+ecosystems. Operating profit per customer
+gained 18.1% year on year to RMB531.
+Contracts per customer rose 9.1% from the
+beginning of 2018 to 2.53. About 63.64 million
+retail customers held multiple contracts with
+different subsidiaries, up 34.7% from the
+beginning of 2018, accounting for 34.6% of all
+customers (up 6.1 pps from the beginning of
+2018).
+With strong operating profit growth, Ping
+An is increasing cash dividends. The yearly
+dividend per share for 2018 rose by 14.7%
+year on year to RMB1.72. In addition, the
+Company distributed the 30th Anniversary
+Special Dividend of RMB0.20 (tax inclusive)
+per share in the first quarter of 2018.
+The Group's operating profit attributable to
+shareholders of the parent company rose
+18.9% year on year to RMB112,573 million.
+The operating ROE was 21.9%. The net
+profit attributable to shareholders of the
+parent company rose 20.6% year on year to
+RMB107,404 million.
+5
+3
+2
+Top Ten Highlights
+Ping An Bank maintained steady, healthy
+business growth, with significant progress
+1
+CUSTOMER DEVELOPMENT STRATEGY
+Progress of Ping An's integrated financial services strategy has been accompanied by increased
+cross-selling. Retail business has become a strong growth driver as its operating profit grew steadily thanks
+to increasing customers, contracts per customer and product profitability.
+Going forward, Ping An will continue to focus on
+retail customers, striving to become a world-leading
+technology-powered retail financial services group.
+Centering on five ecosystems of "financial services,
+health care, auto services, real estate services and
+smart city services," Ping An will empower financial
+services with technologies, empower ecosystems
+with technologies, and empower financial services
+with ecosystems. Ping An will improve service
+efficiency and quality of its products and channels,
+enhance customer experience, and boost both retail
+customer value and corporate value.
+Ping An Health
+Cross-selling of insurance businesses maintained
+significant growth. In 2018, new premium income of
+Ping An Property & Casualty, Ping An Annuity and
+Ping An Health from the agent channel rose by 18.8%
+year on year to RMB51,453 million.
+(2) The numbers of customers may not match totals due to
+rounding.
+Notes: (1) Mass customers are those with annual income below
+RMB100,000, middle class customers RMB100,000-240,000,
+and affluent customers above RMB240,000. HNWIs have
+personal assets of RMB10 million or more.
+35.1
+754
+56.6
+2,096
+45.7
+6,728
+45.9
+7,921
+insurance business of
+Ping An Annuity
+Short-term group
+2.53
+183.96
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 11
+MANAGEMENT DISCUSSION AND ANALYSIS
+Technology-Powered Business
+Transformation
+Cloud Computing
+By developing FiMAX, a proprietary blockchain
+technology, Ping An has exclusively mastered the
+zero-knowledge proof technology in non-currency
+use cases. In the zero-knowledge environment using
+China's state encryption algorithms, FiMAX equals
+or surpasses traditional databases by performance,
+and supports a throughput in excess of 50,000
+transactions per second with latency lower than 0.05
+seconds. Through OneConnect, Ping An built the
+largest commercial blockchain platform in the world,
+providing services to over 200 domestic and foreign
+banks, 200,000 businesses, 500 governmental and
+other business organizations. Over 44,000 blockchain
+nodes have been established. FiMax won the IDC
+FinTech Ranking Real Result Award from IDC, a
+world-renowned data services company.
+Blockchain
+Ping An has applied Al technologies to financial
+services, health care, and smart city services. In
+financial services, Ping An's Al-based prediction, risk
+management and service capabilities facilitate quick
+claims, smart photography and video recording,
+small and medium-sized business loan approval, and
+smart customer services. In smart risk management,
+nearly 90% of decisions made by the loan approval
+system on the basis of smart micro-expression
+recognition are consistent with those made by
+humans; as a result, labor cost was cut by nearly
+40%. In health care, Ping An is committed to building
+an end-to-end smart health care management
+platform covering all the steps before, during
+and after medical services. Ping An provides
+governments, medical institutions and patients with
+full services including Al-based disease prediction,
+image reading, medical assistance, service quality
+control, medical follow-ups and patient education.
+Ping An won many world No.1s in contests of lung
+nodule detection, stomach cancer pathology, and
+diabetic retinopathy detection. So far, Ping An has
+partnered with 249 medical institutions. In smart
+city services, Ping An empowers China's smart city
+initiative by applying Al to various fields including
+transportation, education, government, security,
+environmental protection, and daily life.
+Ping An has world-leading facial, voiceprint and
+medical image recognition technologies. The facial
+and voiceprint recognition technologies have
+accuracy rates of 99.8% and 99.7% respectively. The
+Ping An Brain smart engine won the Wu Wenjun
+Al Science & Technology Award. The natural
+language processing (NLP) technology was ranked
+No.1 in the 2018 SQUAD2.0 global machine reading
+comprehension contest. OneConnect Gamma Lab's
+Memory Augmented Neural Networks achieved
+excellent results in an international top dialogue
+system challenge. In the International "Al +
+Environmental Protection Competition" organized
+by Schneider, Ping An won a world No. 1 with an
+accuracy rate above 80% in detection of abnormal
+energy consumption.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+16.6
+12
+ΑΙ
+Ping An continued to strengthen R&D of the core technologies, namely Al, blockchain and cloud computing.
+Ping An boosted business value by applying the three core technologies to customer development, channel
+management, customer services, and risk management of core businesses. Ping An successfully incubated
+fintech and healthtech unicorns including Lufax Holding, OneConnect, Ping An Good Doctor, and Ping An
+HealthKonnect.
+SUPPORTING BUSINESS DEVELOPMENT WITH THREE CORE TECHNOLOGIES
+Ping An attaches great importance to developing core technologies and securing proprietary intellectual
+property rights. Each year, Ping An increases technological R&D investments by investing 1% of its revenue
+in technological R&D. As of December 31, 2018, Ping An's technology patent applications increased by 9,021
+from the beginning of the year to 12,051, more than most international financial institutions. The applications
+include 3,397 filed under the Patent Cooperation Treaty (PCT) and abroad.
+Ping An has industry-leading technology human resources. The Group has about 99 thousand employees in
+fintech and healthtech, and about 29 thousand employees in technological R&D. Ping An has partnered with
+top universities and research institutes including Peking University, Tsinghua University, Fudan University,
+Massachusetts Institute of Technology, and National Institute of Health to pursue fintech and healthtech
+researches.
+THE GROUP'S "FINANCE + TECHNOLOGY" AND "FINANCE + ECOSYSTEM" STRATEGIES
+Ping An furthers "finance + technology" and pursues “finance + ecosystem." Ping An focuses on three
+core technologies, namely Al, blockchain and cloud computing, to support five ecosystems: financial
+services, health care, auto services, real estate services, and smart city services. Ping An strengthens
+competitiveness by diversifying use cases, increasing efficiency, cutting costs, enhancing risk management,
+and creating excellent products and customer experiences. Moreover, Ping An exports innovative
+technologies and services, promotes the efficiency of technology commercialization and empowers the
+whole industry with technologies.
+The Ping An Brain smart engine won the Wu Wenjun Al Science &
+Technology Award. Ping An's medical imaging technology won world
+No.1s in contests covering lung nodule detection, stomach cancer
+pathology, and diabetic retinopathy detection.
+As of December 31, 2018, Ping An's technology patent applications
+increased by 9,021 from the beginning of the year to 12,051, including
+3,397 filed under the Patent Cooperation Treaty (PCT) and abroad. The
+applications cover the core technologies, namely artificial intelligence
+(AI), blockchain and cloud computing. Ping An is No.1 on the 2018 Global
+Fintech Invention Patents Ranking.
+Ping An is committed to developing Al-based industry-leading capabilities for use cases in financial
+services and health care. Ping An has built basic cognitive capabilities of seeing (facial recognition,
+micro-expression recognition), listening (voiceprint recognition, speech recognition), and speaking/reading
+(speech synthesis, text robot). Moreover, Ping An has established a comprehensive knowledge system and
+created specialized solutions.
+35,828
+16.7
+41,436
+customer
+2017
+2018
+Contracts per
+Number of customers
+(in million)
+New premium income from cross-selling by agents
+Customers and contracts per customer by segment
+Ping An Insurance (Group) Company of China, Ltd.
+HNWIS
+Annual Report 2018
+51.61
+Mass
+79.72
+52.45
+Affluent
+72.0%
+0.19
+HNWIS
+10
+Ping An Cloud hosts the trillion-yuan core business
+of Ping An and offers efficient, secure cloud services
+to users in industries including financial services,
+health care, auto services, real estate services,
+and smart city services. With 12 authoritative
+certifications and over 400 cloud computing patent
+applications, Ping An Cloud is seeking market
+development and building a cloud platform covering
+various industries. In 2018, Ping An Cloud became
+GitHub's first managed service provider (MSP) in
+Greater China. Moreover, in addition to nine data
+centers in the People's Republic of China (the PRC),
+Ping An Cloud established three overseas data
+centers in Singapore and other places.
+0.19
+(in RMB million)
+Casualty
+1.67
+51.61
+Ping An Property &
+2.25
+79.72
+3.78
+52.45
+11.30
+The Group
+Middle-class
+Affluent
+(%)
+Amount
+percentage
+Channel
+contribution
+Channel
+contribution
+percentage
+(%)
+Amount
+Mass
+Middle-class
+Pursuing “Finance + Ecosystem” by Exporting
+Technologies
+Annual Report 2018
+18.8
+-0.1 pps
+20.7
+89,088
+107,404
+20.9
+to shareholders of
+the parent company
+ROE (%)
+Net profit attributable
+22.0
+21.9
+Operating ROE (%)
+5.31
+6.31
+(in RMB)
+earnings per share
+Basic operating
+18.9
+94,708
+112,573
+20.6
+0.2 pps
+(in RMB million)
+Total assets
+Total liabilities
+Cross-selling within Ping An Group continues to improve as about 63.64
+million retail customers held multiple contracts with different subsidiaries,
+up 34.7% from the beginning of 2018, accounting for 34.6% of all customers
+(up 6.1 pps from the beginning of 2018).
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+16
+The life and health insurance business represents
+results of Ping An Life, Ping An Annuity, and Ping
+An Health. The property and casualty insurance
+business represents results of Ping An Property &
+Casualty. The banking business represents results
+of Ping An Bank. The trust business represents
+results of Ping An Trust and Ping An New Capital.
+The securities business represents results of Ping
+An Securities. The other asset management business
+represents results of companies that engage in
+asset management business including Ping An Asset
+Management, Ping An Financial Leasing, and Ping
+An Overseas Holdings. The fintech & healthtech
+business represents results of companies that
+engage in fintech & healthtech business including
+Lufax Holding, Ping An Good Doctor, OneConnect,
+Ping An Health Konnect, and Autohome. Eliminations
+include offsets against cross-shareholding among
+business lines. In 2018, the Company reviewed
+the presentation of cross-shareholding within
+the Company based on the operations of various
+business lines to provide clearer and more concise
+information. The data for 2017 were restated for
+comparison purposes.
+17.6
+473,351
+556,508
+parent company
+7,142,960
+9.4
+6,459,317 5,905,158
+683,643 587,917
+10.0
+31, 2017 Change (%)
+6,493,075
+December
+December
+31, 2018
+SEGMENT REPORTING
+Shareholders' equity
+Equity attributable to
+shareholders of the
+parent company
+16.3
+shareholders of the
+attributable to
+2017 Change (%)
+Auto Services Ecosystem
+As to payers, centering on the smart social
+health insurance (SHI) cloud platform, Ping An
+HealthKonnect has developed industry-leading
+technologies including Al, blockchain and cloud
+computing and a powerful medical knowledge bank.
+This enabled Ping An Health Konnect to build a high
+barrier to entry for "technology + ecosystem." Ping
+An HealthKonnect's services cover all participants
+of the health care ecosystem, including SHI, private
+insurers, medical service providers, pharmaceutical
+companies and the insureds. As of the end of
+2018, Ping An HealthKonnect had provided SHI
+management and member services for SHI fund
+managers in over 200 cities. Over 5,000 hospitals
+had connected with the smart private insurance
+platform. The "City OneConnect" app, targeting the
+insureds, had covered 69 cities. Registered family
+doctors on the platform exceeded 50,000.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+In healthcare regulation and servicing, Ping An
+uses multiple technologies to empower over 10
+provincial/municipal health bureaus as well as
+over 3,000 medical institutions. In smart imaging,
+Ping An developed over 40 disease models, 20 of
+which were deployed at about 200 hospitals to
+read over 15 million images with an accuracy rate
+above 90%. Covering 35 diseases, Ping An's disease
+prediction models have been predicting epidemics
+in Shenzhen and Chongqing, with an accuracy rate
+above 92% in influenza prediction. Ping An's Al-
+based medical decision support system debuted
+at the "Smart Medical Decision Support System
+for General Medicine" contest co-sponsored by
+Zhongshan Hospital affiliated to Fudan University
+and Ping An's smart healthcare team. A community
+physician team equipped with the Al-based medical
+decision support system defeated a team that used
+traditional management methods by a sweeping
+margin of 86.2-51.5.
+As to portals, Ping An Good Doctor is China's
+No.1 online health care portal. As of the end of
+2018, Ping An Good Doctor had served over 265
+million users. Ping An Good Doctor conducts
+R&D in Al technologies and uses an Al-based
+consultation system to help over 100 hospitals to
+increase efficiency. Moreover, Ping An Good Doctor
+has built an offline healthcare service network
+covering over 3,000 traditional Chinese medicine
+clinics, checkup centers, dental clinics, and medical
+cosmetic institutions. This enables users to access
+efficient, convenient offline consultation services. By
+integrating Al-assisted in-house medical staff and
+the offline service network, Ping An Good Doctor
+improved the closed loop of OMO (Online Merge
+Offline) services. Ping An Good Doctor provides
+one-stop and whole-process health care services,
+satisfying various needs of users.
+In the health care ecosystem, Ping An has built a
+robust "patient-medical service provider-payer"
+model, penetrating through online portals and
+payers.
+Ping An provides auto services via Autohome, Ping
+An Bank, Ping An Property & Casualty, and Ping An
+Financial Leasing. Moreover, Ping An empowers auto
+assembly plants and service providers by building
+a comprehensive auto services ecosystem covering
+auto showcasing, purchase and use.
+Health Care Ecosystem
+OneConnect is committed to building a
+world-leading fintech service cloud platform,
+basing its operations on Ping An's financial services
+and cutting-edge technologies. OneConnect has
+launched Smart Banking Cloud, Smart Insurance
+Cloud, Smart Investment Cloud and an open
+tech-powered platform, providing end-to-end
+fintech solutions for various types of financial
+institutions. As of the end of 2018, OneConnect had
+provided services for over 3,000 financial institutions
+in China. Moreover, OneConnect has expanded
+abroad and established subsidiaries in Hong Kong,
+Singapore and Indonesia to serve local financial
+institutions.
+Lufax Holding is a world-leading online wealth
+management and retail lending technology platform,
+and a leader in providing financial institutions and
+local governments with comprehensive financial
+solutions. Lufax Holding has established extensive
+asset partnerships with over 300 institutions, and
+provided over 11 million active investor users
+with over 5,000 products and customized financial
+services. In retail lending, Lufax Holding has
+provided financing services to over 10 million
+customers, with RMB375,006 million in balance of
+loans under management.
+Ping An has launched financial innovation platforms
+including Lufax Holding and OneConnect, powered
+by "finance + technology" and linking assets to
+funds via "open platforms + open marketplaces.”
+Financial Services Ecosystem
+Technology-Powered Business
+Transformation
+14
+13
+Ping An Insurance (Group) Company of China, Ltd.
+With use cases powered by payment technologies,
+Ping An E-wallet provides customers with optimal
+solutions in terms of accounts, payment and loyalty
+programs. In 2018, Ping An E-wallet processed a
+transaction volume of RMB5.7 trillion, and had over
+200 million registered users.
+Positioned as a "world-leading technology-powered
+retail financial services group," Ping An proactively
+exports its leading technologies to build five
+ecosystems, namely financial services, health care,
+auto services, real estate services, and smart city
+services. Ping An uses the five ecosystems to
+empower and develop its core financial businesses.
+As to individual users, Ping An provides auto
+owners with excellent services. In December 2018,
+the "Autohome" app had an average of 29 million
+independent user visits per day. Ping An Property
+& Casualty's "Ping An Auto Owner" app had over
+55 million registered users. As to businesses, Ping
+An now covers over 90% of major service providers
+across China. Ping An is working closely with over
+90 auto assembly plants, over 20,000 new car dealers,
+over 30,000 second-hand car dealers and over 70,000
+garages on the car dealer cloud platform, new car
+and second-hand car trading cloud platforms, and
+spare part cloud platform. As a result, it facilitated
+RMB15.8 billion in auto finance and insurance. In
+2018, Ping An Bank's new loans in the auto finance
+business grew by 24.7% year on year; Ping An
+Financial Leasing's auto lease business volume grew
+by over 100% year on year.
+Ping An Urban-Tech is combining construction,
+management, operations and services to build a
+real estate services ecosystem. Ping An Urban-Tech
+created a digital backbone of city space by
+integrating city spatial data and city operational
+data to facilitate digitalized, smart and visualized
+city planning, operations and management. Ping
+An Urban-Tech established a collaborative services
+platform for construction, trading, and services in
+2018
+Operating profit
+(in RMB million)
+CONSOLIDATED RESULTS
+We offer a wide range of financial products and
+services via various distribution channels under a
+uniform brand. We engage in three core financial
+businesses of insurance, banking and asset
+management through companies including Ping An
+Life, Ping An Property & Casualty, Ping An Annuity,
+Ping An Health, Ping An Bank, Ping An Trust, Ping
+An Securities, Ping An Asset Management, and Ping
+An Financial Leasing. We engage in the fintech &
+healthtech business through companies including
+Lufax Holding, Ping An Good Doctor, OneConnect,
+Ping An Health Konnect, and Autohome.
+In 2018, the Group's basic operating earnings per share rose 18.8% year on
+year to RMB6.31. The operating ROEV was 23.7%.
+The net profit attributable to shareholders of the parent company rose
+20.6% year on year to RMB107,404 million. The ROE was 20.9%. Under the old
+accounting standards for financial instruments, our net profit attributable
+to shareholders of the parent company would have risen 39.5% year on
+year to RMB124,245 million.
+In 2018, the Group's operating profit attributable to shareholders of
+the parent company rose 18.9% year on year to RMB112,573 million. The
+operating ROE was 21.9%.
+Real Estate Services Ecosystem
+Business Analysis
+Performance Overview
+Ping An Insurance (Group) Company of China, Ltd.
+In smart daily life services, Ping An cooperates
+with Shenzhen Municipal Government to promote
+the sharing, development and use of public
+information resources. An integrated portal and a
+universal account have been developed for diverse
+government and daily life services. Functionalities
+including facial recognition, smart customer
+services, smart guidance, smart reservation,
+smart profiling, and all-in-one cards have been
+put into use. Ping An's “i Shenzhen" app enables
+over 700 online government services in health
+care, education, housing and transportation,
+sparing citizens the trouble of visiting government
+departments in person.
+In smart economy and trade, the "Shenzhen Digital
+Economy and Trade Platform" enables economic
+analysis via 4,300 indicators, helping the government
+to strengthen business administration and servicing
+capabilities. The platform was among the Top 50
+"Internet Government Service" Cases in 2018.
+In smart government services, Ping An has built
+several benchmark platforms with government
+departments of Shenzhen. These platforms enable
+Shenzhen government to oversee 3.1 million
+business entities. In the 2018 "Internet + Government
+Service" Contest, Ping An won the Innovative
+Business Award for its solutions and practice in
+smart government service platforms.
+Focusing on retail customers, Ping An is committed to becoming a world-leading technology-powered
+retail financial services group. Ping An adheres to the philosophy of “one customer, multiple products and
+one-stop services." Centering on five ecosystems of "financial services, health care, auto services, real
+estate services and smart city services," Ping An continues to increase investment in technologies and
+pursue "finance + ecosystem.” Moreover, Ping An provides customers with diverse products and services
+by empowering financial services with technologies, empowering ecosystems with technologies, and
+empowering financial services with ecosystems.
+Smart City Ecosystem
+the real estate industry under a holistic, city-centric
+approach to smart city construction. Ping An
+Urban-Tech connects the industry collaboration
+network with the government compliance, approval
+and services platforms to empower the entire
+industry value chain, including development,
+design, construction, supply chain, and operations,
+and to establish the full-cycle real estate services
+ecosystem. As of December 31, 2018, Ping An
+Urban-Tech had signed contracts with 50 cities,
+launched projects in 20 cities, and developed three
+model cities. Ping An Urban-Tech's services help
+the government to break down data silos, increase
+efficiency, strengthen regulation, and improve
+services.
+Annual Report 2018
+15
+Unit: in million
+Ping An is committed to empowering China's
+smart city initiative and addressing issues in social
+development. Under the three philosophies of
+"smart planning & decision, smart management
+& operation, and smart impact assessment," Ping
+An has built multiple smart city platforms for
+government services, economic development and
+people's livelihood. By doing so, Ping An strives to
+make life easier and cities better.
+Ping An has gained better insights into customers
+from its long-term customer development: the
+wealthier customers are, the more contracts they
+hold and the more valuable they are. As at the end
+of 2018, the Group had 132 million middle-class or
+higher-level customers, accounting for 72.0% of the
+total, up 6.9 pps from the beginning of 2018. On
+average, each high net worth individual (HNWI) held
+11.30 contracts, far more than affluent customers.
+December
+December
+Ping An continued to promote migration and
+conversion between customers and users by
+improving service experience across online
+platforms. The proportion of customers who were
+also internet users increased steadily.
+(4) "Others" include fintech & healthtech, other loans and
+other insurance product lines.
+(3) The number of customers of insurance companies is
+counted based on the number of holders of in-force
+policies.
+(2) The number of customers as of the end of 2018 is not
+equal to the sum of the number of customers as of the
+end of 2017 and new customers in the Reporting Period,
+due to customer attrition.
+Retail customer structure
+Ping An continues to optimize its products, channels
+and use cases to deliver excellent customer
+experience. As at the end of 2018, the Group had
+nearly 184 million retail customers, up 11.0% from the
+beginning of 2018. In 2018, the Company acquired
+40.78 million new customers, 14.50 million or 35.6% of
+whom were sourced from internet users within the
+Group's five ecosystems.
+Retail customers
+SCALE: THE GROUP'S RETAIL CUSTOMERS AND
+INTERNET USERS INCREASED STEADILY
+Product profitability
+Note: Group operating profit is the operating profit attributable to shareholders of the parent company.
+20,181
+2017
+in RMB million
+-26.4%
+14,844
+2018
+Change
+Online customers
+(in million)
+31, 2018
+50.18
+60.10
+Retail banking
+13.3
+40.98
+46.43
+Auto insurance (3)
+December 31, 2017
+% of
+customers
+449.69
+Persons
+(in million)
+December 31, 2018
+% of
+14.5
+53.03
+60.70
+Life insurance (3)
+(%)
+31, 2017
+Persons customers
+2017
+profit
+531.25 +18.1%
+2018
+in RMB million
+Retail operating
+profit
+94,708
+2017
+112,573 +18.9%
+2018
+in RMB million
+97,729 +31.1%
+Group operating
+profit
+Core drivers of the Group's operating profit growth
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+8
+(3) The number of yearly active users refers to the number of active users in the 12 months to the end of the Reporting Period.
+(2) Internet users refer to registered internet users with accounts on internet service platforms (including web platforms and
+apps) of fintech & healthtech companies and core financial companies of the Group.
+Notes: (1) Retail customers refer to retail customers holding valid financial products with core financial companies of the Group.
+Customer wealth structure
+Retail customers
+19.8
+2017
+New customers
+2018
+Corporate operating
+RMB/customer
+2.32
+2.53 +9.1%
+Dec 31, 2018
+Dec 31, 2017
+Operating profit
+per customer
+Contracts/customer
+74,527
+Contracts per
+customer
+2017
+Dec 31, 2017
+40.78 -11.9%
+2018
+184 +11.0%
+Dec 31, 2018
+in million
+in million
+46.30
+Number of customers
+166
+47.33
+477.10
+companies
+Fintech & healthtech
+23.4
+436.39
+538.43
+Internet users
+December 31.
+2018
+383.32
+December 31,
+2017
+December 31.
+2015
+Change
+(%)
+December
+31, 2017
+31, 2018
+(in million)
+December
+20.78
+31.50
+December 31.
+2016
+47.23
+24.5
+313.58
+Ping An promotes cross-selling under an integrated
+financial business strategy. As a result, contracts
+per customer and customer value increase year
+by year. As at the end of 2018, about 38.79 million
+customer migrations happened among core
+financial companies of Ping An. About 63.64 million
+retail customers held multiple contracts with
+different subsidiaries, accounting for 34.6% of all
+customers, up 6.1 pps from the beginning of 2018.
+Each customer held 2.53 contracts on average, 9.1%
+more than at the beginning of 2018. Empowered
+by technologies, Ping An maintained healthy, rapid
+profitability growth of major product lines. In 2018,
+the Group's operating profit per customer was
+RMB531, up 18.1% year on year.
+Credit card
+VALUE: THE GROUP SAW A STEADY INCREASE IN
+CUSTOMER VALUE AND REMARKABLE RESULTS
+OF CUSTOMER MIGRATION.
+Note: Internet users and app users of the Group included users of
+fintech & healthtech companies and core financial companies,
+excluding duplicates.
+36.0
+215.94
+293.60
+26.8
+Core financial companies
+241.01
+Core financial companies
+companies
+Fintech & healthtech
+28.3
+369.42
+473.88
+32.6
+236.55
+305.51
+19.0%
+App users
+24.0%
+who were also app
+28.0
+35.56
+45.51
+Others(4)
+Number of customers
+14.2
+33.43
+The Group
+35.10
+82.0
+135.85
+85.3
+157.00
+internet users
+who were also
+63.64
+34.8
+Securities, fund and trust
+183.96
+38.17
+11.0
+% of total customers
+34.6%
+165.73
+Unit: in million
+Number of customers holding multiple contracts
+with different subsidiaries
+Number of internet users
+28.5%
+Internet users
+Customer Development
+MANAGEMENT DISCUSSION AND ANALYSIS
+9
+Ping An provides internet users with one-stop
+services, constantly improves online user experience,
+and aligns use cases with user needs. As at the end
+of 2018, the Group had 538 million internet users, up
+23.4% from the start of 2018. App users increased to
+474 million, up 28.3% from the beginning of 2018. On
+average, each internet user used 2.37 online services
+from Ping An. Meanwhile, both user activity and
+stickiness increased, and yearly active users reached
+252 million due to efficient user development.
+Annual Report 2018
+Notes: (1) The numbers of accumulated customers and new
+customers do not add up to the total due to elimination
+of double counted customers.
+76.9
+127.38
+users
+82.4
+Ping An Insurance (Group) Company of China, Ltd.
+151.66
+(39) OPERATING LEASES
+(38) POLICYHOLDER DIVIDENDS
+Policyholder dividends represent dividends payable by the Group to policyholders in accordance with the
+terms of direct insurance contracts. The dividends are calculated and provided based on the dividend
+allocation method and the results of actuarial valuation.
+Annual Report 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+For the year ended 31 December 2018
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
+accounted for as operating leases.
+Ping An Insurance (Group) Company of China, Ltd. 193
+Upon receipt of the statement of the reinsurance business, the Group adjusts the reinsurance premium
+income and reinsurance expenses, and then recognizes the adjusted amounts through profit or loss
+according to the ceding company statements.
+Annual Report 2018
+Inward reinsurance business
+As a cedent, the Group presents in the statement of financial position the assets arising from reinsurance
+contracts and the liabilities arising from insurance contracts separately instead of offsetting the assets
+and liabilities. The Group also presents in the statement of income the income derived from reinsurance
+contracts and the expenses incurred for insurance contracts separately instead of offsetting the income
+and expenses.
+Outward reinsurance arrangements do not relieve the Group from its obligations to policyholders. When
+recognizing premium income from insurance contracts, the Group calculates to determine the amount of
+premium ceded and reinsurers' share of expenses and recognize them through profit or loss according
+to reinsurance contracts. When calculating unearned premium reserves, claim reserves and long term
+life policyholders' reserves of insurance contracts, the Group estimates the reinsurance related cash
+flows according to the reinsurance contracts, considers the risk margin when determining the amount of
+insurance contract reserves to be recovered from reinsurers, and recognizes reinsurers' share of insurance
+contract liabilities. When insurance contract liabilities are reduced for actual payment of claims and claim
+expenses, reinsurers' share of insurance contract liabilities are reduced accordingly. In the meantime, the
+Group calculates to determine the amount of claim expenses to be recovered from the reinsurers according
+to the reinsurance contracts and recognizes the amount through profit or loss. When there is an early
+termination of an insurance contract, the Group calculates to determine the adjustment amount of premium
+ceded and reinsurers' share of expenses according to the reinsurance contracts and recognizes the amount
+through profit or loss, and the balance of reinsurers' share of insurance contract liabilities is reversed
+accordingly.
+Outward reinsurance business
+The Group undertakes inward and outward reinsurance in the normal course of operations. All of the
+reinsurance business of the Group has significant insurance risk transfer.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(37) REINSURANCE
+Ping An Insurance (Group) Company of China, Ltd.
+Revenue from the sale of goods is recognized when control of the goods has transferred. The Group
+considers the terms of the contract and its customary business practices to determine the transaction
+price. The transaction price is the amount of consideration to be entitled in exchange for transferring
+promised goods to a customer. When determining the transaction price, the Group consider the effects
+of variable consideration, constraining estimates of variable consideration, the existence of a significant
+financing component in the contract, non-cash consideration and consideration payable to a customer.
+(g) Sale of goods
+Expressway toll fee income is recognized upon the completion of the performance obligation of services.
+Dividend income is recognized when the right to receive dividend payment is established.
+(f) Expressway toll fee income
+During the period of recognizing reinsurance premium income, the Group determines reinsurance expenses
+according to the reinsurance contracts and recognizes the expenses through profit or loss. As for profit
+commission, the Group recognizes it as a reinsurance expense through profit or loss according to the
+reinsurance contracts when it is feasible to determine the amount of profit commission to be paid to the
+reinsurers.
+Where the Group is the lessor, assets leased by the Group under operating leases are included in
+investment properties and rentals receivable under such operating leases are credited to the statement of
+income on the straight-line basis over the lease terms.
+The Company settles with the awardees under the share purchase scheme upon vesting.
+(40) EMPLOYEE BENEFITS
+when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
+transaction that is not a business combination and, at the time of the transaction, affects neither the
+accounting profit nor taxable profit or loss; and
+(e) Dividend income
+Deferred tax liabilities are recognized for all taxable temporary differences, except:
+Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting
+period between the tax bases of assets and liabilities and their carrying amounts for financial reporting
+purposes.
+Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
+be recovered from or paid to the taxation authorities.
+Income tax comprises current and deferred tax. Income tax is recognized in the statement of income, or in
+other comprehensive income or in equity if it relates to items that are recognized in the same or a different
+period directly in other comprehensive income or in equity.
+(43) TAX
+The Group's subsidiaries consolidated certain third party assets management scheme. These assets
+management schemes invested in the insurance index shares. As such the Group indirectly hold the
+Company's shares. The employee share purchase scheme consolidated by the Group also hold the
+Company's shares. The consideration paid by the consolidated structured entities in purchasing the
+Company's shares from the market, including any directly attributable incremental cost, is debited to 'Share
+premium' under 'Reserves'. No gain or loss shall be recognized in profit or loss on the sale of those shares,
+the consideration received is credited to 'Share premium' under 'Reserves'.
+(42) SHARES HELD BY CONSOLIDATED STRUCTURED ENTITIES
+At the end of each reporting period, the Group revises its estimates of the number of options and awarded
+shares that are expected to vest based on the non-marketing performance and service conditions. It
+recognizes the impact of the revision to original estimates, if any, in the statement of income, with a
+corresponding adjustment to equity.
+Equity-settled share-based payment transactions (continued)
+(41) SHARE-BASED PAYMENT (CONTINUED)
+Where the Group is the lessee, rentals payable under operating leases are charged to the statement of
+income on the straight-line basis over the lease terms. The aggregate benefit of incentives provided by the
+lessor is recognized as a reduction in rental expenses over the lease terms on the straight-line basis.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Annual Report 2018
+194
+The total amount to be expensed is determined by reference to the fair value of the shares granted, which
+includes the impact of market performance conditions (for example, an entity's share price) but excludes
+the impact of any service and non-market performance vesting conditions (for example, profitability,
+sales growth targets and remaining an employee of the entity over a specified time period) and includes
+the impact of any non-vesting conditions (for example, the requirement for employees to save or holding
+shares for a specified period of time). The Group also estimates the number of total shares expected to
+vest taking into consideration of service and non-market performance conditions. Total expense based
+on fair value of the shares granted and number of shares expected to vest is recognized over the vesting
+period.
+The Group operates an equity-settled, share-based compensation plan (share purchase scheme), under
+which the Group receives services from employees as consideration for equity instruments.
+Equity-settled share-based payment transactions
+(41) SHARE-BASED PAYMENT
+The Group makes monthly contributions for medical benefits to the local authorities in accordance with the
+relevant local regulations for the employees. The Group's liability in respect of employee medical benefits is
+limited to the contributions payable in each period.
+(c) Medical benefits
+The employees of the Group are entitled to participate in various government-sponsored housing funds.
+The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of
+the employees. The Group's liability in respect of these funds is limited to the contributions payable in each
+period.
+(b) Housing benefits
+The employees of the Group are mainly covered by various defined contribution pension plans. The Group
+makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
+the related government authorities that are responsible for the pension liability to retired employees. Under
+such plans, the Group has no other significant legal or constructive obligations for retirement benefits
+beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
+group life insurance but the amounts involved are insignificant.
+(a) Pension obligations
+Ping An Insurance (Group) Company of China, Ltd.
+Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such
+as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses,
+are recognized on the completion of the underlying transaction and the control of services is transferred
+to customers. Fees or components of fees that are linked to a certain performance are recognized after
+fulfilling the corresponding criteria. These fees may include underwriting fees, corporate finance fees,
+brokerage fees. Loan syndication fees are recognized in the statement of income when the syndication has
+been completed and the Group retains no part of the loans for itself or retains part at the same effective
+interest rate as for the other participants.
+Charges including account management fees and surrender charges are calculated at a fixed amount
+or certain percentage of policy account liabilities. Account management fees are recognized as other
+income during the period of service provided and surrender charges are recognized as other income
+as incurred.
+Fees earned from the provision of services over a period of time are accrued over that period. These
+fees include investment fund administration fees, custodian fees, fiduciary fees, credit related fees, asset
+management fees, portfolio and other management fees, advisory fees, etc. However, loan commitment
+fees for loans that are likely to be drawn down are deferred (together with any incremental costs) and
+recognized as an adjustment to the effective interest rate on the loan.
+(35) PROVISIONS
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Fair value changes on financial assets at FVOCI related to the universal life insurance portfolio are
+recognized in other comprehensive income. Changes in the insurance liabilities for the universal life
+insurance portfolio is also recognized in other comprehensive income to the extent that such change
+is derived from fair value changes on financial assets at FVOCI related to the universal life insurance
+portfolio attributable to policyholders.
+Premium receipts are recognized not as premium income, but rather as liabilities, presented in
+policyholder contract deposits. These liabilities are initially measured at fair value and subsequently
+measured using a discounted cash flow model. Commissions, net of receipts from initial charges that
+are meant to compensate such costs, are recognized as transaction costs in the initial amount of the
+liabilities.
+The deposit components separated from the above universal life insurance contracts are accounted for as
+follows:
+The universal life contracts of the Group contain significant insurance risks are classified as insurance
+contracts. These policies also contain both insurance components and deposit components. The deposit
+components are separated from these hybrid insurance contracts. The rest of the contracts are accounted
+for as insurance contracts as described in Note 2. (30).
+(34) UNIVERSAL LIFE BUSINESS
+Assets of investment-linked contracts are initially measured and subsequently carried at fair value,
+presented as policyholder account assets.
+Premium receipts are recognized not as premium income, but rather as liabilities, presented in
+policyholder account liabilities. These liabilities are initially measured and subsequently carried at fair
+value. Commissions, net of receipts from initial charges that are meant to compensate such costs, are
+recognized as transaction costs in the statement of income.
+The Group investment-linked contracts and the deposit component unbundled from the above individual
+investment-linked insurance contracts are accounted for as follows:
+The assets and liabilities related to investment-linked contracts which are regarded as insurance contracts
+are presented as policyholder account assets and liabilities in respect of insurance contracts. The assets
+and liabilities related to investment-linked contracts which are regarded as investment contracts are
+presented as policyholder account assets and liabilities in respect of investment contracts. The assets and
+liabilities of each investment-linked fund are segregated from each other and from the rest of the Group's
+invested assets for record keeping purposes. As the investment risks of investment-linked contracts were
+fully borne by policyholders, the assets and liabilities related to investment-linked contracts were not
+included in the analysis of risk management in Note 51.
+(33) INVESTMENT-LINKED BUSINESS (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+190
+FINANCIAL STATEMENTS
+189
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+The individual investment-linked contracts of the Group contain significant insurance risks and are
+classified as insurance contracts. These policies also contain both insurance components and deposit
+components. The deposit components are unbundled from these hybrid insurance contracts. The rest of
+the contracts are accounted for as insurance contracts. The Group investment-linked contracts of the
+Group that do not contain significant insurance risks are classified as investment contracts.
+(33) INVESTMENT-LINKED BUSINESS
+in respect of taxable temporary differences associated with investments in subsidiaries, associates and
+interests in jointly controlled entities, when the timing of the reversal of the temporary differences
+can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
+future.
+A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past
+event and it is probable that a future outflow of resources will be required to settle the obligation, provided
+that a reliable estimate can be made of the amount of the obligation. When the effect of discounting
+is material, the amount recognized is the present value at the end of the reporting period of the future
+expenditures expected to be required to settle the obligation.
+Fee income from providing transaction services
+Except for contingent considerations deriving from or contingent liabilities assumed in business
+combinations, contingent liabilities are recognized as provisions if the following conditions are met:
+It is probable that an outflow of resources embodying economic benefits will be required to settle the
+obligation; and
+Fee income earned from services that are provided over a certain period of time
+The fees and commission income of non-insurance operations from a diverse range of services it provides
+to its customers are recognized when the control of services is transferred to customers. Fee income can
+be divided into the following main categories:
+(d) Fees and commission income of non-insurance operations
+Interest income for interest bearing financial instruments, is recognized in the statement of income using
+the effective interest rate method. When a financial asset is impaired, the Group reduces the carrying
+amount to its recoverable amount, being the estimated future cash flow discounted at the original effective
+interest rate of the instrument, and continues unwinding the discount as interest income.
+(c) Interest income
+(36) REVENUE RECOGNITION (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+192
+FINANCIAL STATEMENTS
+191
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Revenues from investment contracts issued by the Group are charged fees for policy administration,
+investment management, surrenders or other contract services. The fees may be for fixed amounts or vary
+with the amounts being managed, and will generally be charged as an adjustment to the policyholder's
+balance. The fees are recognized when, or as, the control of services is transferred to customers unless
+the related services still need to be provided in the future period, in which fees should be recognized over
+the period of the contract by reference to the progress towards complete satisfaction of performance
+obligation. Initiation and other front-end fees are charged for certain investment contracts recorded at
+amortized cost and are recognized through an adjustment to the effective yield.
+(b) Income from investment contracts
+Reinsurance premiums are recognized as revenue in accordance with the terms stated in the reinsurance
+contracts. Accounting policies for reinsurance contracts are described in Note 2. (37).
+Premiums from long term life insurance contracts with installment or single payments are recognized
+as revenue when due. Premiums from property and casualty and short term life insurance contracts are
+recognized as revenue based on the amount of total premium stated in the contracts.
+Premium income and reinsurance premium income is recognized when the insurance contracts are issued,
+related insurance risk is undertaken by the Group, it is probable that related economic benefits will flow to
+the Group and related income can be reliably measured.
+(a) Gross premium
+The Group's main revenue is recognized on the following bases:
+(36) REVENUE RECOGNITION
+The Group incorporates forward looking information in estimating the expected credit loss for loan
+commitments and financial guarantee contracts. Refer to note 13 and note 49 for details.
+The amount recognized as a provision shall be the best estimate of the expenditure required to settle the
+present obligation at the end of the reporting period with the consideration of risks, uncertainties and the
+present value. Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the
+current best estimate.
+A reliable estimate can be made of the amount of the obligation.
+An entity has a present obligation as a result of a past event;
+Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused
+tax credits and any unused tax losses, to the extent that it is probable that taxable profit will be available
+against which the deductible temporary differences, and the carry-forward of unused tax credits and
+unused tax losses can be utilized, except:
+Charges including policy administration fees are recognized as other income during the period of
+service provided.
+Annual Report 2018
+At the end of each reporting period, liability adequacy tests are performed on the unearned premium
+reserves, claim reserves and long term life insurance policyholders' reserves. If the insurance contract
+liabilities re-calculated with the insurance actuarial methods exceeds their carrying amounts on date of
+the liability adequacy test, an additional provision is made for the respective insurance contract liabilities
+based on the difference and charged in the statement of income. Otherwise, no adjustment is made for the
+respective insurance contract liabilities.
+Liability adequacy test
+The key assumptions used in the measurement of long term life insurance policyholders' reserves include
+insurance accident occurrence rates, lapse and surrender rates, expense assumptions, policy dividend
+assumptions, discount rate, etc. In deriving these assumptions, the Group uses information currently
+available as at the end of the reporting period. Changes in assumptions are recognized immediately in the
+statement of income.
+The Group determines risk margins of the long term life insurance policyholders' reserves using the
+scenario comparison method. The unfavorable scenarios are determined according to the uncertainty and
+impact of expected net cash outflows.
+Long term life insurance policyholders' reserves are insurance contract liabilities provided for long term life
+and health insurance contracts.
+Long term life insurance policyholders' reserves
+Claim expense reserves are measured based on a reasonable estimate of ultimate necessary claim expenses
+in the future by using the case-by-case estimate method and ratio allocation method as well as margins.
+IBNR are measured according to the nature and distribution of insurance risks, claims development,
+experience data, etc., using the chain ladder method, the Bornhuetter-Ferguson method, the loss ratio
+method and the average claim per case method, based on a reasonable estimate of ultimate claim amounts
+as well as margins.
+Incurred and reported reserves are measured at amounts not higher than the sum insured of the insurance
+contracts, using the case-by-case estimate method and average claim per case method, based on a
+reasonable estimate of ultimate claim amounts as well as margins.
+Claim reserves are insurance contract liabilities provided for insurance claims of the property and casualty
+and short term life insurance contracts. Claim reserves include incurred and reported reserves, incurred but
+not reported (‘'IBNR') reserves and claim expense reserves.
+Claim reserves
+(30) INSURANCE CONTRACT LIABILITIES (CONTINUED)
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+187
+Premium receipts are recognized not as premium income, but rather as liabilities, presented as
+investment contract liabilities. For those non-life investment type policies without guaranteed
+benefits, the related contract liabilities are measured at fair value and the related transaction costs
+are recognized in the statement of income. For other investment contracts, the related liabilities are
+initially measured at fair value and subsequently measured at amortized cost. Commissions, net of
+receipts from initial charges that are meant to compensate such costs, are recognized as transaction
+costs in the initial amount of the liabilities.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(30) INSURANCE CONTRACT LIABILITIES (CONTINUED)
+A reasonable estimate of expected future net cash flows is determined based on information currently
+available as at the end of the reporting period.
+Margins are considered and separately measured in determining insurance contract liabilities. Margins are
+released in the statement of income over the insurance coverage period using systematic and reasonable
+methods. Margins include risk margin and residual margin.
+Risk margin represents provision for the uncertainty associated with the future net cash flows. The
+Group determines risk margins of the long term life insurance policyholders' reserves using the
+scenario comparison method. The unfavorable scenarios are determined according to the uncertainty
+and impact of expected net cash outflows.
+188
+At inception of an insurance contract, any 'day-one' gain is not recognized in the statement of income,
+but included in the insurance contract liabilities as a residual margin. The residual margin is calculated
+net of certain acquisition costs, mainly consisting of commission expenses on insurance operations. At
+inception of an insurance contract, any 'day-one' loss is recognized in the statement of income. Any
+residual margin is subsequently measured based on the assumptions of the years when the policies
+become effective, and will not be adjusted for future change in assumptions. For non-life insurance
+contracts, the Group amortizes the residual margin which is embedded in the unearned premium
+reserves on a time basis during the whole insurance coverage period and records it in profit or loss.
+For life insurance contracts, the Group amortizes the residual margin on the basis of the sums insured
+or the number of policies during the whole insurance coverage period.
+When measuring insurance contract liabilities, the expected period of future net cash outflows is the entire
+insurance period. For insurance policies with a guaranteed renewal option, the expected period is extended
+to the date when the option to renew policy ceases if the probability that the policyholders may execute
+the option is high and the Group does not have the right to reprice the premium.
+Unearned premium reserves
+when the deferred tax asset relating to the deductible temporary differences arises from the initial
+recognition of an asset or liability in a transaction that is not a business combination and, at the time
+of the transaction, affects neither the accounting profit nor taxable profit or loss; and
+Unearned premium reserves are measured using the unearned premium approach. At inception of the
+insurance contracts, unearned premium reserves are measured based on written premiums, with deductions
+made for commissions, insurance guarantee fund, regulatory charges and other incremental costs.
+Subsequent to initial recognition, unearned premium reserves are measured on a 1/365 basis.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+When measuring insurance contract liabilities, the time value of money is considered. The related future
+cash flows are discounted when the impact of time value of money is significant. For short duration
+contracts whose duration is within one year, the cash flows are not discounted. The discount rates used in
+the measurement of time value of money is determined with reference to information currently available as
+at the end of the reporting period and is not locked.
+Annual Report 2018
+The unearned premium reserves are provided for unexpired insurance obligations of property and casualty
+and short term life insurance contracts.
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(45) RELATED PARTIES
+Interim dividends are simultaneously proposed and declared, because the Company's memorandum and
+articles of association grant the directors the authority to declare interim dividends. Consequently, interim
+dividends are recognized immediately as a liability when they are proposed and declared.
+When the final dividends proposed by the directors have been approved by the shareholders and declared,
+they are recognized as a liability.
+(44) DIVIDENDS
+Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
+current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
+the same taxation authority.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
+when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
+enacted or substantively enacted at the end of the reporting period.
+A party is considered to be related to the Group if:
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
+to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
+part of the deferred tax asset to be utilized. Conversely, previously unrecognized deferred tax assets are
+reassessed by the end of each reporting period and are recognized to the extent that it is probable that
+sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+195
+Ping An Insurance (Group) Company of China, Ltd.
+Ping An Insurance (Group) Company of China, Ltd.
+in respect of deductible temporary differences associated with investments in subsidiaries, associates
+and interests in jointly controlled entities, deferred tax assets are only recognized to the extent that it
+is probable that the temporary differences will reverse in the foreseeable future and taxable profit will
+be available against which the temporary differences can be utilized.
+(a) the party is a person or a close member of that person's family and that person:
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(43) TAX (CONTINUED)
+has control or joint control over the Group;
+(31) DPF IN LONG TERM LIFE INSURANCE CONTRACTS AND INVESTMENT CONTRACTS
+Some of the Group's long term life insurance contracts and investment contracts contain a discretionary
+participating feature, which is a contractual right to receive additional benefits as a supplement to
+guaranteed benefits. These contracts are collectively called participating contracts. Under the current
+PRC insurance regulations, the Group is obligated to pay to the policyholders of participating contracts
+at least 70% of the distributable surplus in each period, which includes net investment spread arising from
+the assets supporting these contracts and mortality gains or losses on the pool of contracts to which the
+participating contract belongs. The amounts to be collectively allocated to the policyholders are referred
+to as the eligible surplus. The amount and timing of the subsequent distribution of the eligible surplus
+to individual policyholders of participating contracts is subject to future declarations by the Group. As
+long as the eligible surplus has not been declared and paid, it is included in the long term life insurance
+policyholders' reserves and investment contract reserves. To the extent that there is a subsequent
+change in the expected future eligible surplus due to realized and unrealized gains, which may be paid to
+policyholders of participating insurance contracts in the future under the policy terms, such a change in
+surplus is included in long term life insurance policyholders' reserves and investment contract reserves.
+(i)
+A shadow accounting adjustment is applied to recognize the change in surplus in other comprehensive
+income to the extent that such change is derived from unrealized gains or losses on supporting assets
+recognized directly in other comprehensive income.
+(32) INVESTMENT CONTRACTS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+196
+Insurance policies that are not considered insurance contracts under IFRS 4 are classified as investment
+contracts. These policies do not contain significant insurance risk.
+(iii) the entity and the Group are joint ventures of the same third party;
+(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
+subsidiary of the other entity);
+(i) the entity and the Group are members of the same Group;
+(b) the party is an entity where any of the following conditions applies:
+(iii) is a member of the key management personnel of the Group or of a parent of the Group;
+(ii) has significant influence over the Group; or
+(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third
+entity;
+2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+•
+An entity's business model refers to how an entity manages its financial assets in order to generate cash
+flows. That is, the entity's business model determines whether cash flows are arising from collecting
+contractual cash flows, selling financial assets or both. The business model of managing financial assets
+is not determined by a single factor or activity. Instead, the entity should consider all relevant evidence
+available when making the assessment. Relevant evidence mainly includes, but not limited to, how the cash
+flow of the group of assets is collected, how the performance of the group of assets is reported to key
+management personnel, and how the risk of group of assets is being assessed and managed.
+The contractual cash flows characteristics of financial assets refer to the cash flow attributes of the
+financial assets reflecting the economic characteristics of the relevant financial assets (i.e. whether the
+contractual cash flows generated by the relevant financial assets on a specified date solely represents the
+payments of principal and interest). The principal amount refers to the fair value of the financial asset at
+initial recognition. The principal amount may change throughout the lifetime of the financial assets due
+to prepayment or other reasons. The interest includes the time value of money, the credit risk associated
+with the outstanding principal amount for a specific period, other basic lending credit risks, and the
+consideration of costs and profits.
+(3) MEASUREMENT OF THE EXPECTED CREDIT LOSS ALLOWANCE
+The measurement of the expected credit loss allowance for financial assets measured at amortized
+cost and FVOCI is an area that requires the use of complex models and significant assumptions about
+future economic conditions and credit behaviour. Explanation of the inputs, assumptions and estimation
+techniques used in measuring ECL is further detailed in note 51.
+A number of significant judgements are also required in applying the accounting requirements for
+measuring ECL, such as:
+•
+Determining criteria for significant increase in credit risk;
+3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING
+ACCOUNTING POLICIES (CONTINUED)
+Establishing the number and relative weightings of forward-looking scenarios for each type of
+product/market and the associated ECL; and
+Establishing groups of similar financial assets for the purposes of measuring ECL.
+198
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+(4) MEASUREMENT UNIT AND VALUATION OF INSURANCE CONTRACT LIABILITIES
+The Group makes significant judgments on whether a group of insurance contracts' insurance risks are
+of the same nature. Different measurement units would affect the measurement of insurance contract
+liabilities.
+At the end of the reporting period, when measuring the insurance contract liabilities, the Group needs to
+make a reasonable estimate of amounts of the payments which the Group is required to make in fulfilling.
+the obligations under the insurance contracts, based on information currently available at the end of the
+reporting period.
+At the end of the reporting period, the Group shall make an estimate of the assumptions used in the
+measurement of insurance contract liabilities. Such assumptions shall be determined based on information
+currently available at the end of the reporting period. To determine these assumptions, the Group selects
+proper risk margins according to both uncertainties and degree of impact of expected future cash
+outflows. Refer to Note 2.(2) for the changes in accounting policies and estimates.
+(45) RELATED PARTIES (CONTINUED)
+Choosing appropriate models and assumptions for the measurement of ECL;
+(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
+an entity related to the Group;
+197
+(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key
+management personnel of the entity (or of a parent of the entity).
+Using different valuation techniques and parameter assumptions may lead to significant difference of fair
+value estimation.
+When using valuation techniques to determine the fair value of financial instruments, the Group would
+choose the input value in consistent with market participants, considering the transactions of related assets
+and liabilities. All related observable market parameters are considered in priority, including interest rate,
+foreign exchange rate, commodity prices and share prices or index. When related observable parameters
+are unavailable or inaccessible, the Group uses unobservable parameters and makes estimates for credit
+risk, market volatility and liquidity adjustments.
+(1) FAIR VALUE OF FINANCIAL INSTRUMENTS DETERMINED USING VALUATION
+TECHNIQUES (CONTINUED)
+3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING
+ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Fair value, in the absence of an active market, is estimated by using valuation techniques, applying
+currently applicable and sufficiently available data, and the valuation techniques supported by other
+information, mainly include market approach and income approach, reference to the recent arm's length
+transactions, current market value of another instrument which is substantially the same, and by using the
+discounted cash flow analysis and option pricing models.
+(1) FAIR VALUE OF FINANCIAL INSTRUMENTS DETERMINED USING VALUATION
+TECHNIQUES
+statements.
+In the process of applying the Group's accounting policies, management has made the following judgments
+and accounting estimation, which have the significant effect on the amounts recognized in the financial
+The Group makes estimates and judgments that affect the reported amounts of revenues, expenses,
+assets and liabilities and the disclosure of contingent liabilities in these financial statements. Estimates and
+judgments are continually assessed based on historical experience and other factors, including expectations
+of future events that are believed to be reasonable under the circumstances.
+3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING
+ACCOUNTING POLICIES
+Two or more operating segments can be merged as one if they have similar characteristics and satisfy
+certain conditions.
+(b) The management of the Company regularly assesses the operating results of its business units for the
+purpose of making decisions about resources allocations and performance assessment;
+(a) The component produces income and expenses in its daily operation;
+Operating segments refer to the Group's component that satisfies the following conditions:
+For management purposes, the Group is organized into operating segments based on the internal
+organization structure, management requirements and internal reporting. The reportable segments are
+determined and disclosed based on operating segments and the presentation is consistent with the
+information reported to the Board of Directors.
+(46) SEGMENT REPORTING
+(vi) the entity is controlled or jointly controlled by a person identified in (a); and
+(c) The Group is able to obtain the accounting information such as the financial position, operating results
+and cash flows of the component.
+The judgments in determining the classification of financial assets include the analysis of business models
+and the characteristics of contractual cash flows.
+For long term life insurance contracts where the future insurance benefits are not affected by
+investment return of the underlying asset portfolio, with consideration of the Cai Kuai [2017] No.637
+issued by CIRC and other relevant regulations, the discount rate assumption is based on the
+benchmarking yield curve for the measurement of insurance contract liabilities published by China
+Central Depository and Clearing Co., Ltd, with consideration of the impact of the tax and liquidity
+premium. The current discount rate assumption for the measurement as at 31 December 2018 ranged
+from 3.28%- 4.75% (31 December 2017: 3.16%- 4.75%).
+Ping An International Financial Leasing Tianjin, Corporation
+(Tianjing) Co., Ltd. (iii)
+100,000,000
+100.00%
+100.00%
+Consulting services,
+Shanghai
+Shanghai, Corporation
+Ping An Wealth Management Co., Ltd.
+brokerage, Hong Kong
+HKD324,681,000
+Hong Kong, Corporation Securities investment and
+(Hong Kong) Company Limited (iii)
+Ping An of China Securities
+(RMB unless
+otherwise stated)
+authorized capital
+Finance lease business,
+Registered/
+96.55%
+Proportion of
+votes (%) (i)
+Proportion of
+ordinary shares
+indirectly held by
+the Company (%)
+the Company (%)
+directly held by
+ordinary shares
+Proportion of
+Principal activities and
+place of operation
+Place of incorporation and
+kind of legal entity
+Name
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below
+(continued):
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+100.00%
+100.00%
+100.00%
+10,400,000,000
+1,160,000,000
+100.00%
+99.51%
+Real estate investment,
+Beijing
+Beijing, Corporation
+Beijing Jingxinlize Investment Co., Ltd.
+1,600,000,000
+100.00%
+99.51%
+Real estate development,
+Hangzhou
+Hangzhou Pingjiang Investment Co., Ltd. Hangzhou, Corporation
+840,000,000
+100.00%
+99.51%
+Real estate investment,
+Chengdu
+Chengdu, Corporation
+Chengdu Ping An Property Investment
+Company Co., Ltd.
+Tianjin
+Shenzhen Pingan Real Estate Industrial
+Logistics Company Ltd. (iii)
+Shenzhen, Corporation
+Logistics,
+99.51%
+100.00%
+204
+4,500,000,000
+Beijing Shuangronghui Investment
+Co., Ltd.
+Beijing, Corporation
+Real estate investment,
+Beijing
+99.51%
+100.00%
+256,323,143
+Shenzhen
+Anbon Allied Investment Company
+Limited.(iii)
+Shenzhen
+100.00%
+Project investment,
+British Virgin Islands,
+Corporation
+Jade Reach Investment
+Company Limited
+British Virgin Islands
+USD50,000
+100.00%
+99.51%
+Project investment,
+British Virgin Islands,
+Corporation
+Reach Success International
+Company Limited
+50,000,000
+100.00%
+99.51%
+Insurance sale,
+Shenzhen
+99.51%
+Shenzhen, Corporation
+50,000,000
+100.00%
+100.00%
+Sale agency of insurance,
+Shenzhen
+Shenzhen, Corporation
+Ping An Insurance Sales Services
+Co., Ltd.
+5,648,870,000
+100.00%
+99.51%
+Real estate development,
+Shenzhen
+Shenzhen, Corporation
+Shenzhen Ping An Financial Center
+Development Company Ltd. (iii)
+distribution, Shenzhen
+1,300,000,000
+Ping An Chuang Zhan Insurance
+Sales & Service Co., Ltd
+100.00%
+USD50,000
+British Virgin Islands
+96.55%
+Equity investment,
+Ping An Caizhi Investment Management Shenzhen, Corporation
+Company Limited
+504,000,000
+60.00%
+59.71%
+Expressway operation,
+Taiyuan
+Taiyuan, Corporation
+Shanxi Jinjiao Expressway Co., Ltd.
+750,000,000
+60.00%
+59.71%
+Expressway operation,
+Taiyuan
+Taiyuan, Corporation
+Shanxi Changjin Expressway Co., Ltd.
+700,000,000
+100.00%
+Shenyang Shengping Investment
+Management Co., Ltd.
+Shenyang, Corporation
+Real estate investment,
+Shenyang
+99.51%
+100.00%
+419,000,000
+600,000,000
+Tongxiang Ping An Investment Co., Ltd. Tongxiang Corporation
+99.59%
+100.00%
+500,000,000
+Ping An Commercial Factoring Co., Ltd. Shanghai, Corporation
+Commercial factoring,
+Shanghai
+100.00%
+Investment management,
+Tongxiang
+68.19%
+Hong Kong, Corporation Real estate investment,
+United Kingdom
+100.00%
+Pingan Real Estate Capital Limited
+services, Shenzhen
+Credit Information
+50,000,000
+100.00%
+100.00%
+Personal and Enterprise
+Shenzhen, Corporation
+Shenzhen Qianhai Credit Service
+Centre Co., Ltd.
+1,010,000,000
+100.00%
+100.00%
+Asset management,
+Shanghai
+Shanghai, Corporation
+Hong Kong, Corporation Financing platform,
+Hong Kong
+Shanghai PingXin Asset Management
+Co., Ltd. (iii)
+100.00%
+99.05%
+Investment management,
+Shanghai
+Management Co., Ltd.
+Shanghai, Corporation
+Shanghai Jinyao Investment
+and management,
+Shanghai
+20,000,000
+100.00%
+99.51%
+Real estate development
+Shanghai, Corporation
+Shanghai Gezhouba Yangming
+Property Co., Ltd.
+Shanghai
+1,290,000,000
+99.59%
+100.00%
+USD100,000,000
+(2) CLASSIFICATION OF FINANCIAL ASSETS
+The main assumptions used in the measurement of policyholders' reserves and unearned premium reserves
+are as follows:
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+206
+100,000,000
+100.00%
+99.79%
+Investment management,
+Shenzhen
+Investment Management Co., Ltd.
+Shenzhen, Corporation
+Shenzhen Ping An Anchuang
+100,000,000
+100.00%
+99.79%
+Investment management,
+Shenzhen
+Shenzhen Ping An Chuangke Investment Shenzhen, Corporation
+Management Co., Ltd.
+Shenzhen Qianhai Inclusive
+Shenzhen, Corporation
+Crowdfunding & Trading Co., Ltd.
+Private equity Financing,
+Shenzhen
+79.14%
+80.00%
+63,330,000
+100,000,000
+British Virgin Islands,
+Corporation
+Project investment,
+100.00%
+100.00%
+USD50,000
+British Virgin Islands
+Value Success International Limited
+('Value Success International')
+99.51%
+94.74%
+E-commerce,
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 205
+Annual Report 2018
+50,000,000
+100.00%
+99.51%
+Guangzhou, Corporation Property leasing,
+Guangzhou
+Guangzhou Xinping Property
+Investment Co., Ltd.
+45,000,000
+100.00%
+99.51%
+Property leasing, Beijing
+Beijing, Corporation
+Beijing Jingping Shangdi Investment
+Co., Ltd.
+Notes to Consolidated Financial Statements
+3,115,150,000
+Management consulting,
+Shenzhen
+Shenzhen, Corporation
+Shenzhen Pingke Information
+Consulting Co., Ltd.
+1,000,000,000
+100.00%
+96.55%
+Asset management,
+Shenzhen
+Shenzhen, Corporation
+Ping An Pioneer Capital Co., Ltd.
+100.00% GBP133,000,000
+99.51%
+Hong Kong, Corporation Real estate investment,
+Hong Kong
+Talent Bronze Limited
+GBP90,000,160
+100.00%
+For the year ended 31 December 2018
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below
+(continued):
+Shanghai, Corporation
+Shanghai Pingan Automobile
+E-commerce Co., Ltd.
+Shanghai
+4,810,000,000
+100.00%
+99.51%
+Asset management,
+Shanghai Zean Investment Management Shanghai, Corporation
+Company Limited
+671,713,547
+52.11%
+51.85%
+Industry, Shanghai
+Shanghai, Corporation
+Shanghai Jahwa United Co., Ltd. (iii)
+consumer chemicals,
+Shanghai
+5,268,261,234
+100.00%
+Proportion of
+ordinary shares
+Name
+Shanghai Jahwa (Group) Company Ltd. Shanghai, Corporation
+('Shanghai Jahwa')
+Place of incorporation and
+kind of legal entity
+Principal activities and
+place of operation
+94.74%
+directly held by
+the Company (%)
+Registered/
+authorized capital
+Proportion of
+votes (%) (i)
+(RMB unless
+otherwise stated)
+Production and sale of
+99.51%
+Proportion of
+ordinary shares
+indirectly held by
+the Company (%)
+68.11%
+100.00%
+Shenzhen, Corporation
+Asset management,
+Shanghai
+Shanghai, Corporation
+Ping An Asset Management Co., Ltd.
+4,860,000,000
+100.00%
+13.82%
+86.11%
+Annuity insurance,
+Shanghai
+Shanghai, Corporation
+Ping An Annuity
+13,800,000,000
+96.62%
+55.59%
+40.96%
+98.67%
+Securities investment and
+brokerage, Shenzhen
+Ping An Securities Company Limited.
+('Ping An Securities')
+13,000,000,000
+99.88%
+99.88%
+Investment and trust,
+Shenzhen
+Shenzhen, Corporation
+China Ping An Trust Co., Ltd.
+Shenzhen
+17,170,411,366
+58.00%
+8.40%
+49.56%
+Banking,
+Shenzhen, Corporation
+Shenzhen, Corporation
+1.33%
+100.00%
+1,500,000,000
+Investment holding,
+Shenzhen
+Shenzhen, Corporation
+Shenzhen Ping An New Capital
+Investment Co., Ltd.
+100.00% HKD345,000,000
+100.00%
+Hong Kong, Corporation Asset management,
+Hong Kong
+Ping An of China Asset Management
+(Hong Kong) Company Limited
+('Ping An Financial Leasing')
+100.00% 13,241,511,182
+32.07%
+67.93%
+Finance lease business,
+Shanghai
+Shanghai, Corporation
+Ping An International Financial
+Leasing Co., Ltd. (iii)
+insurance, Hong Kong
+100.00% HKD490,000,000
+100.00%
+Ping An Health (iii)
+Shanghai, Corporation
+Health insurance,
+Shanghai
+73.37%
+1.63%
+75.01%
+Ping An Bank Co., Ltd. (ii)
+('Ping An Bank')
+1,816,577,790
+Hong Kong, Corporation Investment holding,
+Hong Kong
+100.00%
+100.00% HKD7,085,000,000
+('Ping An Overseas Holdings')
+China Ping An Insurance (Hong Kong)
+Company Limited
+Hong Kong, Corporation Property and casualty
+China Ping An Insurance Overseas
+(Holdings) Limited
+99.88%
+insurance, Shenzhen
+99.51%
+(5) CLASSIFICATION AND UNBUNDLING/SEPARATION OF INSURANCE CONTRACTS AND
+SIGNIFICANT INSURANCE RISK TESTS
+3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING
+ACCOUNTING POLICIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+200
+The major assumptions needed in measuring claim reserves include the claim development factor and
+expected claim ratio, which can be used to forecast trends of future claims so as to estimate the ultimate
+claim expenses. The claim development factors and expected claim ratio of each measurement unit are
+based on the Group's historical claim development experience and claims paid, with consideration of
+adjustments to company policies like underwriting policies, level of premium rates, claim management and
+the changing trends of external environment such as macroeconomic, regulations, and legislation. In the
+measurement of claim reserves, the Group applies the cost of capital approach and considers insurance
+industry guideline ranged from 2.5% to 5.5% to determine risk margins.
+In the measurement of unearned premium reserves for the property and casualty insurance and
+short term life insurance business, the Group applies the cost of capital approach and considers the
+insurance industry guideline ranged from 3% to 6% to determine risk margins.
+The assumption of participating insurance accounts is affected by the above factors, and hence bears
+uncertainty. The future assumption of life and participating insurance with a risk margin is based on a
+dividend rate of 85%.
+The Group uses reasonable estimates, based on expected investment returns of participating insurance
+accounts, participating dividend policy, policyholders' reasonable expectations, etc. in deriving policy
+dividend assumptions.
+The expense assumptions include assumptions of acquisition costs and maintenance costs. The
+assumption of maintenance costs also has a risk margin.
+The Group uses reasonable estimates, based on an expense study and future development trends, in
+deriving expense assumptions. If the future expense level becomes sensitive to inflation, the Group will
+consider the inflation factor as well in determining expense assumptions.
+The assumptions of lapse rates are determined by reference to different pricing interest rates, product
+categories and sales channels.
+The Group uses reasonable estimates, based on actual experience and future development trends, in
+deriving lapse rate assumptions.
+The assumptions of mortality and morbidity rates are affected by factors such as changes in lifestyles
+of national citizens, social development, and improvement of medical treatment, and hence subject to
+uncertainty.
+The Group makes significant judgments on whether a written policy undertake both insurance risks and
+other risks, whether contains both an insurance component and a deposit component and whether the
+insurance component and deposit component are distinct and separately measurable. Such judgment
+affects the unbundling/separation of insurance contracts.
+The assumption of morbidity rates is determined based on the Group's assumptions used in product
+pricing, experience data of morbidity rates, and estimates of current and future expectation as well as
+a risk margin.
+The Group uses reasonable estimates, based on market and actual experience and expected future
+development trends, in deriving assumptions of mortality rates, morbidity rates, disability rates, etc.
+(4) MEASUREMENT UNIT AND VALUATION OF INSURANCE CONTRACT LIABILITIES
+(CONTINUED)
+3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING
+ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 199
+Annual Report 2018
+The discount rate and investment return assumptions are affected by the future macro-economy,
+capital market, investment channels of insurance funds, investment strategy, etc., and therefore
+subject to uncertainty.
+For short term insurance contracts liabilities whose duration is within one year, the future cash flows
+are not discounted.
+For long term life insurance contracts where the future insurance benefits are affected by investment
+return of the underlying asset portfolio, the discount rates are determined based on expected future
+investment returns of the asset portfolio backing those liabilities. The future investment returns
+assumption for the measurement as at 31 December 2018 ranged from 4.75%- 5.00% (31 December 2017:
+4.75%-5.00%).
+For long term non-life insurance contracts where the future insurance benefits are not affected by
+investment return of the underlying asset portfolio, as the risk margin has no material impact on the
+reserve measurement, the discount rate assumption used is the benchmarking yield curve for the
+measurement of insurance contract liabilities published by China Central Depository and Clearing Co.,
+Fund raising and
+Ltd.
+The assumption of mortality rates is based on the industrial benchmark or the Group's prior
+experience data on mortality rates, estimates of current and future expectations, the industry criteria
+the understanding of the China insurance market as well as a risk margin. The assumption of mortality
+rates is presented as a percentage of 'China Life Insurance Mortality Table (2000-2003)', which is the
+industry standard for life insurance in China.
+The Group makes significant judgments on whether the contract transfers insurance risk, whether transfer
+of insurance risk has commercial substance, and whether the transferred insurance risk is significant when
+performing significant insurance risk tests. Such judgment affects the classification of insurance contracts.
+When determining whether the policies transfer a significant insurance risk, the Group makes the following
+judgments for different policies:
+If the insurance risk ratio of a non-annuity policy is equal or greater than 5% at one or more points in
+time during the policy coverage period, the Group classifies it as an insurance contract. The insurance
+risk ratio of a direct insurance policy is the percentage of the benefits to be paid when the insured
+event occurs divided by the amounts to be paid when the insured event does not occur minus 100%;
+Annuity policies where the longevity risk is transferred are classified as insurance contracts;
+99.51%
+Property and casualty
+Shenzhen, Corporation
+Ping An Property & Casualty
+99.51%
+99.51%
+Life insurance,
+Shenzhen
+Shenzhen, Corporation
+(RMB unless
+otherwise stated)
+authorized capital
+Registered/
+Proportion of
+votes (%) (i)
+Proportion of
+ordinary shares
+indirectly held by
+the Company (%)
+Proportion of
+ordinary shares
+directly held by
+the Company (%)
+Principal activities and
+place of operation
+Place of incorporation and
+kind of legal entity
+Ping An Life
+If a property and casualty insurance or a short term life insurance policy obviously meets the criteria
+for significant insurance risk transfer, the Group directly classifies it as an insurance contract.
+When determining whether a reinsurance policy transfers significant insurance risks, judgment is made
+on a comprehensive understanding of the commercial substance of the reinsurance policy and other
+relevant contracts and agreements. If the reinsurance risk ratio of the reinsurance policy is greater than
+1%, the Group classifies it as a reinsurance contract. The reinsurance risk ratio of a reinsurance policy is
+derived from the present value of probability-weighted average net losses where the reinsurer incurs a net
+loss divided by expected premium income of the reinsurer. If a reinsurance policy obviously transfers a
+significant insurance risk, the Group directly classifies it as a reinsurance contract without calculating the
+reinsurance risk ratio.
+When performing significant insurance risk testing, the Group would group all policies of the same product
+with similar risk characteristics into the same portfolio. The Group would then select sufficient and
+representative policy samples from each policy portfolio to perform individual testing.
+The unbundling/separation and classification of insurance contracts would affect the Group's revenue
+recognition, liability measurement and financial statement presentation.
+(6) DETERMINATION OF CONTROL OVER THE STRUCTURED ENTITIES
+To determine whether the Group controls the structured entities of which the Group acts as an asset
+manager, management applies judgment based on all relevant fact and circumstance to determine
+whether the Group is acting as the principal or agent for the structured entities. If the Group is acting as
+the principal, it has control over the structured entities. In assessing whether the Group is acting as the
+principal, the Group considers factors such as scope of the asset manager's decision-making authority,
+rights held by other parties, remuneration to which it is entitled, and exposure to variable returns results
+from its additional involvement with structured entities. The Group will perform reassessment once the fact
+and circumstance changes leading to changes in above factors.
+For further disclosure in respect of the maximum risk exposure of unconsolidated structured entities of the
+Group, see Note 51. (8).
+21,000,000,000
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 201
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+4. SCOPE OF CONSOLIDATION
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below:
+Name
+FINANCIAL STATEMENTS
+100.00%
+33,800,000,000
+Ping An Trendwin Capital
+Management Co., Ltd.
+Ping An Tradition International Money
+Broking Company Ltd.
+('Ping An Financial Technology')
+Consulting Co., Ltd. (iii)
+services, Shenzhen
+100.00% 30,406,000,000
+100.00%
+Financial advisory
+Shenzhen Ping An Financial Technology Shenzhen, Corporation
+British Virgin Islands
+USD50,000
+100.00%
+99.51%
+Project investment,
+British Virgin Islands,
+Corporation
+Shenzhen, Corporation
+Ansheng Investment Company Limited
+100.00%
+99.51%
+Investment management,
+Shanghai
+Shanghai, Corporation
+Shanghai Pingpu Investment Co., Ltd.
+1,310,000,000
+100.00%
+100.00%
+Real estate investment,
+Shenzhen
+Shenzhen, Corporation
+Shenzhen Ping An Real Estate
+Investment Co., Ltd.
+420,000,000
+100.00%
+96.74%
+9,130,500,000
+Currency brokerage,
+Shenzhen
+Annual Report 2018
+67.00%
+Ping An Fund Management
+Company Limited (iii)
+800,000,000
+100.00%
+4,000,000,000
+68.11%
+Asset management,
+Shenzhen
+Shenzhen, Corporation
+Ping An-UOB Wealthtone Asset
+Management Co., Ltd. (iii)
+680,000,000
+(RMB unless
+otherwise stated)
+authorized capital
+Registered/
+80.00%
+80.00%
+Property agency,
+Shanghai
+Proportion of
+votes (%) (i)
+Proportion of
+ordinary shares
+indirectly held by
+the Company (%)
+50,000,000
+Ping An Insurance (Group) Company of China, Ltd. 203
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+Futures brokerage,
+Shenzhen
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below
+(continued):
+Pingan Haofang (Shanghai)
+E-commerce Co., Ltd.
+Place of incorporation and
+kind of legal entity
+Shanghai, Corporation
+Proportion of
+Principal activities and
+place of operation
+ordinary shares
+directly held by
+the Company (%)
+Name
+Shenzhen, Corporation
+66.92%
+('Ping An Commercial Property
+Investment')
+and investment
+('Ping An Real Estate')
+20,000,000,000
+100.00%
+99.59%
+Property management
+Shenzhen, Corporation
+(RMB unless
+otherwise stated)
+Proportion of
+votes (%) (i)
+authorized capital
+Registered/
+ordinary shares
+indirectly held by
+the Company (%)
+the Company (%)
+ordinary shares
+directly held by
+management, Shenzhen
+kind of legal entity
+Name
+Place of incorporation and
+Proportion of
+Proportion of
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below
+(continued):
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+202
+100,000,000
+Ping An Futures Co., Ltd.
+100.00%
+99.75%
+Investment consulting,
+Shanghai
+Ping An Real Estate Co., Ltd.
+Ping An Technology (Shenzhen)
+Co., Ltd. (iii)
+Principal activities and
+place of operation
+IT services,
+Shenzhen
+Shenzhen Wanlitong Network
+Information Technology Co., Ltd.
+Shenzhen, Corporation
+Customer loyalty service,
+Shenzhen
+77.14%
+100.00%
+200,000,000
+1,000,000,000
+Shenzhen Ping An Commercial
+Property Investment Co., Ltd. (iii)
+Shenzhen, Corporation
+Real estate investment,
+Shenzhen
+99.50%
+99.99%
+1,367,000,000
+Shenzhen, Corporation
+78.63%
+Shanghai, Corporation
+77.14%
+100.00%
+2,924,763,800
+68.38%
+('Ping An Technology')
+31.62%
+Shenzhen, Corporation
+IT and business process
+outsourcing services,
+Shenzhen
+Shenzhen Ping An Financial Services
+Co., Ltd.
+100.00%
+598,583,070
+Ping An E-wallet Electronic
+Commerce Company Limited
+('Ping An E-wallet')
+Shenzhen, Corporation
+Internet service,
+Shenzhen
+100.00%
+Other expenses
+(580) (6,096)
+(91)
+(351)
+(20,642)
+(2,282)
+(91)
+(1,314) (11,167)
+(453)
+(580) (6,096)
+(351)
+(2,282)
+operations
+Interest expenses on non-banking
+Including: Financial costs
+(352)
+(7,158) (21,601)
+(3)
+23,189
+2,123
+13,372
+36,143
+Profit for the year
+(1,018)
+2,579
+(120)
+4,975
+Income tax
+Profit before tax
+(1,736)
+(1,689)
+3,957
+(470,992) (188,363) (152,808)
+Total expenses
+50,671 18,899 30,157
+(14,528) (5,527) (6,968)
+(456)
+(128)
+(3)
+(41,886)
+(47,569)
+Administrative expenses
+2,533
+(268)
+(2,265)
+Investment expenses
+(319)
+(152)
+(241)
+166
+(59)
+Foreign exchange (losses)/gains
+7,503
+477
+Including: Taxes and surcharges
+(742)
+(32,941)
+(1,349) (1,022)
+(1,319)
+(562)
+(19)
+(14)
+(303)
+(743)
+(61)
+Impairment loss of other
+assets
+(31)
+(3,735)
+(246) (226)
+(27)
+(70)
+(145,126)
+4,384
+(9,025) (13,138)
+(3,632)
+(53)
+(1,314) (11,167)
+(2,135) (5,676) (8,654) 15,917 (21,665)
+(22,397) 25,178 (839,830)
+9,391 20,250 (2,182) 134,740
+(1,888) (3,912) (465) (34,762)
+16,338 (2,647)
+Equity investments
+99,978
+3,593
+Loans and advances to customers
+112,028
+112,028
+Finance lease receivable
+(864) 72,061
+4,260
+14,470
+52,886
+1,309
+Accounts receivable
+318,236
+2
+4,205 305,986
+8,043
+1,660,420
+(3,149) 1,660,864
+Fixed maturity investments
+1,261,019
+48,344
+(40,814)
+jointly controlled entities
+Investments in associates and
+5,452 2,376,638
+(38,428) 630,676
+15,448
+53,174
+statutory deposits for insurance
+operations
+5,510
+6,462
+62,990
+513,706
+19,349
+123,395
+33,459
+133,425 800,539
+11,814
+(453)
+Balances with the Central Bank and
+(20,132)
+The segment analysis as at 31 December 2017 and for the year then ended is as follows (continued):
+5. SEGMENT REPORTING (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 213
+Annual Report 2018
+16,270 (2,700) 89,088
+7,108
+2,043
+3,953
+13,449
+13,307
+35,658
+Attribute to owners of the parent
+Life and
+health
+(in RMB million)
+insurance
+25,159
+32,681
+30,568
+8,594
+37,844 193,448
+175,729
+other financial institutions
+483,891
+Cash and amounts due from banks and
+and
+elimination
+Fintech &
+Healthtech
+Trust Securities management
+Banking
+Other asset
+Other
+businesses
+Property
+and
+casualty
+insurance
+Total
+(11)
+482
+(6,599)
+(1,738)
+145
+1,728
+4,255
+4,292
+35,725
+non-insurance operations
+Fees and commission income from
+(1,903)
+18
+1,038
+112
+44
+33
+658
+44,407
+Including: Inter-segment fees and
+commission revenue from
+non-insurance operations
+Including: Inter-segment investment
+63,725
+(2,161)
+18,051
+1,610
+476
+1,612
+from non-banking operations
+(1,213)
+42,032
+Investment income
+(1,955)
+48
+139
+272
+1,496
+3,318
+Including: Inter-segment interest income
+88,376
+2,019
+Net earned premiums
+(14,625)
+(1)
+(1,047) (13,577)
+reserves
+(17,420)
+(98)
+384,567
+(3,028) (14,294)
+303
+388,642 216,090
+Total
+and
+elimination
+Fintech &
+Healthtech
+Securities management
+8,280
+605,035
+income
+188,219
+572,990
+356
+7,067
+2,809
+441
+7,792
+67,892
+operations
+204
+Interest revenue from non-banking
+(682)
+148,068
+Interest revenue from banking operations
+6,728
+20
+6,226
+Reinsurance commission revenue
+147,386
+(40,803)
+1,442
+100
+(27,360)
+42,647
+30,992
+9,737
+6,664
+182,965
+207,262
+521,663
+Total revenue
+354
+2
+(22,429)
+7,420
+13
+8
+4
+974,570
+Claims and policyholders' benefits
+(320,957) (106,474)
+188
+102
+(563)
+(811)
+(276)
+(5,051)
+(72,501)
+1,558
+6
+(74,059)
+2,140
+(77,754) (38,973)
+Loan loss provisions, net of reversals
+Fees and commission expenses on
+non-insurance operations
+Interest expenses on banking operations
+Commission expenses on insurance
+operations
+(427,243)
+(114,587)
+38
+104
+179
+557
+3,887
+and jointly controlled entities
+Share of profits and losses of associates
+(188) (2,701)
+(662)
+(39)
+183
+(38)
+(51)
+96
+Impairment loss of investment
+assets
+(2,057)
+40
+(26)
+2
+(1,819)
+499
+1,814
+(2,411) 7,145
+1,760
+1
+7
+27
+13,214
+Including: Inter-segment other revenues
+Non-operating gains
+43,813
+3,115
+(22,611)
+18,773
+2,197
+136
+385
+1,150
+22,803
+Other revenues and other gains
+20,980
+1,326
+14,358
+12,482
+Non-automobile insurance
+163,099
+174,988
+Automobile insurance
+Property and casualty insurance
+385,614
+467,278
+15,287
+17,059
+370,327
+450,219
+Group business
+Individual business
+Life insurance
+Net of reinsurance premiums ceded
+48,495
+32,410
+Accident and health insurance
+9,378
+Due from financial institutions
+Due from the Central Bank
+Interest revenue from banking operations
+(in RMB million)
+7. NET INTEREST INCOME FROM BANKING OPERATIONS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+2017
+FINANCIAL STATEMENTS
+Annual Report 2018
+587,615
+700,139
+Net written premiums
+202,001
+232,861
+6,492
+Ping An Insurance (Group) Company of China, Ltd. 215
+Loans and advances to customers
+2018
+605,035
+2017
+2018
+Individual business
+Life insurance
+Gross written premiums
+(in RMB million)
+605,035
+719,556
+Gross written premiums
+216,393
+247,856
+Property and casualty business gross written premiums
+24,152
+31,278
+Short term life business gross written premiums
+Group business
+454,351
+17,349
+373,139
+15,503
+719,556
+Gross written premiums
+216,393
+247,856
+6,552
+9,471
+Accident and health insurance
+(in RMB million)
+39,177
+Non-automobile insurance
+170,664
+181,923
+Automobile insurance
+Property and casualty insurance
+388,642
+471,700
+56,462
+2018
+2017
+4,002
+10,069
+41,087
+37,220
+8,128
+80,418
+2017
+2018
+Available-for-sale financial assets
+Loans and receivables
+Held-to-maturity investments
+other comprehensive income
+Debt financial assets at fair value through
+Financial assets at amortized cost
+(in RMB million)
+8. INTEREST REVENUE FROM NON-BANKING OPERATIONS
+88,546
+88,376
+9. NET FEES AND COMMISSION INCOME FROM NON-INSURANCE
+OPERATIONS
+(in RMB million)
+Others
+34,184
+37,764
+Fees and commission from the banking business
+5,723
+3,125
+Trust service fees
+74,885
+794
+Underwriting commission
+2,363
+2,320
+Brokerage commission
+Fees and commission revenue from non-insurance operations
+2017
+2018
+724
+74,783
+72,501
+86,931
+Others
+34,081
+28,355
+Financial investments
+201
+237
+Discounted bills
+2,074
+53,278
+Individual loans and advances to customers
+40,812
+37,188
+Corporate loans and advances to customers
+10,726
+10,932
+4,232
+78,926
+364,490
+4,056
+161,714
+Trust
+15,522
+36,949
+48,718
+18,523
+18,398
+2,671
+Subtotal
+4,293
+Subtotal
+Bonds payable
+Customer deposits
+Due to financial institutions
+Due to the Central Bank
+Interest expenses on banking operations
+147,386
+Net interest income from banking operations
+440,422
+Long term life business gross written premiums
+2017
+1,744,070
+Insurance contract liabilities
+451,283
+59,574
+9,500
+8,543 342,492
+31,174
+Bonds payable
+(70,032) 1,952,695
+22,307
+2,000,420
+brokerage customers
+Customer deposits and payables to
+(1,176) 114,108
+25,201
+188,405
+494
+1,932,969
+Investment contract liabilities for
+6,935
+58,629
+175,914
+15,256
+6,288
+87,570
+27,668
+90,083
+56,879
+45,622
+45,622
+Policyholder dividend payable
+50,309
+41
+50,268
+policyholders
+Others
+Insurance payables
+(887) 8,522
+1,353
+119,438
+425,479
+97,672
+25,820
+336,073 3,248,475
+2,297,531
+Segment assets
+(57,413) 6,493,075
+11,587 752,474
+77,249
+28,076
+4,086
+89,329 228,734
+285,788
+Others
+27,597 (11,881) 86,207
+27,625
+435,139
+Due to banks and other financial
+27,724
+5,107
+2,949
+Accounts payable
+335 133,981
+10,027
+23,176
+6,359
+institutions
+11,714
+repurchase
+Assets sold under agreements to
+20,555 780,530
+2,189
+135,884
+241
+4,357 589,580
+82,370
+59
+Segment liabilities
+6,288
+214
+45,251
+95
+195
+856
+411
+58
+47
+42,925
+94
+794
+(35)
+charged to consolidated results
+Total other non-cash expenses
+8,607
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+6. GROSS AND NET WRITTEN PREMIUMS
+(in RMB million)
+2018
+(in RMB million)
+605,035
+719,556
+Gross written premiums
+(81,367)
+(93,169)
+468
+Premium deposits separated out from universal life and
+investment-linked products
+(5,654)
+Less: Premium deposits of policies without significant
+insurance risk transfer
+692,288
+818,379
+2017
+2018
+Gross written premiums and premium deposits
+(5,886)
+957
+375
+164
+69,804 128,791
+160,450
+- Attribute to owners of the parent
+-
+(13,637) 587,917
+57,267
+38,973
+19,509
+27,192
+70,144 222,054
+166,392
+Segment equity
+(43,776) 5,905,158
+62,171
+386,506
+70,480
+19,532
+2,131,139 265,929 3,026,421
+25,842
+50,679
+7
+2,691
+580
+3,365
+Depreciation and amortization
+19,424
+228
+31,658
+1,677
+299
+3,056
+1,788
+4,858
+Capital expenditures
+Other segment information:
+(13,382) 473,351
+7,518
+Banking
+receivables and others
+Other
+businesses
+119
+39
+(2,017) 88,546
+8
+8,642
+2,983
+247
+non-insurance operations
+Fees and commission revenue from
+72
+395
+from non-banking operations
+Including: Inter-segment interest revenue
+7,493
+71,190
+1,238
+22
+(1,885)
+39,362
+3,417
+Investment income
+(2,405)
+18
+27
+478
+1,882
+Interest revenue from non-banking
+operations
+non-insurance operations
+Including: Inter-segment fees and
+46,277
+(2,206)
+52
+1,254
+4,014
+3,801
+commission revenue from
+2,980
+(1,174) 161,714
+162,888
+Fintech &
+Healthtech
+(5,081) (14,881)
+Less: Premiums ceded to reinsurers
+247,526
+472,359
+Gross written premiums
+Other asset
+Securities management
+Trust
+Banking
+Property
+and
+casualty
+insurance
+insurance
+health
+(in RMB million)
+Life and
+The segment analysis as at 31 December 2018 and for the year then ended is as follows:
+Other
+businesses
+Change in unearned premium
+reserves
+(1,695) (20,727)
+-
+Interest revenue from banking operations
+6,964
+1,173
+Reinsurance commission revenue
+202 677,703
+(22,436)
+(171) 7,966
+(14)
+545
+(329) 719,556
+Total
+and
+elimination
+211,918
+465,583
+Net earned premiums
+(19,417)
+10,109
+841
+1,674
+Total revenue
+385
+10
+(25,129) 49,892
+(21,100)
+(2,508) 18,074
+6,697
+20,025
+8,169
+29
+10
+3
+5
+28
+103
+197
+Including: Non-operating gains
+1,292
+21
+572,623
+231,947 212,743
+5,189
+11,597
+Banking
+Other asset
+Property
+and
+casualty
+insurance
+(323,494) (116,305)
+health
+insurance
+Commission expenses on insurance
+operations
+Claims and policyholders' benefits
+3
+(in RMB million)
+The segment analysis as at 31 December 2018 and for the year then ended is as follows (continued):
+5. SEGMENT REPORTING (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+210
+(34,240) 1,082,146
+47,348
+Life and
+105
+22
+11,488
+investment properties
+Including: operating lease income from
+(1,743)
+50
+515
+3
+2
+4,117
+3
+1,124
+income
+Including: Inter-segment investment
+31,974
+(1,237)
+8,157
+6,033
+46
+5. SEGMENT REPORTING (CONTINUED)
+212
+3
+Including: Inter-segment other revenues
+2,926 25,038
+203
+384
+1,415
+25,030
+Other revenues and other gains
+31
+6,381
+1,177
+6,230
+and jointly controlled entities
+Share of profits and losses of associates
+3,743
+(867)
+247
+97
+Trust
+For the year ended 31 December 2018
+FINANCIAL STATEMENTS
+(i)
+Notes:
+USD1,191,623
+52.37%
+52.37%
+Automotive internet
+platform, Beijing
+Cayman Islands,
+Corporation
+Autohome Inc.
+52.11% GBP1,154,873
+51.85%
+Infant products,
+United Kingdom
+United Kingdom,
+Corporation
+Mayborn Group Limited
+Tongxiang
+300,000,000
+(ii)
+The proportion of ordinary shares, as shown in the above table, is the sum product of direct holding by the Company and indirect
+holding by a multiplication of the proportion of shares held in each holding layer. The proportion of votes is the sum product of the
+proportion of votes held directly by the Company and indirectly via subsidiaries controlled by the Company.
+For the year ended 31 December 2018, Ping An Bank's profit attributable to its non-controlling interest was RMB10,424 million (2017:
+RMB9,740 million), the dividend paid to its non-controlling interest was RMB1,348 million (2017: RMB1,507 million). As at 31 December
+2018, Ping An Bank's equity attributable to its non-controlling interest was RMB100,818 million (2017: RMB93,263 million). Ping An
+Bank's summarized financial information is disclosed in 'Segment reporting' under the 'Banking' segment.
+(iii) The registered capitals of these subsidiaries were changed in 2018.
+Paid-in capital
+Attributable
+equity interest
+Huabao East Aggregated Fund
+Assets Management
+Ping An Asset Xinxiang No.28
+Name
+As at 31 December 2018, the Group consolidated the following principal structured entities:
+100.00%
+(2)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 207
+Annual Report 2018
+The Company and its subsidiaries are subject to the Company Law as well as various listing requirements,
+where applicable. Capital or asset transactions between the Company and its subsidiaries might be
+subject to regulatory requirements. Certain of the Company's subsidiaries are subject to regulatory capital
+requirements. As such, there are restrictions on the Group's ability to access or use the assets of these
+subsidiaries to settle the liabilities of the Group. Please refer to Note 51. (7) for detailed disclosure on the
+relevant regulatory capital requirements.
+Other than the changes above, there are no significant changes to the scope of consolidation as at 31
+December 2018 as compared to 2017.
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+(RMB)
+99.79%
+Tongxiang, Corporation
+An Ke Technology Company Limited
+(RMB unless
+otherwise stated)
+Proportion of
+votes (%) (i)
+authorized capital
+Registered/
+Proportion of
+ordinary shares
+indirectly held by
+the Company (%)
+the Company (%)
+ordinary shares
+directly held by
+Principal activities and
+place of operation
+Place of incorporation and
+kind of legal entity
+Name
+Proportion of
+(1) Particulars of the Company's principal subsidiaries as at 31 December 2018 are set out below
+(continued):
+4. SCOPE OF CONSOLIDATION (CONTINUED)
+Subtotal
+Hong Kong, Corporation Investment management
+and investment
+consulting, Hong Kong
+100.00%
+Tongxiang Anhao Investment
+Management Co., Ltd.
+100,000,000
+100.00%
+99.69%
+Investment management,
+Shenzhen
+Shenzhen, Corporation
+Lianxin (Shenzhen) Investment
+Management Co., Ltd.
+Investment management,
+Shenzhen
+100.00%
+77.14%
+Internet service,
+Shenzhen, Corporation
+Ping An Pay Technology Service
+Co., Ltd.
+USD335,000,000
+100.00%
+680,000,000
+99.51%
+26,425,812,763
+Principal activities
+Investment in wealth
+management product
+The banking segment undertakes loan and intermediary business with corporate customers and retail
+business customers as well as wealth management and credit card services with individual customers,
+reflecting performance of banking subsidiary;
+The property and casualty insurance segment offers a wide variety of insurance products to individual
+and corporate customers, including automobile insurance, non-automobile insurance and accident and
+health insurance, reflecting performance of property and casualty insurance subsidiary;
+The life and health insurance segment offers a comprehensive range of life insurance products to
+individual and corporate customers, including term, whole-life, endowment, annuity, investment-linked,
+universal life and health care and medical insurance, reflecting performance summary of life insurance,
+annuity insurance and health insurance subsidiaries;
+In 2018, the segment businesses are separately presented as the insurance segment, the banking segment,
+the trust segment, the securities segment, the other asset management segment, the fintech & healthtech
+segment and the other businesses, based on the products and service offerings. The insurance segment
+is divided into the life insurance and health insurance and the property and casualty insurance segment in
+line with the nature of products, risk and asset portfolios. The types of products and services from which
+reportable segments derive revenue are listed below:
+5. SEGMENT REPORTING
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+208
+Investment in wealth
+management product
+3,050,198,071
+99.51%
+Ping An Asset Xinxiang No.11 Assets
+Management
+management product
+Investment in wealth
+5,001,000,000
+The trust segment provides trust products services and undertake investing activities;
+The securities segment undertakes brokerage, trading, investment banking and asset management
+services;
+The other asset management segment provides investment management services, finance lease
+business and other asset management services, reflecting performance summary of asset management
+and finance lease and the other asset management subsidiaries;
+The fintech & healthtech segment provides various financial and daily-life services through internet
+platforms such as financial transaction information service platform, health care service platform,
+reflecting performance summary of the fintech & healthtech business subsidiaries, associates and
+jointly controlled entities.
+Ping An Insurance (Group) Company of China, Ltd. 209
+Annual Report 2018
+0.12%
+0.27%
+1,040
+2,628
+2017
+99.51%
+2018
+Total revenue from top five customers
+(in RMB million)
+During 2018 and 2017, the Group's top five customers in respect of total revenue are as follows:
+More than 95% of the Group's revenue is derived from its operations in Mainland China. More than 95% of
+the Group's non-current assets are located in Mainland China.
+Transfer prices between operating segments are on an arm's-length basis in a manner similar to
+transactions with third parties.
+In the year 2018, the Group reorganized the presentation of the cross-shareholding business based on the
+management of the sub-business lines. The comparative figures have been restated accordingly.
+Management monitors the operating results of the Group's business units separately for the purpose of
+making decisions with regard to resources allocation and performance assessment. Segment performance
+is assessed based on indicators such as net profit.
+Except for the above business segments, the other segments did not have material impact on the Group's
+operating outcome, and as such are not separately presented.
+Percentage of total revenue
+Ping An Asset Xinxiang No.14 Assets
+Management
+management product
+Investment in wealth
+8,910,000,000
+99.50%
+Ping An Asset Xinxiang No.5 Assets
+Management
+Investment in debts
+9,500,000,000
+99.51%
+Shanghai Trust Huarong Aggregated Fund
+Management Scheme
+Investment in wealth
+Fund Management Scheme
+10,000,000,000
+59.71%
+Shanghai Trust Changcheng Aggregated
+Trust Scheme
+Investment in debts.
+12,000,000,000
+98.86%
+Investment in debts
+Notes to Consolidated Financial Statements
+management product
+99.51%
+7,296,884,848
+99.51%
+Ping An Asset Xinxiang No.10 Assets
+Management
+management product
+Investment in wealth
+8,052,180,412
+99.51%
+Ping An Asset Xinxiang No.19 Assets
+Management
+Ping An Asset Xinxiang No.18 Assets
+Management
+Investment in wealth
+8,068,893,684
+99.51%
+Ping An Asset Xinxiang No.20 Assets
+Management
+management product
+Investment in wealth
+9,103,702,167
+management product
+Other asset
+Securities management
+Other
+businesses
+and
+elimination
+Due to banks and other financial
+(13,837) 154,895
+13,789 693,098
+(80,710) 7,142,960
+34,816 39,429
+70,756 23,566
+530,365 123,787
+122,302
+23,943
+14,880
+59
+1,203
+3,587
+83,761 9,464
+287,724 96,838 181,958
+372,624 3,418,592
+2,632,057
+Segment assets
+Others
+jointly controlled entities
+(29,121) 533,540
+49
+institutions
+33,952
+5,552 567,100
+341 210,710
+Insurance payables
+(162) 9,779
+1,080
+189,028
+-
+8,323
+5,745
+32,445
+50
+11,040
+3,066
+7,988
+13,885
+126,387
+repurchase
+Assets sold under agreements to
+(18,683) 803,154
+4,182
+Accounts payable
+92,891
+44,926
+42,227 72,183
+17,016
+165,214
+Finance lease receivable
+1,806
+Accounts receivable
+285,959
+7
+4,286 273,513
+8,153
+operations
+statutory deposits for insurance
+Balances with Central Bank and
+(29,870) 457,524
+17,817
+31,150 39,224
+5,779
+3,902
+74 22,798
+165,214
+Loans and advances to customers
+1,949,757
+392,223
+(14,262) 2,075,151
+12,425 824,939
+38,291
+733
+126,014
+639
+94,687 629,366
+13
+1,237,974
+66,285
+30,648
+13,361
+71,187 148,768
+443,974
+Financial assets at fair value through
+profit or loss
+(19,915) 1,929,842
+Financial assets at amortized cost
+Financial assets at fair value through
+other comprehensive income
+Investments in associates and
+29,241
+-
+(1,444)
+Total other non-cash expenses
+9,842
+621
+1,484
+615
+14,549
+215
+2,538
+3,960
+276
+209
+9
+56
+4,232
+2,466
+1,936
+617
+3,774
+Depreciation and amortization
+charged to consolidated results
+243
+1,410 47,871
+1
+Property
+and
+casualty
+insurance
+Life and
+health
+insurance
+Change in unearned premium
+Less: Premiums ceded to reinsurers
+Gross written premiums and policy fees
+(in RMB million)
+The segment analysis as at 31 December 2017 and for the year then ended is as follows:
+1,383
+5. SEGMENT REPORTING (CONTINUED)
+Annual Report 2018
+212
+53,814
+98
+4
+3,970
+217
+Ping An Insurance (Group) Company of China, Ltd.
+Other segment information:
+Capital expenditures
+(6,949) 556,508
+43,161 79,541
+52,728
+policyholders
+Investment contract liabilities for
+515 2,211,887
+7,380 556,875
+15,221 111,191
+8,680 381,884
+1,997,775 213,597
+19
+Insurance contract liabilities
+Bonds payable
+(60,251) 2,114,344
+25,453
+2,149,142
+brokerage customers
+Customer deposits and payables to
+120,688
+32,519
+53,935 163,047
+52,747
+52,591
+(6,817) 683,643
+87,294
+(73,893) 6,459,317
+36,493
+(1,248) 348,224
+31,231
+141,045
+477,014
+53,351
+Policyholder dividend payable
+19,391
+6,205
+92,901
+17,738 29,401
+17,717 27,976
+- Attribute to owners of the parent
+6,205
+54,903 24,261 72,436
+2,446,812 295,235 3,178,550
+185,245 77,389 240,042
+Segment equity
+Segment liabilities
+Others
+52,591
+178,824 77,014 139,224
+Fintech &
+Healthtech
+176,442
+Cash and amounts due from banks and
+(247)
+(16)
+2
+2
+209
+(45)
+(851)
+Foreign exchange (losses)/gains
+(3,989)
+(75)
+(4)
+(19) (1,992)
+(1)
+(632)
+(1,223)
+(946)
+Investment expenses
+(2,090)
+(256)
+Including: Taxes and surcharges on
+6,112 (151,446)
+(13,685)
+(3,478) (9,246)
+(1,038)
+(36,540)
+(43,537)
+(43)
+(50,034)
+(135)
+(10)
+(125)
+investment operations
+Including: Taxes and surcharges on
+(135)
+2,211
+Administrative expenses
+insurance operations
+Including: Impairment losses on
+(23)
+431 (9,086)
+(489)
+(847)
+(116)
+(8,065)
+Fees and commission expenses on
+non-insurance operations
+(86,931)
+1,212
+(88,143)
+Interest expenses on banking operations
+3,085 (130,394)
+(84,142) (49,337)
+(439,596)
+203
+Total
+Net impairment losses on financial
+assets and other assets
+(243)
+(1,410)
+(198) (1,978)
+(3,582)
+(187)
+(200)
+investment assets
+(43,657)
+1
+(6,168)
+(43,657)
+(53,814)
+(98)
+(4)
+(3,970)
+(217)
+(1)
+(47,871)
+Including: Loan impairment losses
+Including: Impairment losses on
+(758)
+(1,284)
+(2,042)
+(281) (42,699)
+(3,809) 163,151
+30,431 (918,995)
+(28,420)
+16,177
+(2,824) (9,097) (5,576)
+(9,583) (34,931) (19,328)
+2,014 12,417 15,611
+(334) (3,400) (627)
+9,017 14,984
+8,264 14,006
+1,599
+3,008
+14,394
+12,215
+57,914
+- Attribute to owners of the parent
+1,680
+3,012
+12,274 24,818
+(4,090) 120,452
+(3,996) 107,404
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 211
+FINANCIAL STATEMENTS
+Total
+Other
+businesses
+and
+elimination
+Fintech &
+Healthtech
+Securities management
+Trust
+Banking
+Other asset
+58,757
+Property
+and
+casualty
+insurance
+(in RMB million)
+health
+Life and
+The segment analysis as at 31 December 2018 and for the year then ended is as follows (continued):
+5. SEGMENT REPORTING (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+insurance
+Profit for the year
+(901)
+3,913
+sold under agreements to
+Including: Interest expenses on assets
+(15,341)
+1,348
+(63)
+1,345 (18,227)
+(63)
+repurchase and placements
+(2,219) (12,113)
+(1,125) (12,105)
+(677)
+(2,686)
+Including: Financial costs
+(114)
+(3,939) (1,124)
+operations
+Interest expenses on non-banking
+(33)
+other financial institutions
+from banks and other
+(1,253)
+81,259 19,515 32,231
+(22,502) (7,241) (7,413)
+Income tax
+Profit before tax
+(9)
+(1,276)
+(491,364) (212,432) (180,512)
+Total expenses
+(102)
+financial institutions
+(418)
+Other expenses
+(2,886)
+(3)
+(8)
+(1,094)
+(81)
+(447)
+(26,571)
+34,939
+1,343
+44,407
+46,277
+2,344
+Ping An Insurance (Group) Company of China, Ltd.
+6,599
+37,808
+875
+328
+690
+5,034
+8,049
+9,086
+37,191
+Annual Report 2018
+216
+Net fees and commission income from non-insurance operations
+Subtotal
+Others
+Fees and commission on the banking business
+Fees and commission expenses on non-insurance operations
+Brokerage commission
+709
+As at 31 December 2018, the provision for impairment losses of placements with banks and other financial
+institutions measured at fair value through other comprehensive income is RMB16 million.
+60,415
+74,434
+70,678
+60,415
+(21)
+As at 31 December 2018, cash and amounts due from banks and other financial institutions of RMB5,446
+million (31 December 2017: RMB4,506 million) were restricted from use.
+3,756
+As at 31 December 2018, cash and amounts due from overseas banks and other financial institutions
+amounted to RMB16,187 million (31 December 2017: RMB20,306 million).
+31 December 2018
+(in RMB million)
+Statutory reserve deposits with the Central Bank for banking
+operations
+Statutory reserve deposits with the Central Bank for
+banking operations-RMB
+-
+· Statutory reserve deposits with the Central Bank for
+banking operations-Foreign Currencies
+Surplus reserve deposits with the Central Bank
+Fiscal deposits with the Central Bank
+(172)
+31 December 2017
+229,525
+19. BALANCES WITH THE CENTRAL BANK
+60,436
+Gross
+54,512
+5,924
+257,398
+74,434
+60,415
+457,524
+483,891
+31 December 2018
+31 December 2017
+Details of placements with banks and other financial institutions are as follows:
+(in RMB million)
+Measured at amortized most:
+Placements with banks
+Placements with other financial institutions
+271,259
+Less: Provision for impairment losses
+Net
+Measured at fair value through other comprehensive income:
+Placements with other financial institutions
+Total
+68,611
+2,239
+70,850
+223,067
+In accordance with relevant regulations, subsidiaries of the Group engaged in bank operations are required
+to place mandatory reserve deposits with the People's Bank of China (the 'PBC') for customer deposits in
+both local currency and foreign currencies. As at 31 December 2018, the mandatory deposits are calculated
+at 12% (31 December 2017: 15%) of customer deposits denominated in RMB and 5% (31 December 2017: 5%)
+of customer deposits denominated in foreign currencies. Mandatory reserve deposits are not available for
+use by the Group in its day to day operations.
+6,458
+Less: Provision for doubtful receivables
+Premium receivables, net
+Life insurance
+Property and casualty insurance
+Premium receivables, net
+31 December 2018
+31 December 2017
+84,574
+92,428
+959
+85,533
+92,428
+(196)
+(14)
+85,337
+92,414
+7,614
+6,882
+92,951
+Premium receivables
+(in RMB million)
+21. PREMIUM RECEIVABLES
+Total
+4,457
+41,917
+32,898
+2,071
+273,513
+1,829
+305,986
+199,238
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 223
+266,802
+FINANCIAL STATEMENTS
+For the year ended 31 December 2018
+20. FINANCIAL ASSETS HELD UNDER RESOLD AGREEMENTS
+(in RMB million)
+Bonds
+Bills
+Gross
+Less: Provision for impairment losses
+Net
+Stocks and others
+Notes to Consolidated Financial Statements
+161,850
+Cash on hand
+4,228
+7,615
+38,971
+52,643
+2017
+2018
+Impairment losses
+Unrealized gains
+Realized gains from disposal
+Net investment income
+(in RMB million)
+10. INVESTMENT INCOME
+2018
+2017
+Weighted average number of ordinary shares in issue (million shares)
+Issued ordinary shares as at 1 January
+18,280
+18,280
+Weighted average number of shares held by the share
+purchase scheme
+24,184
+(29)
+(28,284)
+(2,701)
+16,533
+Debt financial assets at fair value through profit or loss
+Operating lease income from investment properties
+Interest expenses on assets sold under agreements to repurchase
+and placements from banks and other financial institutions
+35,649
+10,291
+Other net investment income
+Available-for-sale financial assets
+comprehensive income
+Equity financial assets at fair value through other
+2,659
+22,076
+Equity financial assets at fair value through profit or loss
+Dividend income
+2017
+2018
+(in RMB million)
+(1) NET INVESTMENT INCOME
+63,725
+31,974
+Total investment income
+3,271
+(26)
+Weighted average number of shares held by the consolidated
+assets management scheme (i)
+89,088
+17,834
+17,837
+29
+26
+17,863
+6.01
+17,863
+4.99
+Ping An Insurance (Group) Company of China, Ltd.
+18. CASH AND AMOUNTS DUE FROM BANKS AND OTHER FINANCIAL
+INSTITUTIONS
+(in RMB million)
+99,296
+Term deposits
+Due from banks and other financial institutions
+Placements with banks and other financial institutions
+31 December 2018
+31 December 2017
+5,019
+107,404
+2017
+2018
+Annual Report 2018
+Weighted average number of ordinary shares in issue
+(417)
+(417)
+17,834
+17,837
+(i)
+As at 31 December 2018, 417 million (31 December 2017: 417 million) shares were held by the consolidated assets management
+scheme.
+(2) DILUTED
+Diluted earnings per share was computed by dividing the adjusted profit attributable to the equity holders
+of the Company based on assuming conversion of all dilutive potential shares for the year by the adjusted
+weighted average number of ordinary shares in issue. The shares granted by the Company under the share
+purchase scheme (Note 41) have potential dilutive effect on the earnings per share.
+178,833
+Earnings (in RMB million)
+Weighted average number of ordinary shares (million shares)
+Weighted average number of ordinary shares in issue
+Adjustments for:
+-
+Assumed vesting of share purchase scheme
+Weighted average number of ordinary shares for
+diluted earnings per share
+Diluted earnings per share (in RMB)
+222
+Profit attributable to owners of the parent
+31 December 2018
+16,415
+31 December 2017
+31 December 2017
+Finance lease receivable, net of unearned finance income
+Less: Provision for impairment losses
+167,783
+(2,569)
+113,710
+(1,682)
+165,214
+112,028
+The Group's long-term receivables are financial leases receivable to offset the net unrealized financial gains.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 225
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+25. LOANS AND ADVANCES TO CUSTOMERS
+(1) ANALYSED BY CORPORATE AND INDIVIDUAL
+(in RMB million)
+Measured at amortized cost:
+Corporate customers
+Loans
+Discounted bills
+31 December 2018
+Individual customers
+(in RMB million)
+16,671
+29
+1,590,440
+16,192
+1,937,595
+17,950
+23. REINSURERS' SHARE OF INSURANCE LIABILITIES
+(in RMB million)
+Reinsurers' share of unearned premium reserves
+Reinsurers' share of claim reserves
+Reinsurers' share of policyholders' reserves
+24. FINANCE LEASE RECEIVABLE
+31 December 2018
+31 December 2017
+6,325
+5,929
+9,112
+8,835
+1,234
+869
+15,633
+New generation loan
+Credit cards
+Property mortgages
+(44,322)
+1,868,155
+1,660,864
+Measured at fair value through other comprehensive income:
+Corporate customers
+Loans
+Discounted bills
+Subtotal
+Carrying amount
+19,985
+41,702
+61,687
+1,929,842
+1,660,864
+As at 31 December 2018, the provision for impairment losses of loans and advances to customers measured
+at fair value through other comprehensive income is RMB154 million (refer to Note 25.(6)).
+As at 31 December 2018, discounted bills with a carrying amount of RMB4,178 million (31 December 2017:
+RMB3,467 million) were pledged for amounts due to the Central Bank.
+226
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+(54,033)
+Net
+Less: Provision for impairment losses
+6,237
+Vehicle loans
+Others
+Gross
+31 December 2018
+31 December 2017
+761,938
+835,864
+14,756
+153,745
+129,844
+176
+473,295
+182,363
+152,865
+172,029
+140,929
+172,581
+127,300
+1,915,951
+1,705,186
+Add: Interest receivable
+303,628
+2
+1
+4
+2,334
+1,536
+69,793
+47,597
+Ping An Insurance (Group) Company of China, Ltd.
+22. DERIVATIVE FINANCIAL INSTRUMENTS
+(in RMB million)
+Interest rate swaps
+Currency forwards and swaps
+Gold derivative instruments
+Stock index options
+Others
+(in RMB million)
+Interest rate swaps
+Currency forwards and swaps
+Gold derivative instruments
+Stock index options
+Others
+31 December 2018
+Assets
+1,350
+44,711
+65,159
+2,300
+31 December 2017
+47,597
+(2,643)
+(1,903)
+67,150
+45,694
+1,362
+11,458
+50,735
+34,236
+Liabilities
+67,150
+The credit terms of premium receivables granted are generally from one to six months, and non-interest
+bearing.
+An aging analysis of premium receivables is as follows:
+(in RMB million)
+Within 3 months
+Over 3 months but within 1 year.
+Over 1 year
+224
+Annual Report 2018
+31 December 2018
+45,694
+69,793
+Fair value
+Fair value
+Assets
+Liabilities
+Nominal amount
+Fair value
+Nominal amount
+Fair value
+1,035,712
+225
+1,351,287
+473,565
+14,107
+535,465
+100
+15,848
+61,788
+1,852
+50,663
+1,972
+19,373
+2
+6
+31 December 2017
+21,911
+2,052,213
+3
+Nominal amount
+1,564,617
+459,542
+28,051
+-
+12,013
+7,622
+2,273
+2,729,192
+438,417
+12,147
+Nominal amount
+6,898
+2,670
+-
+5,398
+16
+3
+676
+516
+3,229,703
+22,247
+56,020
+3,743
+Financial assets at fair value through profit or loss
+(3,456)
+17,407
+64,071
+65,904
+2017
+2018
+Impairment loss on other assets
+Net impairment losses on financial investments
+Amortization of intangible assets
+Depreciation of property and equipment
+Depreciation of investment properties
+investment contract reserves
+Interest expenses on policyholder contract deposits and
+Employee costs (Note 14. (2))
+(in RMB million)
+(1) PROFIT BEFORE TAX IS ARRIVED AT AFTER CHARGING THE FOLLOWING ITEMS:
+14. PROFIT BEFORE TAX
+52,105
+1,212
+(94)
+23,873
+Placements with banks and other financial institutions
+1,231
+5,053
+(2) EMPLOYEE COSTS
+80
+85
+quarterly agreed-upon procedures
+annual audit, half-year review and
+-
+Auditors' remuneration
+4,325
+6,310
+Cost of sales
+40,814
+Loan loss provisions, net of reversals
+581
+Provision for doubtful debts, net
+1,709
+52,105
+2,394
+2,898
+4,385
+1,233
+218
+1,047
+Others
+12,754
+308,203
+(1,094)
+(525)
+13,279
+Short term life insurance claims
+309,297
+Long term life insurance contract benefits
+Net
+Reinsurers' share
+Gross
+(in RMB million)
+2017
+439,596
+(10,108)
+449,704
+15,654
+116,435
+(7,065)
+123,500
+Property and casualty insurance claims
+Property and casualty insurance claims
+114,082
+(7,796)
+106,286
+Loan commitments
+Finance lease receivables
+5,244
+676
+Debt financial assets at fair value through other comprehensive income
+Financial assets at amortized cost
+43,657
+145
+2018
+Loans and advances to customers
+(in RMB million)
+Accounts receivables
+13. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 219
+Annual Report 2018
+427,243
+(9,415)
+436,658
+(in RMB million)
+307,507
+2018
+Wages, salaries and bonuses
+(ii)
+(i)
+9,140
+11,334
+RMB0.62 (2017: RMB0.50) per ordinary
+3,656
+30th Anniversary Special Dividend declared in 2018- RMB0.20 (ii)
+2018 interim dividend
+share (iii)
+-
+10,054
+18,280
+2017
+2018
+2017 final dividend declared in 2018- RMB1.00 (2016 final dividend
+declared in 2017: RMB0.55) per ordinary share (i)
+(in RMB million)
+16. DIVIDENDS
+Taxes for taxable income attained from outside of PRC are measured at the tax rates under local and PRC
+law, regulations and conventions. The income tax credited by the Group is verified by official tax bureau.
+34,762
+42,699
+(199)
+(iii)
+(13,574)
+(iv)
+On 26 April 2018, the Board of Directors of the Company approved the Resolution of 30th Anniversary Special Dividend, agreeing
+to declare a cash dividend in the amount of RMB0.20 (tax inclusive) per share based on the total shares of 18,280,241,410. The total
+amount of the 30th Anniversary Special Dividend was RMB3,656 million.
+89,088
+17,837
+17,834
+Weighted average number of ordinary shares in issue (million shares)
+107,404
+Basic earnings per share (in RMB)
+Profit attributable to owners of the parent (in RMB million)
+2017
+2018
+Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the
+weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased
+by the Group.
+(1) BASIC
+17. EARNINGS PER SHARE
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 221
+Annual Report 2018
+On 12 March 2019, the Board of Directors of the Company approved the Resolution of the Profit Appropriation Plan for 2018,
+agreeing to declare a final cash dividend of RMB1.10(tax inclusive) per share for 2018. It was not recognized as a liability as at 31
+December 2018.
+On 21 August 2018, the Board of Directors of the Company approved the Resolution of the Profit Appropriation Plan for Interim
+Dividend of 2018, and declared an interim cash dividend of RMB0.62 (tax inclusive) per share for 2018. The amount of the interim cash
+dividend for 2018 would be RMB11,334 million.
+On 23 May 2018, the above profit appropriation plans in (i) and (ii) were approved by the shareholders of the Company at the annual
+general meeting.
+On 20 March 2018, the Board of Directors of the Company approved the Resolution of the Profit Appropriation Plan for 2017,
+agreeing to declare a cash dividend in the amount of RMB1.00 (tax inclusive) per share based on the total shares of 18,280,241,410 for
+2017. The total amount of the cash dividend for 2017 was RMB18,280 million.
+(13,527)
+(336)
+14,850
+15,774
+Charge for the year
+Current income tax
+2017
+2018
+(in RMB million)
+15. INCOME TAX
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+220
+64,071
+65,904
+1,794
+1,854
+Others
+14,006
+14,148
+Retirement benefits, social security contributions and
+welfare benefits
+48,271
+49,902
+51,135
+43,857
+- Adjustments in respect of current income tax of previous years
+Deferred income tax
+(336)
+33,685
+40,788
+134,740
+163,151
+2017
+2018
+Income tax per consolidated statement of income
+Adjustments in respect of current income tax of previous years
+Income not subject to tax
+2017
+Expenses not deductible for tax
+Profit before tax
+(in RMB million)
+Reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax
+rate of 25% (2017: 25%) is as follows:
+Certain subsidiaries enjoy tax preferential treatments. These subsidiaries are not material to the Group.
+Except for those subsidiaries enjoying tax preferential treatments, the applicable corporate income tax rate
+of the Group for 2018 was 25%.
+34,762
+42,699
+(8,896)
+(8,100)
+(199)
+Tax at the applicable tax rate of 25% (2017: 25%)
+(2,064)
+(979)
+16,633
+Short term life insurance claims
+-
+(199)
+11,213
+1,000
+(28,688)
+(120)
+(12,150)
+(191)
+1,677
+2017
+2018
+(in RMB million)
+11. OTHER REVENUES AND OTHER GAINS
+Total
+Available-for-sale
+Equity investments
+- Loan and receivables
+- Held-to-maturity
+- Available-for-sale
+2,462
+Fixed maturity investments
+120
+(28,284)
+Annuity management fee
+1,161
+1,195
+Expressway toll fee.
+2,557
+3,588
+from investment contracts
+Management fee from investment-linked products and
+13,756
+2017
+2018
+18,268
+Sales revenue
+(2,701)
+(1,212)
+(2,145)
+656
+2017
+3,271
+(137)
+(in RMB million)
+(4) IMPAIRMENT LOSSES
+Financial liabilities at fair value through profit or loss
+640
+958
+Derivative financial instruments
+3,452
+Available-for-sale financial assets
+(358)
+121
+Loans and receivables
+Financial assets at amortized cost
+2,569
+(199)
+3,069
+Debt financial assets at fair value through other
+comprehensive income
+2017
+2018
+(in RMB million)
+(2) REALIZED GAINS FROM DISPOSAL
+38,971
+52,643
+Gain on disposals of loans and advances
+769
+525
+Income from precious metal transactions
+- Wealth management investments and other investments
+Financial assets designated at fair value through profit or loss
+Derivative financial instruments
+Stocks
+- Funds
+Bonds
+Financial assets at fair value through profit or loss
+(in RMB million)
+(3) UNREALIZED (LOSSES)/GAINS
+10. INVESTMENT INCOME (CONTINUED)
+For the year ended 31 December 2018
+679
+Notes to Consolidated Financial Statements
+Ping An Insurance (Group) Company of China, Ltd. 217
+Annual Report 2018
+24,184
+7,615
+16,736
+2,324
+Investment in subsidiaries, associates and jointly controlled entities
+620
+573
+FINANCIAL STATEMENTS
+595
+Consulting income
+Finance lease income
+7,371
+7,371
+Annuities
+20,519
+20,519
+Surrenders
+137,016
+(9,824)
+146,840
+Claims and claim adjustment expenses
+Net
+Reinsurers' share
+Gross
+(in RMB million)
+2017
+439,596
+(10,108)
+449,704
+17,407
+Maturities and survival benefits
+27,709
+27,709
+Policyholder dividends
+309,571
+Long term life insurance contract benefits
+Net
+Reinsurers' share
+Gross
+(in RMB million)
+2018
+(2)
+427,243
+17,407
+(9,415)
+23,873
+23,873
+Interest credited to policyholder contract deposits
+197,626
+409
+197,217
+Increase in policyholders' reserves
+13,129
+13,129
+436,658
+2,757
+Interest credited to policyholder contract deposits
+(365)
+12. CLAIMS AND POLICYHOLDERS' BENEFITS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+218
+43,813
+49,892
+8,212
+8,725
+Others
+2,694
+121
+Income from customer loyalty service
+1,256
+416
+Income from guarantees
+5,753
+12,749
+7,829
+4,151
+(1)
+2018
+(in RMB million)
+Claims and claim adjustment expenses
+185,051
+Increase in policyholders' reserves
+16,445
+16,445
+Policyholder dividends
+22,186
+22,186
+Maturities and survival benefits
+22,725
+184,686
+22,725
+21,539
+21,539
+154,608
+(9,743)
+164,351
+Net
+Reinsurers' share
+Gross
+Surrenders
+Annuities
+6.02
+4.99
+Government bonds
+Carried at fair value through profit or loss
+Available-for-sale, at cost
+Available-for-sale, at fair value
+(in RMB million)
+(3) OTHER EQUITY INVESTMENTS
+Unlisted
+Listed
+276,916
+259,938
+16,978
+31 December 2017
+Held for trading
+Held for trading
+(in RMB million)
+(2) EQUITY SECURITIES
+90,426
+79,620
+10,806
+90,426
+33,491
+56,935
+31 December 2017
+Unlisted
+Available-for-sale, at fair value
+Listed
+Designated at fair value through profit or loss
+340
+Provision
+2018
+The Group's investments in the principal associates and jointly controlled entities as at 31 December 2018
+are as follows:
+32. INVESTMENTS IN ASSOCIATES AND JOINTLY CONTROLLED ENTITIES
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 233
+Annual Report 2018
+Note: Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds with public market price
+quotation.
+276,576
+263,334
+Unlisted
+77,059
+Listed
+263,334
+17,505
+9,475
+126
+236,228
+31 December 2017
+276,916
+186,275
+As at
+Held for trading
+(in RMB million)
+1,243,768
+221,871
+31 December 2017
+2,376,638
+43,588
+465,191
+239,351
+1,628,508
+31 December 2017
+2
+3,115
+63,801
+7,174
+Listed
+Unlisted
+Finance bonds
+Corporate bonds
+Government bonds
+(in RMB million)
+Carried at fair value through profit or loss
+Loans and receivables
+Available-for-sale, at fair value
+Held-to-maturity
+(in RMB million)
+(1) BONDS
+Wealth management products
+2018
+Available-for-sale, at fair value
+99,068
+31 December 2017
+(1) SECURITY INVESTMENT FUNDS
+630,676
+263,334
+276,916
+90,426
+31 December 2017
+Other equity investments
+Equity securities
+Security investment funds
+(in RMB million)
+1,628,508
+31. EQUITY INVESTMENTS
+Annual Report 2018
+During 2013, the Group's subsidiary Ping An Bank Co., Ltd. ("Ping An Bank") reclassified bonds with a fair
+value of RMB91,675 million from available-for-sale financial investments to held-to-maturity financial assets
+reflecting its positive intention and ability to hold them until maturity. As at 31 December 2017, the carrying
+amount of these bonds was RMB44,060 million while the corresponding fair value was RMB43,226 million.
+These financial investments are reclassified to the financial assets at amortized cost under IFRS 9.
+Note: Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded.
+1,628,508
+1,157,490
+471,018
+1,628,508
+384,844
+604,805
+638,859
+Ping An Insurance (Group) Company of China, Ltd.
+Additional
+1 January
+investment
+Liuzhou
+Hong Kong
+Water plant operation
+Yes
+260
+1
+16
+12
+Shanxi Taichang
+Taiyuan
+Veolia Liuzhou
+Taiyuan
+Yes
+6,272
+3,340
+1,033
+346
+Beijing-Shanghai Railway
+The PRC
+The PRC
+Railway investment
+Yes
+Expressway operation
+16,001
+(27)
+1
+Principal activities
+operation
+31 December
+as at
+31 December
+Total
+revenue in
+current year
+Net profit/
+(loss) in
+current year
+Associates
+Veolia Kunming
+Kunming
+Hong Kong
+(24)
+Water plant operation
+1,157
+48
+66
+58
+Veolia Yellow River
+Lanzhou
+Hong Kong
+Water plant operation
+Yes
+806
+Yes
+519
+503
+Jointly controlled entities
+291
+30
+759
+Shanxi Taichang Expressway Co., Ltd. ('Shanxi Taichang')
+('Veolia Liuzhou')
+13
+261
+10
+Veolia Water (Liuzhou) Investment Co., Ltd.
+("Veolia Yellow River')
+1
+Veolia Water (Yellow River) Investment Co., Ltd.
+Associates
+(in RMB million)
+Proportion of
+ordinary
+shares held by
+the Group (%)(i)
+Cash
+dividends in
+current Year
+Change of
+provision in
+current Year
+31 December
+as at
+As at
+31 December
+balance
+Increase/
+(Decrease) in
+current year
+Veolia Water (Kunming) Investment Co., Ltd.
+('Veolia Kunming')
+(36)
+23.88%
+213
+Kunyu Highway
+Kunming
+Kunming
+Expressway operation
+Yes
+1,992
+85
+1,733
+1,070
+The Group has no significant contingent liabilities relating to the associates and jointly controlled entities
+listed above.
+(i) The proportion of ordinary shares, as shown in the above table, is the multiplication of the proportion of shares held in each holding
+layer.
+236
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+124
+12
+262
+539
+112
+48.76%
+(395)
+209
+(4)
+Debt schemes and trust schemes
+Total
+liabilities
+Asset management schemes
+(in RMB million)
+comprehensive income
+Measured at fair value through other
+44,322
+32,436
+11,886
+54,033
+As at 31 December
+(152)
+(56)
+(96)
+As at 31 December 2017/31 December 2016
+495
+(659)
+(659)
+(675)
+allowances recognized as interest income
+Unwinding of discount of impairment
+3,496
+1,859
+1,637
+9,356
+Recovery of loans written off previously
+Others
+(39,402)
+Change in accounting policy (Note 2)
+As at 1 January 2018/1 January 2017
+Funds
+Corporate bonds
+Finance bonds
+The Group's investments in the principal associates and jointly controlled entities as at 31 December 2017
+are as follows:
+Bonds
+(in RMB million)
+26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+54
+Ping An Insurance (Group) Company of China, Ltd. 229
+44,322
+32,436
+11,886
+54,187
+As at 31 December 2018/31 December 2017
+154
+As at 31 December
+100
+Charge for the year
+54
+Annual Report 2018
+Stocks
+(11,582)
+(46,409)
+25. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+228
+1,660,864
+(44,322)
+1,929,842
+Carrying amount
+(54,033)
+Less: Loan allowance
+(6) LOAN LOSS PROVISION
+6,237
+100.00%
+1,705,186
+100.00%
+1,977,638
+Gross
+3.01%
+51,265
+3.36%
+66,514
+Offshore business
+Add: Interest receivable
+(27,820)
+(in RMB million)
+Individually
+assessed
+Write-off and transfer during the year
+40,814
+10,435
+30,379
+43,557
+Charge for the year
+40,225
+31,780
+8,445
+47,709
+2018
+As at 1 January 2018/1 January 2017
+Change in accounting policy (Note 2)
+40,225
+31,780
+8,445
+44,322
+As at 31 December 2017/31 December 2016
+Measured at amortized cost:
+Total
+Collectively
+assessed
+2017
+3,387
+Preferred shares
+Unlisted equity investments
+Debt schemes
+Preferred shares
+Stocks
+(in RMB million)
+Equity financial assets at fair value through other comprehensive income comprise the following individual
+investments:
+29. EQUITY FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
+COMPREHENSIVE INCOME
+As at 31 December 2018, the total provision for impairment losses recognized in debt financial assets at fair
+value through other comprehensive income is RMB1,180 million.
+310,901
+261,086
+49,815
+310,901
+Unlisted equity investments
+34,836
+66,225
+69,598
+123,491
+31 December 2018
+Listed
+Unlisted
+Wealth management investments
+Margin accounts receivables
+Corporate bonds
+Finance bonds
+Government bonds
+16,751
+Bonds
+Listed
+31 December 2018
+30. FIXED MATURITY INVESTMENTS
+Unlisted equity investments
+Preferred shares
+Stocks
+(in RMB million)
+The dividends income of equity financial assets at fair value through other comprehensive income
+recognized during the year are as follows:
+29. EQUITY FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
+COMPREHENSIVE INCOME (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+232
+Unlisted
+FINANCIAL STATEMENTS
+Annual Report 2018
+Due to the increase of shareholding of a stock investment in the reporting period, the Group became to
+have significant influence over the investee, so the stock investment in the investee was changed from an
+equity investment designated as FVOCI to an investment in associates and accounted for using the equity
+method. The carrying amount upon transfer was RMB13,973 million. The dividend income recognized for
+the year was RMB673 million, and the accumulated other comprehensive income of RMB1,715 million has
+been transferred to retain profits. There is no other material disposal of equity financial assets at fair value
+through other comprehensive income in the current year.
+For the equity investments which are not held for trading but for long term investments, the Group has
+irrevocably elected them at initial recognition to recognize in this category.
+222,639
+1,722
+220,917
+222,639
+1,722
+66,682
+154,235
+Ping An Insurance (Group) Company of China, Ltd. 231
+(in RMB million)
+28. DEBT FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
+COMPREHENSIVE INCOME
+Ping An Insurance (Group) Company of China, Ltd.
+27. FINANCIAL ASSETS AT AMORTIZED COST
+At 31 December 2018, the Group did not hold any financial assets designated at fair value through profit or
+loss.
+As at 31 December 2017, the Group held the investments of RMB21,786 million financial assets designated at
+fair value through profit or loss. With the implementation of IFRS 9, following the tests on business model
+and contractual cash flows characteristics, these financial assets became mandatorily measured at fair
+value through profit or loss, therefore they were de-designated as measured at fair value through profit or
+loss.
+824,939
+678,857
+146,082
+824,939
+60,180
+230,846
+15,432
+(in RMB million)
+57,544
+89,640
+200,753
+46,201
+82,333
+40,833
+31 December 2018
+Total
+Listed
+Unlisted
+Other investments
+Wealth management investments
+1,177
+Bonds
+Government bonds.
+Finance bonds
+Annual Report 2018
+230
+2,075,151
+130,878
+1,944,273
+2,075,151
+(13,305)
+2,088,456
+104,847
+155,759
+301,971
+133,650
+497,233
+894,996
+31 December 2018
+Unlisted
+Listed
+Net
+Less: provision for impairment losses
+Gross
+Other investments
+Wealth management investments
+Debt schemes
+Corporate bonds
+Bonds (1)
+Total assets
+as at
+Significant to
+the Group's
+Place of
+incorporation
+421
+2,889
+Xuhui Holdings Co., Ltd.
+6.00%
+(766)
+(766)
+911
+(753)
+1,664
+Shenzhen Jinzheng Science & Technology Co., Ltd.
+3,310
+39.92%
+(11)
+510
+Guangzhou Jinglun Property Development Co., Ltd.
+36.65%
+894
+54
+840
+Massive Idea Investments Limited
+1114
+414
+499
+(1,046)
+156
+Ping An Healthcare and Technology Co., Ltd.
+Jiangsu Dezhan Investment Co., Ltd.
+38.81%
+1,173
+(17)
+1,190
+Co., Ltd.
+Shenzhen China Merchants-Ping An Asset Management
+39.87%
+38.54%
+39.27%
+9.56%
+3,107
+689
+OneConnect Financial Technology Co., Ltd. ('OneConnect')
+4,599
+4,418
+181
+Ping An Medical and Healthcare Management Co., Ltd.
+17,870
+2,160
+15,710
+('Ping An Good Doctor')
+2,418
+2,001
+1,046
+41.14%
+current Year
+Cash
+dividends in
+current Year
+Proportion of
+ordinary
+shares held by
+the Group (%)(i)
+(in RMB million)
+Associates
+Veolia Kunming
+Veolia Yellow River
+Veolia Liuzhou
+266
+(5)
+31 December
+261
+240
+(27)
+213
+(348)
+48.76%
+120
+(8)
+112
+44.78%
+Shanxi Taichang
+23.88%
+Foshan Huatai Property Development Co., Ltd.
+31 December
+as at
+39.19%
+35
+305
+20,876
+6,300
+8,880
+11,996
+Lufax Holding Ltd.('Lufax')
+'
+6,300
+Change of
+provision in
+Scheme (Beijing-Shanghai Railway')
+29.85%
+44.78%
+821
+62
+(23)
+As at
+1 January
+Additional
+investment
+Increase/
+(Decrease) in
+current year
+Provision
+balance
+As at
+Beijing-Shanghai High-Speed Railway Equity Investment
+114
+2,115
+23.65%
+15,934
+Others
+48.90%
+993
+1
+992
+Xi'an Languang Meidu Enterprise Management Service Ltd.
+49.79%
+351
+571
+5,069
+(266)
+Wuhan DAJT Property Development Co., Ltd.
+24.92%
+1,295
+(4)
+1,299
+Beijing ZhaoTai Property Development Co., Ltd.
+48.85%
+2,125
+(49)
+2,174
+837
+Nanjing Mingwan Property Development Co., Ltd.
+4,755
+(6)
+32. INVESTMENTS IN ASSOCIATES AND JOINTLY CONTROLLED ENTITIES
+(CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+234
+4,323
+(772)
+(1,324)
+154,895
+24,131
+44,557
+25,758
+86,207
+1,734
+(6)
+(6)
+31,486
+4,034
+5,069
+22,383
+Subtotal
+874
+(6)
+Investments in associates and jointly controlled entities
+49.94%
+509
+744
+4.47%
+673
+25
+2,255
+80
+2,175
+China Traditional Chinese Medicine Holdings Co., Ltd.
+14,231
+258
+13,973
+57
+China Yangtze Power Co., Ltd.
+102
+1,529
+114
+1,415
+Beijing Beiqi Penglong Automobile Service Co., Ltd.
+10.21%
+1,585
+(170)
+1,755
+Zhongan Online Property & Casualty Co., Ltd.
+39.18%
+11.94%
+China Fortune Land Development Co., Ltd.
+13,868
+(403)
+1,147
+('Kunyu Highway')
+Yunnan KunYu Highway Development Co., Ltd.
+Jointly controlled entities
+2,589
+(766)
+(1,318)
+123,409
+20,097
+39,488
+63,824
+Subtotal
+882
+(98)
+26,233
+2,468
+9,472
+14,293
+Others
+19.73%
+14,477
+609
+746
+13
+759
+83
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+32. INVESTMENTS IN ASSOCIATES AND JOINTLY CONTROLLED ENTITIES
+(CONTINUED)
+The financial information summary of the Group's principal associates and jointly controlled entities as at
+year end of 2018 are as follows:
+Name of the invested entity
+Place of
+business
+Place of
+incorporation
+Significant to
+the Group's
+Total assets
+as at
+Ping An Insurance (Group) Company of China, Ltd. 235
+Principal activities
+31 December
+Total
+liabilities
+as at
+31 December
+Total
+revenue in
+current year
+Net profit/
+(loss) in
+current year
+Associates
+Veolia Kunming
+Kunming
+Hong Kong
+Water plant operation
+Yes
+operation
+1,317
+Annual Report 2018
+(446)
+285
+49.94%
+48.90%
+24.95%
+49.79%
+48.90%
+Others
+13,335
+2,664
+(65)
+838
+15,934
+18,142
+3,664
+577
+22,383
+285
+Investments in associates and jointly controlled entities
+48,955
+14,384
+22,868
+86,207
+Subtotal
+9
+74
+64
+Beijing-Shanghai Railway
+The PRC
+The PRC
+Railway investment
+Yes
+16,001
+791
+775
+Jointly controlled entities
+Kunyu Highway
+333
+Kunming
+Expressway operation
+Yes
+1,623
+64
+390
+174
+14
+The financial information summary of the Group's principal associates and jointly controlled entities as at
+year end of 2017 are as follows:
+Name of the invested entity
+Place of
+business
+Kunming
+989
+2,944
+5,997
+Veolia Yellow River
+Lanzhou
+Hong Kong
+Water plant operation
+Yes
+773
+3
+(19)
+(21)
+Veolia Liuzhou
+Liuzhou
+Hong Kong
+Water plant operation
+Yes
+305
+3
+18
+14
+Shanxi Taichang
+Taiyuan
+Taiyuan
+Expressway operation
+Yes
+992
+16.76%
+(8)
+Xi'an Languang Meidu Enterprise Management Service Ltd.
+Shenzhen Jinzheng Science & Technology Co., Ltd.
+1,648
+16
+1,664
+6.00%
+Xuhui Holdings Co., Ltd.
+2,889
+2,889
+9.56%
+Ping An Good Doctor
+39.92%
+15,710
+46.20%
+Ping An Medical and Healthcare Management Co., Ltd.
+181
+181
+44.33%
+OneConnect
+689
+689
+44.30%
+Shenzhen China Merchants-Ping An Asset Management
+15,710
+Co., Ltd.
+510
+523
+29.85%
+Beijing-Shanghai Railway
+6,300
+6,300
+198
+39.18%
+Lufax
+9,182
+2,814
+11,996
+(13)
+43.76%
+908
+138
+1,046
+29.34%
+Massive Idea Investments Limited
+793
+47
+840
+36.65%
+Guangzhou Jinglun Property Development Co., Ltd.
+Foshan Huatai Property Development Co., Ltd.
+1,170
+20
+1,190
+10,720
+22,291
+63,824
+(446)
+553
+Jointly controlled entities
+Kunyu Highway
+1,243
+(96)
+1,147
+30,813
+Nanjing Mingwan Property Development Co., Ltd.
+485
+2,174
+Beijing ZhaoTai Property Development Co., Ltd.
+1,243
+56
+1,299
+Wuhan DAJT Property Development Co., Ltd.
+632
+205
+837
+1,689
+Subtotal
+138
+(98)
+38.81%
+Jiangsu Dezhan Investment Co., Ltd.
+1,974
+27
+2,001
+23.65%
+Zhongan Online Property & Casualty Co., Ltd.
+848
+907
+1,755
+10.21%
+Beijing Beiqi Penglong Automobile Service Co., Ltd.
+723
+937
+(245)
+1,415
+134
+39.18%
+Others
+8,516
+3,750
+2,027
+14,293
+1,000
+285,757
+2017
+298,178
+Secured by monetary assets
+Secured by mortgages
+227,376
+592,717
+31 December 2017
+200,873
+775,467
+31 December 2018
+Secured by collateral
+Guaranteed
+Unsecured
+(in RMB million)
+(44,322)
+1,660,864
+(54,033)
+6,237
+1,705,186
+1,977,638
+854,566
+1,154,013
+(3) ANALYSED BY TYPE OF COLLATERAL HELD OR OTHER CREDIT ENHANCEMENTS
+1,929,842
+Subtotal
+Carrying amount
+671,915
+287,681
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 227
+Annual Report 2018
+1,660,864
+1,929,842
+Carrying amount
+(44,322)
+(54,033)
+Less: Provision for impairment losses
+6,237
+Add: Interest receivable
+1,705,186
+1,977,638
+14,756
+41,702
+Gross
+Discounted bills
+1,690,430
+1,935,936
+271,127
+599,210
+For the year ended 31 December 2018
+Less: Provision for impairment losses
+Individual customers
+39,131
+Transportation and communication
+25,854
+21,745
+Energy
+141,976
+119,845
+Manufacturing (light industry)
+58,048
+41,140
+9,291
+5,837
+31 December 2017
+31 December 2018
+Extraction (heavy industry)
+Agriculture, husbandry and fishery
+Corporate customers
+(in RMB million)
+(2) ANALYSED BY INDUSTRY
+25. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
+15.08%
+53,274
+Gross
+Commercial
+91,746
+850,620
+823,625
+Subtotal of corporate customers
+14,756
+41,702
+Discounted bills
+835,864
+781,923
+Subtotal of loans.
+107,865
+89,501
+Others
+48,107
+45,403
+Construction
+135,938
+142,266
+Social service, technology, culture and sanitary industries
+163,765
+176,016
+Real estate
+101,039
+25. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
+Add: Interest receivable
+31 December 2018
+Past due loans refer to the loans with either principal or interest being past due by one day or more.
+433
+12,708
+28,704
+19,663
+10,843
+134
+2,778
+5,537
+2,394
+Secured by monetary assets
+19,060
+146
+4,974
+10,237
+3,703
+Secured by mortgages
+Secured by collateral
+15,089
+49
+2,814
+(5) ANALYSED BY REGION
+6,641
+31 December 2018
+(in RMB million)
+Northern China
+(4) AGING ANALYSIS OF PAST DUE LOANS BY PASS DUE DAYS
+11.14%
+190,016
+9.33%
+184,593
+Western China
+37.38%
+637,393
+42.49%
+840,288
+Southern China
+31.71%
+540,755
+29.74%
+588,065
+%
+Amount
+%
+Amount
+Eastern China
+31 December 2017
+5,585
+61,508
+4,610
+160
+3,703
+4,060
+Secured by mortgages
+Secured by collateral
+9,290
+266
+2,924
+1,490
+19,351
+15,046
+1,119
+7,140
+9,817
+Guaranteed
+Unsecured
+Total
+More than 3 years
+1 to 3 years
+16,516
+Within 3 months 3 months to 1 year
+(in RMB million)
+1,275
+Secured by monetary assets
+7,123
+Within 3 months
+2,142
+6,289
+7,981
+Total
+More than 3 years
+1 to 3 years
+3 months to 1 year
+2,605
+31 December 2017
+Guaranteed
+(in RMB million)
+Unsecured
+1,684
+8,973
+23,314
+17,972
+8,256
+139
+1,071
+4,441
+51,943
+104
+Disposals of subsidiaries
+As at 1 January 2017
+Accumulated amortization
+Charge for the year
+4,147
+As at 31 December 2017
+2,717
+737
+73,876
+Disposals
+9,544
+10,181
+15,082
+10,669
+8,360
+20,507
+As at 31 December 2017
+(655)
+(380)
+(275)
+346
+Disposals
+9,714
+3,885
+9,751
+372
+(2,949)
+6,197
+20,507
+As at 31 December 2017
+Net book value
+12,895
+4,239
+674
+4,901
+918
+2,163
+(269)
+(269)
+(1,062)
+(136)
+(926)
+2,394
+759
+328
+754
+181
+11,832
+(77)
+Net book value
+Disposals of subsidiaries
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 241
+Annual Report 2018
+60,981
+5,305
+9,040
+10,181
+9,751
+6,197
+20,507
+Notes to Consolidated Financial Statements
+As at 1 January 2018
+5,194
+9,407
+9,458
+11,326
+2,545
+20,520
+As at 31 December 2018
+14,103
+5,841
+9,040
+58,450
+For the year ended 31 December 2018
+36. INTANGIBLE ASSETS (CONTINUED)
+2017
+2,631
+1,448
+446
+594
+143
+74,849
+8,553
+9,268
+15,082
+10,075
+11,232
+20,639
+As at 1 January 2017
+Additions
+Cost
+Total
+and others
+Trademarks
+Core deposits
+Software
+Prepaid land
+premiums
+Expressway
+operating rights
+Goodwill (i)
+(in RMB million)
+(2,872)
+5,305
+1,831
+As at 1 January 2017
+-
+20,520
+(2)
+15
+20,507
+321
+15
+306
+5,265
+5,265
+20,507
+1,073
+241
+241
+134
+66
+328
+1,829
+(2)
+2,502
+8,761
+As at
+31 December 2018
+1,073
+Decrease
+15
+1 January 2017
+241
+134
+66
+328
+503
+(275)
+2,502
+8,761
+31 December 2017
+As at 31 December 2018
+As at
+Decrease
+20,520
+(2)
+2017
+134
+66
+328
+2,106
+2,502
+8,761
+Increase
+As at
+60,981
+2018
+66
+Ping An E-wallet
+Ping An Commercial Property Investment
+Beijing Shuangronghui Investment Co., Ltd.
+Shanghai Gezhouba Yangming Property
+Co., Ltd.
+Ping An Securities
+Mayborn Group Limited
+Shanghai Jahwa
+Ping An Bank
+(in RMB million)
+(i) GOODWILL
+36. INTANGIBLE ASSETS (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Autohome Inc.
+Annual Report 2018
+The Group was still in the process of applying for its prepaid land premium with a carrying amount of
+RMB54 million as at 31 December 2018 (31 December 2017: RMB52 million).
+As at 31 December 2018, prepaid land premiums with a carrying amount of RMB3,757 million (31 December
+2017: RMB3,632 million) were pledged as collateral for long term borrowings amounting to RMB2,420 million
+(31 December 2017: RMB2,304 million).
+As at 31 December 2018, expressway operating rights with a carrying amount of RMB2,545 million (31
+December 2017: RMB5,711 million) were pledged as collateral for long term borrowings amounting to
+RMB836 million (31 December 2017: RMB2,939 million).
+63,017
+4,668
+8,922
+10,935
+9,338
+8,515
+20,639
+242
+134
+Other
+Less: Impairment losses
+328
+1,831
+2,502
+8,761
+Increase
+1 January 2018
+As at
+Net book value
+Less: Impairment losses
+Total
+Total
+Other
+Ping An E-wallet
+Shanghai Gezhouba Yangming Property
+Co., Ltd.
+Beijing Shuangronghui Investment Co., Ltd.
+Ping An Commercial Property Investment
+Ping An Securities
+Mayborn Group Limited
+Shanghai Jahwa
+Ping An Bank
+(in RMB million)
+Net book value
+Autohome Inc.
+5,624
+As at 1 January 2017
+993
+6,057
+3,737
+As at 1 January 2017
+67,336
+3,176
+9,431
+13,553
+32,401
+8,775
+Accumulated depreciation
+6,290
+As at 31 December 2017
+(219)
+(270)
+(1,317)
+(34)
+(78)
+Disposals
+(185)
+(185)
+Disposals of subsidiaries
+438
+(1,918)
+(761)
+1,167
+Charge for the year
+6,955
+7,197
+4,745
+As at 31 December 2017
+(1,506)
+(210)
+(1,131)
+(6)
+(159)
+Disposals
+17,251
+(86)
+94
+Disposals of subsidiaries
+118
+118
+Transfer from investment properties, net
+4,385
+308
+1,976
+1,028
+1,073
+(180)
+1,199
+properties, net
+Transfer from/(to) investment
+Leasehold
+improvements
+2017
+35. PROPERTY AND EQUIPMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 239
+Annual Report 2018
+47,067
+3,176
+Buildings
+8,160
+25,118
+4,030
+As at 1 January 2018
+49,323
+1,253
+6,407
+8,944
+28,767
+3,952
+As at 31 December 2018
+6,583
+Equipment,
+furniture and
+fixtures
+Motor
+vehicles
+Construction
+(739)
+85
+29
+625
+Transfer of construction in progress
+11,521
+2,130
+5,599
+3,064
+233
+495
+Additions
+57,480
+2,765
+4,102
+11,906
+30,974
+7,733
+As at 1 January 2017
+Cost
+(in RMB million)
+Total
+in progress
+1,265
+1,142
+20,162
+As at 1 January 2017
+11,035
+9,910
+15,082
+12,468
+3,538
+20,520
+(311)
+(275)
+(34)
+(2)
+(19)
+(5,072)
+(4,823)
+4,040
+1,746
+445
+1,833
+1
+15
+73,876
+20
+9,544
+20
+9,714
+(249)
+15,082
+72,553
+Charge for the year
+(36)
+(27)
+(9)
+(1,654)
+(249)
+-
+(1,405)
+2,898
+1,629
+78
+As at 1 January 2018
+723
+235
+12,895
+4,239
+674
+4,901
+918
+2,163
+As at 31 December 2018
+Disposals
+Disposals of subsidiaries
+233
+10,669
+8,360
+20,507
+24,831
+3,996
+47,067
+3,176
+8,160
+6,583
+25,118
+4,030
+107
+21
+5,616
+86
+15
+86
+6
+15
+86
+241
+As at 31 December 2017
+Net book value
+As at 31 December 2017
+Charge for the year
+6
+2,935
+2,765
+40,143
+Total
+and others
+Trademarks
+Core deposits
+Software
+Prepaid land
+premiums
+Expressway
+operating rights
+Goodwill (i)
+2018
+Accumulated amortization
+As at 31 December 2018
+Disposals/decrease
+Disposals of subsidiaries
+Additions
+Acquisitions of subsidiaries
+As at 1 January 2018
+Cost
+(in RMB million)
+36. INTANGIBLE ASSETS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+240
+The Group was still in the process of applying for title certificates for its buildings with a carrying amount
+of RMB295 million as at 31 December 2018 (31 December 2017: RMB390 million).
+Impairment losses
+1,073
+(6)
+5,265
+(1) POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INSURANCE CONTRACTS
+38. POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INSURANCE/
+INVESTMENT CONTRACTS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+244
+261,275
+155,686
+Net
+(351)
+(486)
+(in RMB million)
+(40)
+(45)
+(4)
+(445)
+-
+(288)
+(12)
+(1,373)
+(12)
+(256)
+(1,369)
+33. STATUTORY DEPOSITS FOR INSURANCE OPERATIONS
+-
+(in RMB million)
+Cash and amounts due from banks and other financial institutions
+Financial assets at fair value through profit or loss
+31 December 2017
+38,775
+32,344
+406
+919
+330
+730
+172
+333
+3,329
+1,481
+31 December 2018
+24,470
+6,118
+2,821
+Other assets
+Financial assets held under resold agreements
+Other investments
+Stocks
+Funds
+Bonds
+3,950
+5,070
+20,990
+(2) POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INVESTMENT CONTRACTS
+Ping An Life
+Ping An Annuity
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+34. INVESTMENT PROPERTIES
+(in RMB million)
+Cost
+2018
+2017
+As at 1 January
+45,834
+41,180
+FINANCIAL STATEMENTS
+Additions
+5,095
+Transfer from construction in progress
+761
+Transfer to property and equipment, net
+(2,097)
+(1,199)
+Disposals
+(3)
+As at 31 December
+44,925
+1,188
+Ping An Property & Casualty
+Ping An Insurance (Group) Company of China, Ltd. 237
+Statutory deposits for insurance operations are placed with PRC national commercial banks in accordance
+with the relevant regulations issued by China Bank and Insurance Regulatory Commission (the 'CBIRC')
+based on 20% of the registered capital for the insurance company subsidiaries and 5% of the registered
+capital for insurance sales agency subsidiaries within the Group, respectively. Statutory deposit for
+insurance operations can only be utilized to settle liabilities during liquidation of insurance companies.
+Ping An Health
+Others
+Subtotal
+Add: Interest receivables
+31 December 2018
+31 December 2017
+6,758
+6,760
+4,198
+4,200
+Annual Report 2018
+972
+310
+310
+8
+8
+12,246
+12,250
+200
+12,446
+12,250
+Total
+972
+(in RMB million)
+31 December 2018
+31 December 2017
+(679)
+As at 1 January 2017
+(289)
+1,002
+(1,291)
+As at 31 December 2018
+33
+33
+(277)
+277
+431
+Expired
+565
+(593)
+(294)
+565
+-
+714
+(1,008)
+(593)
+Total
+107
+Value of
+employee services
+Exercised
+Cost of shares held for
+share purchase scheme
+(248)
+(603)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+The share-based compensation expense arising from the Scheme and the total value of employee services for the year ended 31
+December 2018 were RMB565 million (31 December 2017: RMB524 million) and RMB565 million (31 December 2017: RMB524 million)
+respectively.
+During the period from 23 March 2017 to 27 March 2017, 16,419,990 ordinary A shares were purchased from the market. The average
+price of shares purchased was RMB36.74 per share.
+As at 27 April 2018, 9,666,900 ordinary A shares were purchased from the market. The average price of shares purchased was
+RMB61.29 per share.
+(ii)
+(i)
+(294)
+33
+714
+Purchased (i)
+(1,008)
+3
+30
+Expired
+(244)
+244
+Exercised
+524
+524
+Share-based compensation expenses (ii)
+(603)
+As at 31 December 2017
+Share-based compensation expenses (ii)
+Purchased (i)
+As at 1 January 2018
+19
+-
+1,128
+776
+1,636
+1,666
+10,832
+10,832
+Domestic listed
+A shares, par value
+RMB1.00 per share
+31 December 2018
+952
+1 January 2018
+39. SHARE CAPITAL
+Other assets
+Financial assets held under resold agreements
+Other investments
+Stocks
+Funds
+Bonds
+120
+395
+Cash and amounts due from banks and other financial institutions
+Financial assets at fair value through profit or loss
+(million shares)
+603
+380
+175
+(in RMB million)
+Movement of reserves relating to the Scheme is as follows:
+The Company has adopted an employee share purchase scheme (the 'Scheme') for the key employees
+(including executive directors and senior management) of the Company and its subsidiaries. Shares shall
+be vested and awarded to the key employees approved for participation in the Scheme, subject to the
+achievement of certain performance targets.
+41. SHARE PURCHASE SCHEME
+In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
+is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
+Standards and (ii) the retained profits determined in accordance with IFRSS.
+In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic or
+other losses as incurred by companies operating in the insurance, banking, trust, securities, futures, fund
+businesses, finance lease and financial guarantee businesses. The Group's respective entities engaged in
+such businesses would need to make appropriations for such reserves based on their respective year-end
+profit or risk assets, the companies operating in the insurance should make appropriations for general
+reserves based on 10% of net profit, the company operating in banking should make appropriations based
+on 1.5% of risk assets, the company operating in securities should make appropriations based on 10%
+of net profit, the companies operating in trust should make appropriations based on 5% of trust claim
+reserves, the companies operating in futures should make appropriation based on 10% of net profit, and
+the companies operating in fund should make appropriation based on 10% of fund management fees as
+determined in accordance with PRC Accounting Standards, and based on the applicable PRC financial
+regulations, in their annual financial statements. Such reserves are not available for dividend distribution or
+transfer to share capital.
+40. RESERVES, RETAINED PROFITS AND NON-CONTROLLING INTERESTS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+246
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 245
+Annual Report 2018
+18,280
+7,448
+18,280
+7,448
+Total
+H shares, par value
+RMB1.00 per share
+Overseas listed
+4,109
+3,964
+223
+45,834
+1,073
+Accumulated depreciation
+5,725
+(4)
+86
+21
+107
+19
+(34)
+-
+(2,588)
+(2,127)
+Margin accounts receivables
+Others
+(15)
+Inventories
+Foreclosed assets
+Due from reinsurers
+Other receivables
+Interest receivables
+Less: Loss provisions
+263,863
+157,813
+Gross
+4,350
+8,160
+Prepayments
+Others
+19
+15
+(2)
+20,162
+5,053
+274
+Disposals
+(48)
+(191)
+(909)
+(360)
+(1,508)
+6
+As at 31 December 2018
+8,513
+8,275
+1,466
+-
+23,975
+Impairment losses
+As at 1 January 2018
+Charge for the year
+Disposals
+86
+5,721
+(4)
+11,266
+1,886
+Interest receivables
+(in RMB million)
+37. OTHER ASSETS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 243
+Annual Report 2018
+The results of cash flow projections exceed the carrying amount of each related cash-generating unit or
+group of units. However, subsequent impairment tests may be based upon different assumptions and future
+cash flow projections, which may result in an impairment of these assets in the foreseeable future.
+The primary valuation technique used is cash flow projections based on business plans approved by
+management covering a three to five year period and a risk adjusted discount rate. Cash flows beyond that
+period have been extrapolated using a steady growth rate and terminal value. Discount rates used by the
+Group range from 7% to 18% (2017: 9% to 16%) and growth rates, where applicable, range from 1% to 40%
+(2017: 2% to 33%).
+Other receivables
+20,507
+143
+20,639
+20,507
+(275)
+143
+20,639
+306
+143
+163
+5,265
+(275)
+5,890
+Due from reinsurers
+31 December 2017
+Amounts in the processing clearance and settlement
+Margin accounts receivables
+4,868
+5,082
+Inventories
+395
+494
+Dividends receivable
+87,501
+56,835
+Precious metals held for trading
+31 December 2018
+2,664
+Prepayments
+5,251
+4,634
+Foreclosed assets
+8,001
+8,695
+81,743
+67,666
+51,934
+1,152
+3,209
+Disposals of subsidiaries
+-
+274
+36,568
+66,922
+The fair values of the investment properties as at 31 December 2018 were estimated by the Group, based on
+valuation performed by independent valuers. It falls under level 3 in the fair value hierarchy.
+The rental income arising from investment properties for the year 2018 amounted to RMB3,743 million (2017:
+RMB2,757 million), which is included in net investment income.
+As at 31 December 2018, investment properties with a carrying amount of RMB9,338 million (31 December
+2017: RMB7,666 million) were pledged as collateral for long term borrowings with a carrying amount of
+RMB5,133 million (31 December 2017: RMB4,507 million).
+The Group was still in the process of applying for title certificates for certain investment properties with a
+carrying amount of RMB2,189 million as at 31 December 2018 (31 December 2017: RMB2,046 million).
+238
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+35. PROPERTY AND EQUIPMENT
+40,108
+Equipment,
+(in RMB million)
+Leasehold
+improvements
+furniture
+Buildings
+and fixtures
+Motor
+vehicles
+Construction
+in progress
+Total
+Cost
+As at 1 January 2018
+2018
+8,775
+67,240
+38,242
+4,611
+Charge for the year
+1,231
+1,233
+Transfer to property and equipment, net
+(274)
+(118)
+Disposals
+(1)
+As at 31 December
+40,108
+6,682
+Impairment losses
+As at 1 January
+As at 31 December
+Net book value
+As at 31 December
+As at 1 January
+Fair value as at 31 December
+1
+1
+1
+5,725
+32,401
+13,553
+9,431
+(3,352)
+(86)
+(5,183)
+As at 31 December 2018
+Accumulated depreciation
+9,673
+37,366
+17,219
+7,894
+1,253
+(1,137)
+73,405
+4,745
+7,197
+6,955
+1,265
+Charge for the year
+1,024
+1,237
+2,231
+561
+Transfer from investment properties, net
+As at 1 January 2018
+(299)
+(309)
+Disposals
+3,176
+67,336
+Additions
+689
+279
+4,507
+1,810
+1,884
+9,169
+Transfer of construction in progress
+518
+2,896
+302
+5
+(3,721)
+Transfer from/(to) investment
+properties, net
+2,097
+2,097
+Disposals of subsidiaries
+(8)
+(6)
+(14)
+As at 1 January
+Net book value
+5 years
+7,983
+(5,888)
+90,614
+(5,564) 98,305
+(9,645) 178,850
+9,409 (158,109)
+(5,800) 119,046
+124,846
+As at 31 December
+(167,518)
+188,495
+Premiums written during the year
+Premiums earned during the year
+103,869
+As at 1 January
+Net
+Reinsurers'
+share
+Gross
+Net
+share
+Gross
+(in RMB million)
+Reinsurers'
+2017
+2018
+188,900
+The unearned premium reserves of property and casualty insurance are analysed as follows:
+214,287
+85,031
+89,441
+103,869
+124,846
+31 December 2017
+31 December 2018
+84,726
+Claim reserves
+162,856
+(149,601)
+153,413
+114,407
+(92,429)
+55,323
+(7,730)
+63,053
+(8,604) 76,427
+(7,086) 116,444
+6,980 (112,140)
+(8,710) 80,731
+89,441
+As at 31 December 2018/2017
+(119,120)
+Claims paid during the year
+123,530
+Claims incurred during the year
+85,031
+As at 1 January 2018/2017
+Net
+Reinsurers'
+share
+Gross
+Net
+share
+Gross
+(in RMB million)
+Reinsurers'
+2017
+2018
+The claim reserves of property and casualty insurance are analysed as follows:
+98,305
+(5,564)
+103,869
+(139,834)
+9,767
+(9,443)
+(7,796)
+Unearned premium reserves
+(3) PROPERTY AND CASUALTY INSURANCE CONTRACTS
+(in RMB million)
+Reinsurers'
+2017
+2018
+The claim reserves of short term life insurance are analysed as follows:
+5,772
+(365)
+6,137
+7,467
+(525)
+7,992
+As at 31 December
+21,203
+(20,156)
+2,753
+(22,909)
+(2,948)
+24,151
+25,538
+(23,843)
+4,920
+(28,763)
+Premiums earned during the year
+(5,080)
+30,618
+Premiums written during the year
+4,725
+(170)
+4,895
+5,772
+(365)
+Gross
+(in RMB million)
+share
+Gross
+45. INSURANCE CONTRACT LIABILITIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 251
+Annual Report 2018
+5,355
+(231)
+(10,566)
+11,367
+(1,912)
+1,884
+13,279
+(12,450)
+5,586
+13,883
+(12,525)
+6,713
+(2,750)
+2,579
+(402)
+7,115
+As at 31 December
+(15,104)
+Claims paid during the year
+16,633
+Claims incurred during the year
+4,554
+(203)
+4,757
+5,355
+(231)
+5,586
+As at 1 January
+Net
+Reinsurers'
+share
+Net
+6,137
+106,611
+(85,507)
+None
+Ping An Financial Leasing Corporate bonds
+bonds
+5,000
+5,100
+5.30%-5.56%
+Fixed
+2017
+5,000
+None
+3 years
+None
+Ping An Financial Leasing Private corporate
+notes
+5,000
+5,011
+3.35%-4.55%
+Fixed
+2016
+5,000
+None
+3 years
+None
+Ping An Financial Leasing Private placement
+notes
+4,000
+4,081
+3.34%-3.58%
+Fixed
+3 years
+2016
+None
+2017
+None
+150 days-
+None
+Ping An Financial Leasing Short-term
+notes
+5,000
+5,031
+Fixed 5.40%-6.10%
+2017
+5,000
+None
+3 years
+None
+Ping An Financial Leasing Private placement
+2,100
+2,189
+Fixed 5.50%
+4,400
+4,472
+Fixed 4.70%-4.89%
+notes
+217
+2017
+2,100
+None
+3 years
+None
+Ping An Financial Leasing Medium term
+217
+4,400
+6,922
+4,000
+3-5 years
+2,264
+1,047
+11,138
+10,108
+44,930
+50,295
+2017
+2018
+As at 31 December
+Others
+Policy administration fees and risk premiums deducted
+Liabilities released for benefits paid
+Accretion of investment income
+Policyholder principal increased
+As at 1 January
+(in RMB million)
+The investment contract liabilities are analysed as follows:
+50,309
+4,109
+46,200
+52,747
+3,964
+48,783
+Policyholder account liabilities in respect of investment contracts
+Investment contract reserves
+31 December 2017
+31 December 2018
+(in RMB million)
+46. INVESTMENT CONTRACT LIABILITIES FOR POLICYHOLDERS
+76,427
+(8,604)
+85,031
+(8,949)
+None
+(7,949)
+(63)
+None
+Ping An Financial Leasing Medium term
+2017
+2018
+(per annum)
+Interest type
+year
+million)
+option
+Maturity
+type
+Type
+Issuer
+31 December
+Coupon rate
+Issued
+(in RMB
+redemption
+Guarantee
+Par value
+Early
+47. BONDS PAYABLE
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+252
+As at 31 December 2017 and 2018, all reinsurance contracts of the Group transferred significant insurance
+risk.
+50,309
+52,747
+(11)
+(59)
+305
+11,500
+As at 1 January
+Reinsurers'
+share
+Property and casualty insurance contracts
+Short term life insurance contracts
+Long term life insurance contracts
+(in RMB million)
+Property and casualty insurance contracts
+Short term life insurance contracts
+Long term life insurance contracts
+(in RMB million)
+Total
+Claim reserves
+Unearned premium reserves
+Policyholder account liabilities in respect of insurance contracts
+Policyholder contract deposits
+Policyholders' reserves
+(in RMB million)
+45. INSURANCE CONTRACT LIABILITIES
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+248
+As at 31 December 2018, bonds classified as financial assets carried at amortized costs with a carrying
+amount of RMB36,924 million (31 December 2017: financial assets classified as fixed maturity investments
+with a carrying amount of RMB21,326 million and bonds classified as loans and receivables with a carrying
+amount of RMB14,624 million) were pledged as collaterals for time deposits from the Central Bank.
+1,952,695
+2,114,344
+22,291
+25,315
+3,168
+5,027
+19,123
+20,288
+- Individual customers
+Corporate customers
+(in RMB million)
+Payables to brokerage customers
+Current portion*
+Short term life
+31 December 2018
+1,932,969
+90,617
+96,556
+2,211,887
+110,006
+132,838
+38,775
+32,344
+574,132
+502,646
+1,190,925
+31 December 2017
+1,376,017
+31 December 2018
+188,900
+1,932,969
+11,723
+1,732,346
+contract liabilities
+Insurance
+2,211,887
+1,982,493
+15,107
+214,287
+contract liabilities
+Insurance
+Total
+Property and casualty
+Short term life
+Long term life
+Non-current portion
+Property and casualty
+Long term life
+Reinsurers' share
+1,930,404
+17,828
+Ping An Insurance (Group) Company of China, Ltd. 247
+Annual Report 2018
+For bonds repurchase transactions through stock exchange, the Group is required to deposit certain
+exchange traded bonds and/or bonds transferred under new pledged repurchase transaction with fair value
+converted at a standard rate pursuant to stock exchange's regulation no less than the balance of related
+repurchase transaction into a collateral pool.
+As at 31 December 2018, the carrying amount of bonds deposited in the collateral pool was RMB112,164
+million (31 December 2017: RMB118,607 million). The collaterals are restricted from trading during the period
+of the repurchase transaction. The Group can withdraw the exchange-traded bonds from the collateral
+pool in short time provided that the value of the bonds is no less than the balance of related repurchase
+transactions.
+As at 31 December 2018, bonds with a carrying amount of RMB95,739 million (31 December 2017: RMB94,012
+million) were pledged as collaterals for financial assets sold under agreements to repurchase resulted from
+repurchase transactions entered into by the Group in the inter-bank market. The collaterals are restricted
+from trading during the period of the repurchase transaction.
+133,981
+189,028
+31 December 2017
+31 December 2018
+(in RMB million)
+Bonds
+Refer to Notes 25, 34 and 36 for the assets pledged as collateral to support the above borrowings.
+43. ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE
+780,530
+803,154
+109,165
+148,069
+Long term borrowings
+90,310
+93,627
+Short term borrowings
+130,652
+149,756
+Due to the Central Bank
+450,403
+411,702
+31 December 2017
+31 December 2018
+Deposits from other banks and financial institutions
+(in RMB million)
+42. DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS
+FINANCIAL STATEMENTS
+2,089,029
+Notes to Consolidated Financial Statements
+44. CUSTOMER DEPOSITS AND PAYABLES TO BROKERAGE CUSTOMERS
+23,472
+Remittance payables and outward remittance
+32,729
+17,903
+Fiscal deposits
+34,812
+38,481
+Time deposits from the Central Bank
+218,900
+175,098
+Guarantee deposits
+140,194
+267,697
+- Individual customers
+778,685
+901,739
+175,268
+173,372
+531,988
+491,267
+31 December 2017
+31 December 2018
+- Corporate customers
+Term deposits
+- Individual customers
+- Corporate customers
+Current and savings accounts
+Customer deposits
+(in RMB million)
+For the year ended 31 December 2018
+Net
+(1,234)
+1,981,259
+Liabilities released for benefits paid
+24,490
+17,530
+Accretion of investment income
+87,371
+102,318
+431,711
+502,281
+(365)
+Policyholder principal increased
+Change in accounting policy
+As at 1 January 2018/2017
+431,711
+502,646
+As at 31 December 2017/2016
+2017
+2018
+1,190,925
+1,376,017
+3,384
+3,541
+(33,683)
+(35,295)
+(99,257)
+(125,478)
+342,700
+329,744
+990,737
+1,190,549
+(376)
+(34,183)
+990,737
+(27,787)
+(13,814)
+Gross
+Net
+share
+Gross
+(in RMB million)
+Reinsurers'
+2017
+2018
+The unearned premium reserves of short term life insurance are analysed as follows:
+11,723
+15,107
+5,586
+7,115
+6,137
+7,992
+31 December 2017
+31 December 2018
+Claim reserves
+Unearned premium reserves
+(in RMB million)
+(2) SHORT TERM LIFE INSURANCE CONTRACTS
+45. INSURANCE CONTRACT LIABILITIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+250
+502,646
+574,132
+As at 31 December 2018/2017
+(13,139)
+Policy administration fees and risk premiums deducted
+Net
+1,190,925
+2018
+Estimated net cash flows within 12 months from the end of the reporting period.
+1,932,969
+650
+82,331
+97,642
+866
+1,794,694
+2,073,010
+106,569
+11,073
+(62,348)
+14,241
+116,645
+(90,517)
+31 December 2017
+31 December 2018
+174,731
+1,917,336
+(15,633)
+(14,169)
+11,128
+(595)
+1,731,477
+(869)
+Net
+Reinsurers' share
+31 December 2017
+2,195,216
+(16,671)
+14,181
+199,776
+(14,511)
+(926)
+2,211,887
+2017
+Annual Report 2018
+FINANCIAL STATEMENTS
+1,732,346
+38,775
+502,646
+1,190,925
+1,982,493
+32,344
+574,132
+1,376,017
+31 December 2017
+31 December 2018
+(in RMB million)
+The policyholder contract deposits are analysed as follows:
+As at 31 December 2018/2017
+Others
+-
+Surrender
+O Claims and benefits paid
+Increase during the year
+Decrease during the year
+As at 31 December 2017/2016
+Change in accounting policy
+As at 1 January 2018/2017
+(in RMB million)
+The policyholders' reserves are analysed as follows:
+Policyholder account liabilities in respect of insurance contracts
+Policyholder contract deposits
+Policyholders' reserves
+(in RMB million)
+(1) LONG TERM LIFE INSURANCE CONTRACTS
+45. INSURANCE CONTRACT LIABILITIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+Ping An Insurance (Group) Company of China, Ltd. 249
+2017
+Fixed 4.55%-5.46%
+financing bills
+2,407
+Fixed 2.50%-2.65%
+2018
+2,196
+None
+1 year
+Guaranteed
+(Note 1)
+Offshore HKD
+bonds
+Value Success
+International
+607
+Fixed 3.35%
+2018
+547
+444
+None
+1 year
+Guaranteed
+(Note 1)
+Offshore USD
+bonds
+Value Success
+International
+1,957
+2,074
+Fixed 3.20%
+2016
+2,003
+None
+5 years
+Guaranteed
+(Note 1)
+Offshore USD
+bonds
+Value Success
+International
+Li Guan International
+1,283
+Offshore USD
+bonds
+million)
+31 December 31 December
+Coupon rate
+Issued
+(in RMB
+redemption
+option
+Maturity
+type
+Type
+Issuer
+Guarantee
+Par value
+Early
+47. BONDS PAYABLE (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+256
+255
+Ping An Insurance (Group) Company of China, Ltd.
+FINANCIAL STATEMENTS
+Annual Report 2018
+3,442
+4.38%
+Fixed
+2018
+3,440
+None
+5 years
+Guaranteed
+(Note 1)
+Co.,Ltd.
+year
+1,349
+2016
+Value Success
+International
+4.75%
+Fixed
+2013
+2,100
+None
+5 years
+Guaranteed
+(Note 1)
+Offshore RMB
+bonds
+Value Success
+International
+3,500
+3,507
+First 5 years: 5.10%
+Next 5 years 6.10%
+(If not redeemed)
+fifth year
+Fixed
+2017
+3,500
+End of the
+10 years
+None
+Capital supplement
+bonds
+Ping An Property &
+Casualty
+(If not redeemed)
+Next 5 years: 5.79%
+fifth year
+5,043
+5,172
+First 5 years: 4.79%
+Fixed
+Offshore RMB
+Fixed 3.00%
+bonds
+None
+1,272
+None
+5 years
+Guaranteed
+(Note 1)
+Offshore HKD
+bonds
+Value Success
+International
+1,806
+1,883
+4.13%
+Fixed
+2014
+1,779
+None
+5.5 years
+Guaranteed
+(Note 1)
+bonds
+International
+Offshore SGD
+Value Success
+751
+351
+2,102
+5
+765
+4.95%
+Fixed
+2014
+750
+750
+Guaranteed
+(Note 1)
+2015
+Interest type
+2018
+Co., Ltd.
+5,419
+Fixed 9.38%-11.40%
+2018
+5,305
+None
+1-2 years
+None
+Private corporate
+bonds
+Estate Investment
+Shenzhen Ping An Real
+Co., Ltd.
+sixth month
+bonds
+Estate Investment
+2,991
+Fixed 8.70%-9.00%
+2018
+2,852
+End of the
+1 year
+None
+Corporate
+Shenzhen Ping An Real
+third year
+bonds
+3,016
+4.10%
+Fixed
+Ping An Financial
+Technology
+2018
+Corporate bonds
+2 years
+8,194
+3.27%-3.60%
+Fixed
+2016
+916
+Annual Report 2018
+8,000
+None or end
+of the fifth
+year
+3-7 years
+None
+Corporate bonds
+Ping An Real Estate
+sixth month
+Investment Co. Ltd
+2,446
+8.85%
+Fixed
+2018
+2,382
+End of the
+1 year
+None
+Corporate bonds
+Shenzhen Dingshuntong
+5,000
+Fixed 4.70%-4.80%
+2018
+5,000
+None
+None
+(per annum)
+3,000
+5 years
+End of the
+5 years
+None
+Private corporate
+bonds
+Ping An Securities
+1,300
+1,352
+4.65%
+Fixed
+2017
+1,300
+None
+3 years
+None
+Private corporate
+bonds
+Ping An Securities
+second year
+1,500
+1,541
+3.50%
+Fixed
+2016
+1,500
+End of the
+3 years
+None
+Private corporate
+bonds
+Ping An Securities
+2017
+1,200
+End of the
+2017
+4.99%
+None
+Corporate
+Ping An Securities
+3,997
+5.30%-5.60%
+Fixed
+2018
+3,840
+None
+2-3 years
+None
+Private corporate
+bonds
+Ping An Securities
+second year
+5,500
+4,064
+4.88%-5.48%
+Fixed
+2017
+5,500
+End of the
+6 months-
+3 years
+None
+Private corporate
+bonds
+Ping An Securities
+third year
+second and
+1,200
+1,251
+Fixed
+5,000
+End of the
+10 years
+3,650
+End of the
+15 years
+None
+Hybrid capital debt
+Ping An Bank
+(If not redeemed)
+1,466
+1,533
+First 10 years: 5.70%
+Next 5 years: 8.70%
+tenth year
+instrument
+Fixed
+2009
+1,500
+End of the
+15 years
+None
+Hybrid capital debt
+Ping An Bank
+2017
+2018
+31 December
+31 December
+Coupon rate
+(per annum)
+Interest type
+year
+million)
+option
+2011
+Maturity
+Fixed
+instrument
+fifth year
+bonds
+9,000
+9,388
+6.80%
+Fixed
+2014
+9,000
+End of the
+10 years
+None
+Tier-2 Capital
+Ping An Bank
+fifth year
+bonds
+6,000
+6,259
+6.50%
+Fixed
+2014
+6,000
+End of the
+10 years
+None
+Tier-2 Capital
+Ping An Bank
+3,650
+3,808
+tenth year
+7.50%
+Ping An Bank
+Issued
+redemption
+3.80%-4.82%
+Fixed
+2018
+4,600
+None
+1 year
+None
+Ping An Financial Leasing Short-term
+10,780
+5.00%-6.29%
+Fixed
+2018
+10,508
+None
+2-3 years
+None
+Private corporate
+bonds
+Ping An Financial Leasing
+7,727
+5.20%-6.40%
+Fixed
+2018
+7,500
+None
+1-3 years
+None
+notes
+Ping An Financial Leasing Private placement
+1 year
+4,697
+(in RMB
+financing bills
+None
+Guarantee
+type
+Туре
+Issuer
+Par value
+Early
+47. BONDS PAYABLE (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 253
+Annual Report 2018
+11,500
+2,407
+4.48%
+Fixed
+2018
+2,400
+None
+3 years
+None
+Ping An Financial Leasing Medium term notes
+270 days
+financing bills
+8,075
+Fixed 3.70%-4.49%
+2018
+8,000
+None
+180 days-
+Ping An Financial Leasing Super short-term
+Interbank deposits
+None
+1-3 years
+31 December
+31 December
+Coupon rate
+Issued
+(in RMB
+redemption
+Guarantee
+type
+Туре
+Issuer
+Par value
+Early
+47. BONDS PAYABLE (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+254
+(If not redeemed)
+5,037
+5,064
+First 5 years: 3.90%
+Next 5 years: 4.90%
+fifth year
+bonds
+Fixed
+2015
+5,000
+End of the
+10 years
+Capital supplement None
+Ping An Life
+(If not redeemed)
+Maturity
+Next 5 years: 7.90%
+option
+year
+Capital supplement None
+bonds
+Ping An Property &
+Casualty
+7,807
+8,336
+2.38%-2.88%
+Fixed
+2016
+7,872
+None
+3-5 years
+Offshore USD bonds None.
+Ping An Life
+(If not redeemed)
+Next 5 years: 4.82%
+fifth year
+10,059
+10,370
+First 5 years: 3.82%
+Fixed
+2016
+10,000
+End of the
+10 years
+Capital supplement None
+bonds
+Ping An Life
+2017
+2018
+(per annum)
+Interest type
+million)
+fifth year
+8,270
+8,749
+Fixed
+2018
+302,670
+None
+Less than 1
+None
+Interbank deposits
+Ping An Bank
+fifth year
+bonds
+10,000
+10,431
+3.85%
+Fixed
+2016
+10,000
+End of the
+10 years
+None
+Tier-2 Capital
+Ping An Bank
+3,000
+2,946
+2.95%-3.30%
+Floating
+216
+2016
+3,950
+None
+2.90%-4.80%
+297,201
+294,376
+year
+First 5 years: 5.90%
+Fixed
+2014
+8,000
+End of the
+10 years
+None
+Subordinated
+bonds
+Ping An Life
+35,234
+3.79%
+Fixed
+2018
+35,000
+Ping An Insurance (Group) Company of China, Ltd.
+None
+None
+Financial bonds
+Ping An Bank
+15,000
+15,083
+4.20%
+Fixed
+2017
+15,000
+None
+3 years
+None
+Financial bonds
+Ping An Bank
+3 years
+31 December
+(32,132)
+Annual Report 2018
+value through profit or loss
+Fair value adjustments on financial
+assets and liabilities carried at fair
+31 December
+as at
+Temporary
+difference
+31 December
+As at
+Other
+changes
+Charged to
+equity
+Charged to
+profit or loss
+1 January
+As at
+(197)
+2017
+83,360
+(20,840)
+275
+4,322
+6,964
+1,381 (32,401)
+(33,782)
+(3,419) 13,676
+275
+7
+(3,701)
+(3,701)
+(in RMB million)
+(658)
+(855)
+3,420
+(11)
+(66)
+(3,624)
+Others
+14,465
+(3,615)
+(3,615)
+disposal of subsidiaries
+Assets evaluation premium from
+8,288
+(2,072)
+30
+(2,102)
+Autohome Inc.
+premium from acquisition of
+Intangible assets evaluation
+10,168
+(2,542)
+189
+(2,731)
+Intangible assets-core deposits
+83,988
+(20,997)
+(13,310)
+(7,687)
+available-for-sale investments
+Fair value adjustments on
+Others
+(3,701)
+(3,615) 14,460
+(3,615)
+(855)
+31 December
+2018
+as at
+31 December
+Other
+changes
+Charged to
+equity
+Charged to
+profit or loss
+1 January
+2018
+policy
+2017
+difference
+(9,751) (10,606)
+As at
+Change in
+accounting
+31 December
+As at
+Temporary
+2018
+Fair value adjustments on financial assets and
+liabilities carried at fair value through
+profit or loss
+(in RMB million)
+The deferred tax liabilities are analysed as follows:
+48. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+258
+As at
+6,738
+(3,868)
+15,472
+subsidiaries
+Assets evaluation premium from disposal of
+8,168
+(2,042)
+30
+(2,072)
+(2,072)
+acquisition of Autohome Inc.
+Intangible assets evaluation premium from
+9,412
+(2,353)
+189
+(2,542)
+(2,542)
+Intangible assets-core deposits
+22,172
+(5,543)
+4,322
+(9,865)
+(9,865)
+other comprehensive income
+instruments at fair value through
+Fair value adjustments on financial
+20,997
+(20,997)
+investments
+Fair value adjustments on available-for-sale
+(3,615)
+(192,128)
+14,799
+(4,120)
+534,124
+31 December 2017
+31 December 2018
+Entrusted investments of banking operations
+Entrusted loans of banking operations
+Assets under asset management schemes
+Assets under annuity investments and annuity schemes
+Assets under trust schemes
+(in RMB million)
+50. FIDUCIARY ACTIVITIES
+Ping An Insurance (Group) Company of China, Ltd.
+348,463
+621,518
+259,110
+38,482
+5,697
+6,449
+1,941
+6,110
+6,990
+30,705
+19,039
+992
+959
+607
+1,175
+38,028
+442,990
+380,005
+915,566
+There would be no significant mitigating terms and conditions that reduce the insured risk accepted for
+contracts with fixed and guaranteed benefits and fixed future premiums. However, for contracts with
+discretionary participation features, the participating nature of these contracts results in a significant
+portion of the insurance risk being shared with the insured party.
+These risks currently do not vary significantly in relation to the location of the risk insured by the Group
+whilst undue concentration by amounts could have an impact on the severity of benefit payments on a
+portfolio basis.
+(1) INSURANCE RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 261
+Annual Report 2018
+The insurance business of the Group mainly comprises long term life insurance contracts, property
+and casualty and short term life insurance contracts. For contracts where death is the insured risk, the
+significant factors that could increase the overall frequency of claims are epidemics, widespread changes
+in lifestyles and natural disasters, resulting in earlier or more claims than expected. For contracts where
+survival is the insured risk, the most significant factor is continuing improvement in medical science and
+social conditions that would increase longevity. For property and casualty insurance contracts, claims are
+often affected by natural disasters, calamities, terrorist attacks, etc.
+The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance
+contracts as a more diversified portfolio is less likely to be affected across the board by change in any
+subset of the portfolio. The variability of risks is also improved by careful selection and implementation of
+underwriting strategies and guidelines.
+Development risk - the possibility that changes may occur in the amount of an insurer's obligation at
+the end of the contract period.
+the possibility that the cost of the events will differ from those expected.
+-
+Severity risk
+Occurrence risk - the possibility that the number of insured events will differ from those expected.
+Insurance risk refers to the risk that actual indemnity might exceed expected indemnity due to the
+frequency and severity of insurance accidents, as well as the possibility that insurance surrender rates are
+being underestimated. The principal risk the Group faces under such contracts is that the actual claims and
+benefit payments exceed the carrying amount of insurance liabilities. This could occur due to any of the
+following factors:
+(1) INSURANCE RISK
+51. RISK AND CAPITAL MANAGEMENT
+The above table shows main fiduciary activities of the Group. Where the Group acts in a fiduciary capacity
+such as nominee, trustee or agent, assets held for fiduciary activities together with related undertakings
+on return such assets to customers, are recorded off-balance sheet, as risks and gains of such assets are
+assumed by customers. All of above are off-balance sheet items.
+2,451,954
+2,684,672
+501,062
+537,781
+408,582
+254,211
+540,787
+6,610
+(16,341)
+8,579
+35,606
+Interest payable
+Salaries and welfare payable
+management products
+Payable to holders of trust schemes and banking wealth
+Other payables
+(in RMB million)
+49. OTHER LIABILITIES
+2023
+2022
+2021
+2020
+2019
+Other tax payable
+2018
+The following table shows unrecognized tax losses based on its expected expiry date:
+As at 31 December 2018, unrecognized tax losses of the Group were RMB7,573 million (31 December 2017:
+RMB5,119 million).
+48. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 259
+Annual Report 2018
+135,128
+(33,782)
+(11)
+(13,310)
+(in RMB million)
+Insurance guarantee fund
+Contingency provision
+Provision payables
+35,999
+4,150
+5,593
+188,510
+134,656
+31 December 2017
+31 December 2018
+5,119
+7,573
+3,601
+1,198
+827
+2,251
+2,007
+1,272
+981
+163
+157
+235
+31 December 2017
+31 December 2018
+Annual Report 2018
+260
+Others
+Contract liabilities
+Deferred income
+Accruals
+30,696
+Insurance risk is also affected by the policyholders' rights to terminate the contract, pay reduced
+premiums, refuse to pay premiums or exercise annuity conversion option, etc. Thus, the resultant insurance
+risk is subject to policyholders' behaviour and decisions.
+Ping An Insurance (Group) Company of China, Ltd.
+13,016
+1,500
+None
+3 years
+None
+Corporate bonds
+Ping An Real Estate
+(Note 2)
+Management Co.,Ltd.
+4.85%
+Fixed
+2015
+1,000
+2018
+None
+Offshore RMB bonds Guaranteed
+Fuqing Investment
+third year
+1,253
+1,355
+3.80%
+Fixed
+2017
+1,254
+End of the
+5 years
+Guaranteed
+(Note 2)
+3 years
+Fixed
+5.00%
+1,532
+Annual Report 2018
+The bonds are guaranteed by Pingan Real Estate Capital Limited, which is a subsidiary of Ping An Real Estate.
+Note 2:
+The bonds are guaranteed by Ping An Overseas Holdings, which is the holding company of Value Success International Limited
+and Li Guan International Co., Ltd..
+Note 1:
+451,283
+556,875
+4,017
+4.73%-5.08%
+Fixed
+2018
+4,000
+None
+3 years
+None
+Medium term notes
+Ping An Real Estate
+9,123
+3.75%-5.15%
+Fixed
+2018
+9.000
+None
+270 days
+None
+Super short-term
+financing bills
+Ping An Real Estate
+Medium term
+notes
+998
+Management Limited
+1,746
+2,500
+None or end
+5 years
+None
+Corporate bonds
+Ping An Real Estate
+2017
+2018
+(per annum)
+Interest type
+year
+31 December
+217
+31 December
+Issued
+(in RMB
+million)
+option
+Maturity
+type
+Type
+Issuer
+redemption
+Guarantee
+Par value
+Early
+47. BONDS PAYABLE (CONTINUED)
+Coupon rate
+2017
+Fixed
+4.88%-5.27%
+5.10%
+Fixed
+2018
+1,654
+None
+1 year
+Guaranteed
+(Note 2)
+bonds
+Management Limited
+Offshore USD
+Fuxiang Investment
+1,950
+2,065
+3.63%
+Fixed
+2016
+2,709
+None
+3 years
+Guaranteed
+(Note 2)
+Offshore USD
+bonds
+Management Limited
+Fuxiang Investment
+Pyear
+of the third
+2,492
+2,588
+Fuxiang Investment
+1,657
+Ping An Insurance (Group) Company of China, Ltd. 257
+Notes to Consolidated Financial Statements
+As at
+2017
+Insurance contract liabilities
+Impairment loss provisions
+Others
+Fair value adjustments on
+available-for-sale investments
+Fair value adjustments on financial
+assets and liabilities carried at fair
+value through profit or loss
+(in RMB million)
+(190,204)
+47,551
+(314)
+(1,650)
+1,136
+48,379
+1 January
+347
+(29,640)
+7,410
+(296)
+(795)
+8,501
+8,501
+(123,952)
+30,988
+(192)
+4,667
+26,513
+26,203
+48,032
+Charged to
+profit or loss
+Charged to
+equity
+Other
+changes
+33,359
+(34,004)
+8,501
+830
+7,671
+(104,812)
+26,203
+8,003
+18,200
+(46,612)
+11,653
+1,087
+3,993
+6,573
+(2,640)
+660
+570
+90
+(4,060)
+1,015
+190
+825
+31 December
+as at
+Temporary
+difference
+31 December
+As at
+Impairment loss provisions
+Others
+FINANCIAL STATEMENTS
+8,033
+(2,169)
+1 January
+Temporary
+difference
+As at
+As at
+Change in
+accounting
+31 December
+As at
+14,250
+40,141
+(25,891)
+31 December 2017
+26,711
+45,187
+(18,476)
+2017
+31 December 2018
+investments
+Fair value adjustments on available-for-sale
+profit or loss
+Fair value adjustments on financial assets and
+liabilities carried at fair value through
+(in RMB million)
+The deferred tax assets are analysed as follows:
+Net
+Deferred tax liabilities
+Deferred tax assets
+(in RMB million)
+48. DEFERRED TAX ASSETS AND LIABILITIES
+For the year ended 31 December 2018
+2018
+policy
+2018
+Charged to
+profit or loss
+11,469
+(184)
+11,653
+Insurance contract liabilities
+(2,676)
+669
+(191)
+860
+860
+other comprehensive income
+instruments at fair value through
+Fair value adjustments on financial
+(1,804)
+451
+(18)
+(660)
+660
+(567)
+1,036
+21
+1,015
+31 December
+2018
+as at
+31 December
+Other
+changes
+Charged to
+equity
+(1,267)
+Concentration of insurance risks
+48,032
+310
+474,237
+(390,577)
+134,483
+(87,426)
+109,867
+(85,635)
+89,642
+(81,964)
+(72,719)
+(62,833)
+Cumulative claims paid
+75,772
+64,473
+Estimated cumulative claims
+64,473
+Four years later
+75,772
+66,866
+Subtotal
+Three years later
+80,012
+67,587
+Two years later
+112,013
+109,867
+95,508
+81,490
+69,292
+One year later
+94,445
+83,767
+69,852
+As at the end of current year
+claims paid:
+Estimated cumulative
+89,642
+Total
+83,660
+unallocated loss adjustment
+expenses, discount and risk
+margin
+125,966
+104,195
+101,879
+86,439
+70,855
+59,479
+One year later
+85,558
+72,724
+59,864
+As at the end of current year
+claims paid:
+Estimated cumulative
+Total
+2018
+Prior year adjustments,
+2017
+2015
+2014
+(in RMB million)
+Reproduced below is an exhibit that shows the development of net claim reserves of property and casualty
+insurance by the accident year:
+(b) Property and casualty and short term life insurance contracts (continued)
+Sensitivities (continued)
+Assumptions and sensitivities (continued)
+(1) INSURANCE RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+89,441
+5,781
+Annual Report 2018
+264
+Outstanding claim reserves
+2016
+2018
+2017
+2016
+rates and etc.
+Mortality, morbidity, accident
+(5,093)
+(5,093)
+4,957
+4,957
+(4,957)
+5,093
+(4,957)
+5,093
+-10bps
+Discount rate/investment return
++10bps
+Discount rate/investment return
+Impact on equity
+before tax
+Increase/
+(decrease)
+Increase/
+(decrease)
++10%
+Increase/(decrease)
+Impact on profit
+before tax
+Impact on net
+policyholders'
+31 December 2017
+Increase/(decrease)
+reserves
+Impact on gross
+policyholders'
+Change in
+assumptions
+(in RMB million)
+Note: For long term life and health insurance contracts where the future insurance benefits are not affected by investment return of the
+underlying asset portfolio, the amounts above represent the results of sensitivity analysis calculated by the discount rates when the
+benchmarking yield curve for the measurement of insurance contract liabilities increases or decreases 10bps, with consideration of
+the Cai Kuai [2017] No.637 issued by CIRC and other relevant regulations.
+(3,066)
+(3,066)
+3,066
+3,066
++5%
+reserves
+32,477
+32,477
+(32,477)
+2015
+2014
+(in RMB million)
+Reproduced below is an exhibit that shows the development of gross claim reserves of property and
+casualty insurance by the accident year:
+The property and casualty and short term life insurance claim reserves are sensitive to the above key
+assumptions. The sensitivity of certain variables including legislative change, uncertainty in the estimation
+process, etc., is not possible to quantify. Furthermore, because of delays that arise between the occurrence
+of a claim and its subsequent notification and eventual settlement, the outstanding claim reserves are not
+known with certainty at the end of the reporting period.
+Sensitivities
+Other key assumptions include delays in settlement, etc.
+The principal assumption underlying the estimates includes assumptions in respect of average claim
+costs, claims handling costs, claims inflation factors and claim numbers for each accident year which are
+determined based on the Group's past claim experiences. Judgement is used to assess the extent to which
+external factors such as judicial decisions and government legislation affect the estimates.
+Assumptions
+(b) Property and casualty and short term life insurance contracts
+Assumptions and sensitivities (continued)
+(1) INSURANCE RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 263
+(32,477)
+Policy lapse rates
++10%
+10,391
+10,391
+(10,391)
+Two years later
+(10,391)
++5%
+2,563
+2,563
+(2,563)
+(2,563)
+Annual Report 2018
+Maintenance expense rates
+58,057
+69,493
+81,264
+11,033
+8,175
+6,367
+As at the end of current year
+claims paid:
+Estimated cumulative
+Total
+2018
+2017
+2016
+2015
+2014
+(in RMB million)
+7,115
+12,779
+Reproduced below is an exhibit that shows the development of net claim reserves of short term life
+insurance by the accident year:
+1,622
+expenses and risk margin
+unallocated loss adjustment
+Prior year adjustments,
+5,493
+Subtotal
+(49,436)
+54,929
+16,879
+(11,923)
+(12,378)
+12,779
+10,657
+(10,541)
+(7,831)
+(6,763)
+Outstanding claim reserves
+15,809
+One year later
+6,574
+266
+6,713
+1,285
+Outstanding claim reserves
+expenses and risk margin
+unallocated loss adjustment
+Prior year adjustments,
+5,428
+Subtotal
+52,855
+(47,427)
+15,809
+(11,227)
+12,191
+(11,823)
+10,675
+(10,197)
+(7,644)
+(6,536)
+Cumulative claims paid
+7,644
+7,673
+10,544
+12,191
+Two years later
+6,536
+7,663
+Cumulative claims paid
+10,675
+6,551
+7,644
+Four years later
+6,536
+Estimated cumulative claims
+6,536
+Three years later
+(13,870)
+7,875
+Estimated cumulative claims
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+80,731
+5,661
+Ping An Insurance (Group) Company of China, Ltd. 265
+Annual Report 2018
+Outstanding claim reserves
+margin
+expenses, discount and risk
+unallocated loss adjustment
+Prior year adjustments,
+75,070
+Subtotal
+430,138
+(355,068)
+For the year ended 31 December 2018
+125,966
+(83,469)
+(74,469)
+(63,159)
+(53,863)
+Cumulative claims paid
+101,879
+81,264
+65,717
+55,312
+Estimated cumulative claims
+55,312
+Four years later
+65,717
+57,416
+Three years later
+(80,108)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(1) INSURANCE RISK (CONTINUED)
+Assumptions and sensitivities (continued)
+6,739
+Four years later
+7,875
+6,758
+Three years later
+10,657
+7,900
+6,715
+Two years later
+12,779
+10,875
+7,904
+6,786
+One year later
+16,879
+13,341
+11,458
+(b) Property and casualty and short term life insurance contracts (continued)
+Sensitivities (continued)
+Reproduced below is an exhibit that shows the development of gross claim reserves of short term life
+insurance by the accident year:
+(in RMB million)
+2014
+2015
+2016
+6,739
+2017
+Total
+Estimated cumulative
+claims paid:
+As at the end of current year
+6,732
+8,415
+2018
+(13,870)
+134,483
+13,870
+rates and etc.
+Mortality, morbidity, accident
+Discount rate/investment return
+Discount rate/investment return
+(in RMB million)
+Sensitivities (continued)
+(a) Long term life insurance contracts (continued)
+Assumptions and sensitivities (continued)
+(1) INSURANCE RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Policy lapse rates
+262
+a 10% increase in policy lapse rates; and
+a 10% increase in mortality, morbidity, accident rates and etc. (a 10% increase in mortality rates of
+annuity policies before the payment period, a 10% decrease in the payment period);
+discount rate/investment return assumption decreased by 10 basis points;
+discount rate/investment return assumption increased by 10 basis points;
+The Group has measured the impact on long term life insurance contract liabilities using sensitivity analysis,
+of varying independently certain assumptions under reasonable and possible circumstances. The following
+changes in assumptions have been considered:
+Significant judgment is required in determining insurance contract reserves and in choosing discount rates/
+investment return, mortality, morbidity, lapse rates, policy dividend, expenses assumptions relating to long
+term life insurance contracts.
+Assumptions
+(a) Long term life insurance contracts
+Assumptions and sensitivities
+The Group's concentration of insurance risk is reflected by its major lines of business as analysed by
+insurance contract liabilities in Note 45.
+The Group runs its insurance business primarily within the PRC. Hence the geographical insurance risk is
+concentrated primarily within the PRC.
+13,870
+a 5% increase in maintenance expense rates.
+Maintenance expense rates
+Sensitivities
+Impact on gross
+policyholders'
++10%
+31 December 2018
+(44,436)
+(44,436)
+44,436
++10%
+(6,622)
+(6,622)
+6,622
+6,622
+6,446
+6,446
+(6,446)
+44,436
+-10bps
+(6,446)
+Impact on net
+policyholders'
+reserves
+Change in
+reserves
+Impact on profit
+assumptions Increase/(decrease) Increase/(decrease)
+Impact on equity
+before tax
+Increase/
+(decrease)
+(decrease)
++10bps
+before tax
+Increase/
+15,541
+18,168
+316,249
+5,913,670
+135,560
+5
+350
+2,578
+132,627
+18,239
+556,875
+-
+5,069
+533,567
+Bonds payable
+52,591
+2
+6,263,628
+52,747
+Other liabilities
+Net position of foreign currency
+Off-balance sheet credit commitments
+10,265
+1
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 269
+Annual Report 2018
+397,732
+4,475
+319
+49,219
+343,719
+Notional amount of foreign exchange
+derivative financial instruments
+55,110
+21,162
+25,053
+(1,826)
+(12,129)
+(4,485)
+14,788
+56,936
+21,024
+25,647
+8,895
+6
+21
+Average claim costs
+Policyholder dividend payable
+To illustrate the sensitivities of ultimate claims costs, for example, a respective percentage change in the
+average claim costs alone results in a similar percentage change in claim reserves:
+(in RMB million)
+Notes to Consolidated Financial Statements
+Property and casualty insurance
+Short term life insurance
+(in RMB million)
+Average claim costs
+Property and casualty insurance
+Short term life insurance
+(b) Property and casualty and short term life insurance contracts (continued)
+Sensitivities (continued)
+(c) Reinsurance
+Impact on gross
+claim reserves
+increase
+31 December 2018
+Impact on net
+claim reserves
+Impact on profit
+increase
+before tax
+decrease
++5%
++5%
+4,472
+356
+Change in
+assumptions
+Change in
+assumptions
+52,568
+Assumptions and sensitivities (continued)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+52,740
+policyholders
+Investment contract liabilities for
+2,211,887
+16
+9,779
+120,688
+2,114,344
+3
+27
+823
+(1) INSURANCE RISK (CONTINUED)
+2,217
+Insurance contract liabilities
+497
+-
+1
+9,778
+120,161
+Insurance payables
+Accounts payable
+3,753
+8,299
+2,208,831
+For the year ended 31 December 2018
+83,203
+(2) MARKET RISK (CONTINUED)
+255,417
+5,695,604
+151,880
+115
+699
+2,505
+148,561
+Other assets
+112,028
+68,514
+112,028
+15,633
+257
+1,003
+14,373
+Reinsurers' share of insurance liabilities
+72,061
+72,061
+Accounts receivable
+45,694
+Finance lease receivable
+44
+30,565
+Liabilities
+14,048
+173,434
+1,760,813
+brokerage customers.
+Customer deposits and payables to
+133,981
+320
+9,697
+123,964
+6,050,100
+Assets sold under agreements to
+repurchase
+4
+14,056
+Financial liabilities held for trading
+780,530
+10,179
+1,054
+93,289
+676,008
+Due to banks and other financial
+institutions
+14,060
+874
+44,776
+Premium receivables
+318,236
+640
+6,409
+311,187
+483,891
+4,686
+10,831
+68,704
+399,670
+Financial assets held under resold
+Cash and amounts due from banks
+and other financial institutions
+Balances with the Central Bank and
+statutory deposits for insurance
+operations
+Others
+(RMB
+equivalent)
+equivalent)
+HKD
+(RMB
+USD
+(RMB
+equivalent)
+RMB
+31 December 2017
+Assets
+(in RMB millions)
+(a) Foreign currency risk (continued)
+RMB
+equivalent
+total
+agreements
+99,296
+99,296
+1,660,864
+15,835
+9,955
+99,545
+1,535,529
+Loans and advances to customers
+630,676
+8,254
+41,568
+42,026
+538,828
+Equity investments
+2,376,638
+1,675
+4,520
+34,351
+2,336,092
+Fixed maturity investments
+4,037
+336
+83,203
+Policy loans
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(4,037)
+(336)
+USD
+(4,037)
+11,564
+871
+824,939
+2,075,151
+Equity financial assets at fair
+value through other
+comprehensive income
+215,145
+7,494
+222,639
+18,976
+2,091
+Debt financial assets at fair
+comprehensive income
+298,713
+11,864
+7
+Loans and advances to customers
+1,799,339
+103,086
+Premium receivables
+66,011
+value through other
+1,088
+25,447
+Financial assets at amortized cost
+5,516
+4,726
+457,524
+Balances with the Central Bank
+and statutory deposits for
+insurance operations
+277,838
+7,588
+533
+285,959
+2,046,742
+Financial assets held under resold
+92,951
+Policy Loans
+111,219
+92,951
+111,219
+Financial assets at fair value
+through profit or loss
+702,919
+91,480
+agreements
+80,142
+8,459
+51
+310,901
+1,929,842
+43,815
+36,565
+6,661,470
+Liabilities
+Due to banks and other financial
+institutions
+707,221
+80,572
+3,600
+11,761
+326,514
+803,154
+16,975
+16,975
+Assets sold under agreements to
+repurchase
+181,235
+7,793
+189,028
+Customer deposits and payables to
+brokerage customers
+1,897,967
+Financial liabilities held for trading.
+317
+18,958
+6,254,576
+53
+-
+67,150
+Accounts receivable
+22,722
+76
+22,798
+Reinsurers' share of insurance liabilities
+15,145
+1,104
+78,512
+422
+204,325
+Finance lease receivable
+165,214
+165,214
+Other assets
+73,478
+4,715
+266
+4,400
+16,671
+Impact on equity
+before tax
+decrease
+367,140
+(in RMB millions)
+Assets
+The analysis below is performed for reasonably possible movements in key variables with all other variables
+held constant, showing the pre-tax impact on profit and equity (due to changes in fair value of foreign
+currency denominated non-monetary assets and liabilities measured at fair value, as well as monetary
+assets and liabilities). The correlation of variables will have a significant effect on determining the ultimate
+impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be
+changed on an individual basis.
+(in RMB million)
++5%
+368
+Change in
+variables
+31 December 2018
+Increase/
+(decrease)
+in profit
+before tax
+Increase/
+(decrease)
+in equity
+before tax
+31 December 2017
+Increase/
+(decrease)
+in profit
+before tax
+Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates.
+Fluctuations in exchange rates between the RMB and other currencies in which the Group conducts
+business may affect its financial position and results of operations. The foreign currency risk facing the
+Group mainly comes from movements in the USD/RMB and HKD/RMB exchange rates. The Group set
+limitation to its position of foreign currency, monitor the size of foreign currency position, and limit the
+foreign currency position within the threshold set by utilizing hedging strategy.
+(1,282)
+1,253
+381
+HKD
++5%
+871
+1,058
+305
+2,344
+Other currencies
+Increase/
+(decrease)
+in equity
+before tax
++5%
+(a) Foreign currency risk
+(2) MARKET RISK
+(336)
+Impact on gross
+claim reserves
+increase
+31 December 2017
+Impact on net
+claim reserves
+increase
+Impact on profit
+before tax
+decrease
+Impact on equity
+before tax
+decrease
++5%
++5%
+4,252
+279
+Market risk is the risk of changes in fair value of financial instruments and future cash flows from
+fluctuation of market prices, which includes three types of risks from volatility of foreign exchange rates
+(foreign currency risk), market interest rates (interest rate risk) and market prices (price risk).
+3,821
+268
+(3,821)
+(268)
+The Group limits its exposure to losses from insurance operations mainly through participation in
+reinsurance arrangements. The majority of the business ceded is placed on the quota share basis and
+the surplus basis with retention limits varying by product lines. Amounts recoverable from reinsurers are
+estimated in a manner consistent with the assumptions used for ascertaining the underlying policy benefits
+and are presented in the statement of financial position as reinsurers' share of insurance liabilities and due
+from reinsurers.
+Even though the Group may have reinsurance arrangements, it is not relieved of its direct obligations to its
+policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any
+reinsurer is unable to meet its obligations assumed under such reinsurance agreements.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 267
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(3,821)
+(268)
+Cash and amounts due from banks
+and other financial institutions
+429
+(5)
+(2,756)
+982
+(2,956)
+268
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(2) MARKET RISK (CONTINUED)
+(a) Foreign currency risk (continued)
+(1,668)
+The main monetary assets and liabilities of the Group (excluding balances of investment-linked contracts)
+and non-monetary assets and liabilities measured at fair value are analysed as follows by currency:
+RMB
+USD
+(RMB
+equivalent)
+HKD
+Others
+(RMB
+equivalent)
+(RMB
+equivalent)
+equivalent
+RMB
+total
+31 December 2018
+445
+(231)
+(445)
+231
+1,668
+2,756
+(982)
+2,956
+USD
+-5%
+(368)
+(1,253)
+5
+1,282
+HKD
+-5%
+(871)
+(1,058)
+(305)
+(2,344)
+Other currencies
+-5%
+(429)
+(381)
+1,952,695
+1,243,768
+8,522
+306,672
+2,042,017
+173,178
+57,488
+25
+115,665
+1,187,723
+80,714
+137,179
+397,258
+969,830
+17,621
+34,358
+148,573
+223,984
+28,484
+30,194
+165,306
+256,878
+39,282
+200,552
+36,457
+2,745,947
+Held-to-
+maturity
+76,504
+1-2 years (including 2 years)
+285,697
+1,731
+36,103
+84,695
+163,168
+3 months to 1 year (including 1 year)
+176,000
+Loans and
+receivables
+26,704
+27,846
+100,201
+(including 3 months)
+Less than 3 months.
+Fixed interest rate
+Total
+Carried at fair
+value through
+profit or loss
+Available-
+for-sale
+31 December 2017
+21,249
+87,422
+181,139
+50,202
+3 months to 1 year (including 1 year)
+Less than 3 months (including 3 months)
+Fixed interest rate
+(in RMB million)
+The following table sets out the Group's bonds, debt schemes and banking wealth management products
+(excluding balances of investment-linked contracts) by maturity or repricing date (whichever is the earlier):
+(c) Interest rate risk (continued)
+(2) MARKET RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+1-2 years (including 2 years)
+Notes to Consolidated Financial Statements
+Ping An Insurance (Group) Company of China, Ltd. 273
+Annual Report 2018
+161,850
+174,138
+3,500
+3,499
+1,000
+19,116
+27,890
+FINANCIAL STATEMENTS
+260,765
+2-3 years (including 3 years)
+4-5 years (including 5 years)
+17,424
+193,139
+330,665
+86,309
+38,186
+206,170
+112,202
+37,158
+12,849
+3-4 years (including 4 years)
+62,195
+Financial assets
+at fair value
+through
+profit or loss
+income
+assets at
+fair value
+through other
+comprehensive
+Debt financial
+31 December 2018
+cost
+Financial assets
+at amoritized
+(in RMB million)
+More than 5 years
+Floating interest rate
+Total
+19,393
+26,498
+198,291
+(3) CREDIT RISK (CONTINUED)
+(a) Credit risk management (continued)
+Credit risk of insurance business
+The Group evaluated the credit rating of the reinsurance companies before signing the reinsurance
+contracts, and choose the reinsurance companies with higher credit quality to reduce the credit risk.
+The limit of policy loans are based on the cash values of valid insurance policies, with appropriate
+discounts, and the validity periods of policy loans are within the validity periods of insurance policies. The
+credit risk associated with policy loans did not have material impact on the Group's consolidated financial
+statements as at 31 December 2018 and 31 December 2017.
+Credit quality of amounts due from banks and other financial institutions
+The following table sets forth aggregated amounts due from banks and other financial institutions placed
+with the PBC and the major commercial banks in the PRC held by the Group. The following analysis
+excludes balances of investment-linked contracts.
+(in RMB million)
+PBC
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Commercial banks
+Industrial Bank Co., Ltd.
+China CITIC Bank Corporation Limited
+Industrial and Commercial Bank of China Limited
+Bank of Communications Co., Ltd.
+Other major banks and financial institutions
+Bank of Shanghai Co., Ltd.
+China Construction Bank Corporation
+China Minsheng Banking Corp. Ltd.
+Hengfeng Bank Co., Ltd.
+Bank of China Limited
+Agricultural Bank of China Co., Ltd.
+Others
+For the year ended 31 December 2018
+FINANCIAL STATEMENTS
+241,025
+74,222
+2,406,213
+Interest rates on floating rate term deposits and floating rate bonds are repriced at intervals of less than
+one year. Interest rates on fixed rate term deposits and fixed rate bonds are fixed before maturity.
+274
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(3) CREDIT RISK
+Notes to Consolidated Financial Statements
+Credit risks refer to the risk of losses incurred by the inabilities of debtors or counterparties to fulfill their
+contractual obligations or by the adverse changes in their credit conditions. The Group is exposed to
+credit risks primarily associated with its deposit arrangements with commercial banks, loans and advances
+to customers, financial assets at amortized cost and debt financial assets at fair value through other
+comprehensive income, reinsurance arrangement with reinsurers, policy loans, margin financing and with
+the exposure arising from loan commitments and financial guarantee contracts, etc. The Group uses a
+variety of controls to identify, measure, monitor and report credit risk.
+Credit risk of banking business
+The banking business of the Group has formulated a set of credit management processes and internal
+control mechanisms, so as to carry out the whole process management of credit business. Credit
+management procedures for its corporate and retail loans comprise of credit origination, credit review,
+credit approval, disbursement, post credit monitoring and collection. In addition, the banking business
+of the Group has formulated procedure manuals for credit management, which clarifies the duties of
+each cycle in the credit management processes, effectively monitoring credit risk and enhancing credit
+compliance.
+The banking business of the Group further enhances credit risk monitoring and early warning management
+mechanism to monitor the credit risks, respond to the changes in credit environment proactively, analyse
+the credit risk situations and trends regularly, take risks monitoring measures prospectively. The Group has
+established enhancement mechanism for problematic credit, aiming to accelerate the progress of handling
+problematic credit and preventing non-performing loans.
+Credit risks arising from financial guarantees and loan commitments are similar to those of loans and
+advances. Therefore, financial guarantees and loan commitments are also subject to the same application,
+post crediting monitoring and collateral requirements as loan and advances business.
+Credit risk of investment business
+As to debt investments, the Group applies the credit ratings of the existing investments through internal
+credit rating policies and processes, with high credit quality counterparties selected and strict selection
+criteria set.
+The Group's debt investment mainly includes domestic government bonds, Central Bank bills, financial
+institution bonds, corporate bonds and debt investment schemes. The Group manages the credit risk for
+these investments mainly through controlling the investment scales, selecting counterparties within the
+financial institutions with appropriate credit quality prudently, balancing the credit risks and rate of return
+of investment and considering the internal and external credit rating information comprehensively.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 275
+(a) Credit risk management
+7,867
+276
+31 December 2018
+153,567
+More than 5 years
+214,132
+2,786
+26,831
+110,383
+74,132
+4-5 years (including 5 years)
+161,888
+703,584
+2,712
+103,171
+38,321
+3-4 years (including 4 years)
+253,362
+8,881
+23,551
+99,040
+121,890
+2-3 years (including 3 years)
+17,684
+Annual Report 2018
+73,165
+934,942
+281,252
+31,461
+31,402
+26,793
+24,001
+19,973
+17,729
+17,044
+17,041
+4,626
+15,997
+244,859
+743,483
+Ping An Insurance (Group) Company of China, Ltd.
+181,901
+18,915
+15,944
+27,627
+119,415
+Floating interest rate
+15,931
+20,570
+25,074
+40,537
+The Group managed price risks by diversification of investments, setting limits for investments in different
+securities, etc.
+The above investments are exposed to price risk because of changes in market prices, where changes are
+caused by factors specific to the individual financial instruments or their issuers, or factors affecting all
+similar financial instruments traded in the market.
+The Group's price risk exposure relates to financial assets and liabilities whose values will fluctuate as a
+result of changes in market prices (other than those arising from interest rate risk or foreign currency risk),
+which mainly include listed equity securities and security investment funds classified as financial assets at
+fair value through other comprehensive income and financial assets at fair value through profit or loss.
+(b) Price risk
+(2) MARKET RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+270
+The Group uses a 10-day market price value-at-risk ('VaR') technique to estimate its risk exposure for
+listed equity securities and equity investments funds. The Group adopts 10-day as the holding period on
+the assumption that not all the investments can be sold in one day. Moreover, the VaR calculation is made
+based on normal market conditions and a 99% confidence interval.
+353,957
+1,626
+42,808
+308,826
+Off-balance sheet credit commitments
+59,113
+4,613
+46,881
+7,619
+41,425
+697
+(10,070)
+The use of VaR has limitations because it is based on historical correlations and volatilities in market prices
+and assumes that future price movements will follow a statistical distribution. Due to the fact that VaR
+relies heavily on historical data to provide information and may not clearly predict future changes and
+modifications of the risk factors, the probability of large market moves may be underestimated if changes
+in risk factors fail to align with the normal distribution assumption. The VaR may also be under or over
+estimated due to the assumption placed on risk factors and the relationship between such factors for
+specific instruments. Even though positions may change throughout the day, the VaR only represents the
+risk of the portfolios at the close of each business day, and it does not account for any losses that may
+occur beyond the 99% confidence interval.
+The analysis below is the estimated impact for listed stocks and security investment funds with 10-day
+reasonable market fluctuation in using the VaR module in the normal market.
+(in RMB million)
+The analysis below is performed for reasonably possible movements in interest rate with all other variables
+held constant, for the following financial instruments, showing the pre-tax impact on the Group's profit (fair
+value change on bonds carried at fair value through profit or loss) and equity (fair value change on bonds
+carried at fair value through profit or loss and bonds carried at fair value through other comprehensive
+income).
+The Group's interest rate risk policy requires it to manage interest rate risk by maintaining an appropriate
+mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest
+bearing financial assets and interest bearing financial liabilities. Interest on floating rate instruments is
+repriced at intervals of less than one year. Interest on fixed interest rate instruments is priced at inception
+of the financial instruments and is fixed until maturity.
+Floating rate instruments expose the Group to cash flow interest rate risk, whereas fixed rate instruments
+expose the Group to fair value interest risk.
+Interest rate risk is the risk that the value/future cash flows of a financial instrument will fluctuate because
+of changes in market interest rates.
+(c) Interest rate risk
+(2) MARKET RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+In practice, the actual trading results will differ from the VaR calculation and, in particular, the calculation
+does not provide a meaningful indication of profits and losses in stressed market conditions.
+Notes to Consolidated Financial Statements
+Ping An Insurance (Group) Company of China, Ltd. 271
+Annual Report 2018
+The Group expects that current listed stocks and equity investments funds will not lose more than
+RMB15,799 million due to market price movements in a 10-trading-day holding period on 99% of occasions.
+9,455
+15,799
+31 December 2017
+31 December 2018
+Listed stocks and security investment funds
+(in RMB million)
+FINANCIAL STATEMENTS
+Bonds carried at fair value through
+profit or loss and available-for-sale
+Bonds carried at fair value through
+profit or loss and available-for-sale
+Bonds carried at fair value through
+profit or loss and through other
+comprehensive income
+(2,444)
+Notional amount of foreign exchange
+derivative financial instruments
+Policyholder dividend payable
+50,309
+1
+7
+50,301
+policyholders
+Investment contract liabilities for
+1,932,969
+17
+45,603
+788
+1,930,484
+Insurance contract liabilities
+114,108
+3
+23
+469
+113,613
+Insurance payables
+8,522
+1,680
+53,939
+17
+45,622
+17,688
+5,698,780
+15,882
+14,683
+49,325
+(46,320)
+Net position of foreign currency
+19,189
+301,737
+5,361,972
+2
+214,701
+421
+11,425
+201,575
+Other liabilities
+451,283
+2,535
+11,715
+437,033
+Bonds payable
+1,280
+Bonds carried at fair value through
+profit or loss and through other
+comprehensive income
+Change in
+interest rate
+847,198
+(18)
+(18)
+(18)
+points
+-50 basis
+Floating rate term deposits
+(140)
+(140)
+Loans and advances to customers
+(109)
+points
+-50 basis
+Floating interest rate bonds
+5,148
+5,148
+5,930
+5,930
+points
++50 basis
+(109)
+Loans and advances to customers
+-50 basis
+points
+(5,930)
+36,226
+43,370
+34,745
+9,770
+21,346
+15,213
+14,739
+31 December 2017
+31 December 2018
+(5,930)
+4-5 years (including 5 years)
+More than 5 years
+Floating interest rate
+2-3 years (including 3 years)
+1-2 years (including 2 years)
+3 months to 1 year (including 1 year)
+Less than 3 months (including 3 months)
+Fixed interest rate
+(in RMB million)
+The following table sets out the Group's term deposits (excluding balances of investment-linked contracts)
+exposed to interest rate risk by maturity or repricing date (whichever is the earlier):
+(5,148)
+(5,148)
+3-4 years (including 4 years)
+18
+18
+18
+Annual Report 2018
+272
+(5,072)
+(460)
+5,072
+460
+Increase/
+(decrease)
+in equity
+before tax
+31 December 2017
+Increase/
+(decrease)
+in profit
+before tax
+(8,356)
+Ping An Insurance (Group) Company of China, Ltd.
+(1,739)
++50 basis
+8,356
+1,739
+-50 basis
+points
+Increase/
+(decrease)
+in equity
+before tax
+31 December 2018
+Increase/
+(decrease)
+in profit
+before tax
+points
++50 basis
+-50 basis
+points
+points
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(2) MARKET RISK (CONTINUED)
+(c) Interest rate risk (continued)
+18
+points
++50 basis
+Floating rate term deposits
+140
+140
+109
+109
+points
+in equity
+before tax
+Increase/
+(decrease)
+before tax
+in profit
+31 December 2017
+Increase/
+(decrease)
+Increase/
+(decrease)
+in equity
+before tax
+31 December 2018
+Increase/
+(decrease)
+in profit
+before tax
++50 basis
+Change in
+interest rate
+Floating interest rate bonds
+(in RMB million)
+The following sensitivity analysis is based on the assumption that the floating rate bonds, floating rate term
+deposits and loans and advances have a static structure of interest rate risk. The analysis only measured
+interest rate changes within one year, reflecting the impact on interest income and interest expenses from
+the re-pricing of financial assets and liabilities within a year with the following assumptions: firstly, the
+interest rate of the floating rate bonds, floating rate term deposits/loans and advances is re-priced after
+the end of the reporting period; secondly, the yield curve moved in parallel with the changes in the interest
+rate; and thirdly, there are no other changes in the portfolio of financial assets and liabilities. Regarding the
+above assumptions, the pre-tax impact on the Group's profit and equity as a result of actual increases or
+decreases in interest rates may differ from that of the following sensitivity analysis.
+Accounts payable
+(18)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+40,167
+ECL impairment provision and other liabilities related to ECL recognized in
+the consolidated balance sheet
+Difference-amount
+Difference-percentage
+280
+Annual Report 2018
+31 December 2018
+loan commitment from stage 2 to stage 1
+67,177
+(7,991)
+-11%
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(3) CREDIT RISK (CONTINUED)
+(b) Expected credit loss (continued)
+Credit exposure
+Without considering the impact of collateral and other credit enhancements, for on-balance sheet assets,
+the maximum exposures are based on net carrying amounts as reported in the consolidated financial
+statements. The Group also assumes credit risk due to credit commitments and financial guarantee
+contracts. The details are disclosed in Note 59. (3).
+75,168
+The total amount of ECL impairment provision and other liabilities related to ECL
+under assumption of reclassification of financial assets and
+(in RMB million)
+The following table shows the changes of ECL impairment provision and other liabilities related to ECL
+assuming the financial assets and loan commitment in stage 2 reclassified to stage 1 due to significant
+change in credit risk.
+Forward-looking information (continued)
+The impact of these economic indicators on PD and LGD varies to different businesses. The Group
+comprehensively considers internal and external data, expert forecasts and statistical analysis to determine
+the relationship between these economic indicators with PD and LGD. The Group evaluates and forecasts
+these economic indicators at least annually, provides the best estimates for the future, and regularly
+evaluates the results.
+In 2018, the Group considered different macroeconomic scenarios. The key macroeconomic assumptions
+used to estimate expected credit losses are listed below.
+GDP year on year percentage change
+CPI
+year on year percentage change
+PMI
+6.2%-6.6%
+2.0%-3.0%
+49.5%-51.1%
+Broad measure of money supply (M2) – year on year percentage change
+-
+7.9%-9.7%
+Similar to other economic forecasts, the estimates of economic indicators forecasting have high inherent
+uncertainties, actual results may have significant difference with estimates. The Group considered the
+estimates above represented the optimal estimation of possible outcomes.
+Sensitivity analysis
+Expected credit losses are sensitive to the parameters used in the model, the macroeconomic variables of
+the forward-looking forecast, the weight probabilities in the three scenarios, and other factors considered
+in the application of expert judgement. Changes in these input parameters, assumptions, models, and
+judgments will have an impact on the significant increase in credit risk and the measurement of expected
+credit losses.
+The banking business of the Group assumed that if the weight of the upside scenario increased by 10% and
+the weight of the base scenario reduced by 10%, the Group's ECL impairment provision on 31 December,
+2018 would be reduced by RMB571 million; if the weight of the downside scenario increased by 10% and the
+weight of the base scenarios reduced by 10%, the Group's ECL impairment provision would be increased by
+RMB814 million.
+Please refer to Note 25. (2) and (5) for an analysis of concentration of loans and advances by industry and
+geographical region.
+Collateral and other credit enhancements
+The amount and type of collateral required depends on an assessment of the credit risk of the
+counterparty. Policies are established regarding to the selection of types of collateral and valuation
+parameters.
+The main types of collateral obtained are as follows:
+Subtotal
+15,363
+6,906
+(3,209)
+11,666
+Stage 3
+5,871
+(6,906)
+3,091
+(3,733)
+13,419
+Stage 2
+at amortized cost
+2,067,222
+(3,091)
+1,956,396
+(b) Expected credit loss (continued)
+132,060
+Debt financial assets
+for policy loans, collaterals are cash value of policies;
+for reverse repurchase transactions, collaterals are quoted securities;
+for commercial loans, collaterals are real estate properties, inventories, equity investments and trade
+receivables, etc.;
+for retail loans to individuals, collaterals are residential properties mortgages.
+Management monitors the market value of the collateral, and requires additional collateral when needed
+according to contracts, when assessing the adequacy of impairment.
+It is the Group's policy to dispose collateral orderly. The proceeds are used to repay all or part of the
+outstanding balance. Generally, the Group would not use the collateralised assets for business purpose.
+556
+Stage 2
+at fair value through
+310,017
+(328)
+(556)
+90,816
+220,085
+Stage 1
+2,088,456
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+12,880
+7,365
+14,874
+35,119
+4,888
+32
+1,682
+35,606
+47,597
+8,001
+113,710
+2,164,524
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 277
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(3) CREDIT RISK (CONTINUED)
+2,093,799
+(b) Expected credit loss
+Gross total
+108
+2,867
+56
+8,096
+10,008
+854,566
+Premium receivables
+42,674
+11
+19
+5
+Due from reinsurers
+Finance lease receivable
+6,710
+112,028
+259
+892
+35
+1,259
+139,002
+From 1 January 2018, the Group formulates the credit losses of debt instruments carried at amortized cost
+and FVOCI, finance lease receivable, loan commitment and financial guarantee contracts using ECL models
+according to IFRS 9 requirements.
+The parameters and assumptions involved in ECL model are described below.
+The definition of credit-impaired assets
+Under IFRS 9, in order to determine whether credit impairment occurs, the defined standards adopted by
+the Group are consistent with the internal credit risk management objectives for relevant financial assets,
+while considering quantitative and qualitative indicators. When the Group assesses whether the debtor has
+credit impairment, the following factors are mainly considered:
+The debtor has overdue more than 90 days after the contract payment date;
+Internal credit rating is default grade;
+The lender gives the debtor concessions for economic or contractual reasons due to the debtor's
+financial difficulties, where such concessions are normally reluctant to be made by the lender;
+The debtor has significant financial difficulties;
+The debtor is likely to go bankrupt or other financial restructuring;
+The active market for financial assets disappears
+The credit impairment of financial assets may be caused by the joint effects of multiple events, and may
+not be caused by separately identifiable events.
+Forward-looking information
+The determinations of 12 months and the lifetime EAD, PD and LGD also incorporates forward-looking
+information. The Group has performed historical data analysis and identified the key macroeconomic
+variables associated with credit risk and expected credit losses for each portfolio. The Group has
+developed macroeconomic forward looking adjustment model by establishing a pool of macro-economic
+indicators, preparing data, filtering model factors and adjusting forward-looking elements, and the
+indicators include gross domestic product (GDP) year on year percentage change, customer price index
+(CPI) year on year percentage change, purchasing manager's index (PMI) and other macroeconomic
+variables. Through regression analysis, the relationship among these economic indicators in history with
+EAD, PD and LGD is determined, and the EAD, PD, LGD are determined through forecasting economic
+indicator. The forecasting methods and critical assumptions applied have no material change during the
+year ended 31 December 2018.
+In 2018, the Group collected 10-year time series data of macroeconomic parameters from the China
+Macroeconomic Database published by Wind Info Technology Co., Ltd., and analyzed the inter-period
+relationship between economic parameters, and simulated randomization through the Monte Carlo method
+to formulate prediction function. Combined with the expert judgement, the Group established the values
+used for different scenarios. In addition to the base economic scenario, the Group also considers other
+possible scenario and relative weightings. The scenario is set, by analysing of each major product structure,
+to ensure non-linearity is considered. The Group regularly reassess the number of scenarios and their
+attributes. In 2018, the Group combined statistical analysis to determine the weights of different scenarios,
+and also considered the range of possible outcomes represented by each scenario, and determined the
+final macroeconomic assumptions and weights to measure the relevant expected credit loss.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 279
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+The Group set quantitative and qualitative criteria to judge whether the credit risk has SICR after initial
+recognition. The judgement criteria mainly includes the PD changes of the debtors, changes of credit risk
+categories and other indicators of SICR, etc. In the judgement of whether the credit risk has SICR after
+initial recognition, the Group has not rebutted the 30 days past due as presumption of SICR.
+Parameters of ECL model
+Judgement of significant increase in credit risk ('SICR') (continued)
+(3) CREDIT RISK (CONTINUED)
+The Group considers the credit risk characteristics of different financial instruments when determining if
+there is significant increase in credit risk. For financial instruments with or without significant increase in
+credit risk, 12-month or lifetime expected credit losses are provided respectively. The expected credit loss
+is the result of discounting the product of EAD, PD and LGD.
+i)
+ii)
+iii)
+Exposure at Default (EAD): EAD is based on the amounts the Group expects to be owed at the time of
+default, over the next 12 months or over the remaining lifetime.
+Probability of Default (PD): The PD represents the likelihood of a borrower defaulting on its financial
+obligation, either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the
+obligation.
+Loss given Default (LGD): LGD represents the Group's expectation of the extent of loss on a defaulted
+exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral
+or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of
+default (EAD). LGD is calculated on a 12-month or lifetime basis.
+The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile
+looks at how defaults develop on a portfolio from the point of initial recognition throughout the Lifetime.
+The maturity profile is based on historical observed data and is assumed to be the same across all assets
+within a portfolio and credit grading band. This is supported by historical analysis.
+Judgement of significant increase in credit risk ('SICR')
+Under IFRS 9, when considering the impairment stages for financial assets, the Group evaluates the credit
+risk at initial recognition and also whether there is any significant increase in credit risk for each reporting
+period.
+The Group considers various reasonable supporting information to judge if there is significant increase
+in credit risk, including the forward-looking information, when determining the ECL staging for financial
+assets. Major factor being considered include regulatory and operating environment, internal and external
+credit ratings, solvency, and operational capabilities. The Group could base on individual financial
+instruments or portfolios of financial instruments with similar credit risk characteristics to determine
+ECL staging by comparing the credit risks of the financial instruments at the reporting date with initial
+recognition.
+278
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(b) Expected credit loss (continued)
+1,931,311
+Stage 1
+Financial assets
+1,660,864
+1,929,842
+29,694
+37,254
+1,862,894
+customers
+Loans and advances to
+2,075,151
+7,976
+5,524
+2,061,651
+Financial assets at amortized
+cost
+310,901
+841
+43
+Accounts receivable
+310,017
+21,980
+198
+99,296
+92,951
+314
+94
+92,543
+resold agreements
+Financial assets held under
+112,028
+165,214
+411
+3,080
+161,723
+Finance lease receivable
+72,061
+22,798
+620
+Fixed maturity investments
+(excluding measured as
+comprehensive income
+Debt financial assets at
+(b) Expected credit loss (continued)
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 281
+26,672
+23,039
+31 December 2017
+31 December 2018
+Annual Report 2018
+Loans and advances to customers
+(in RMB million)
+The carrying amount of loans and advances that would otherwise be past due or impaired and whose terms
+have been renegotiated is as follows:
+The following table presents the credit risk exposure of the financial assets under the scope of expected
+credit loss. Without considering guarantee or any other credit enhancement measures, for on-balance sheet
+assets, the maximum credit risk exposure is presented as the net carrying amount of the financial assets:
+fair value through other
+(in RMB million)
+31 December 2018
+318,236
+285,959
+285,959
+insurance operations
+and statutory deposits for
+483,891
+457,524
+Balances with the Central Bank
+457,524
+Cash and amounts due from
+banks and other financial
+institutions
+Stage 2
+Stage 1
+31 December 2017
+Maximum credit
+risk exposure
+Maximum credit
+risk exposure
+Stage 3
+Net carrying amount
+5,173
+FVPL)
+76,754
+1,880,008
+(1,277)
+(65,775)
+383,823
+1,563,237
+Stage 1
+Loans and advances
+2018
+Write-offs
+Stage 3
+Stage 3
+Stage 2
+(Note 1)
+2018
+Stage
+to customers
+Gross carrying amount (in RMB million)
+Stage 2
+(20,413)
+1,983,875
+(45,804)
+350,228
+1,679,451
+Subtotal
+58,682
+(45,804)
+44,812
+1,277
+(13,182)
+71,579
+Stage 3
+45,185
+(44,812)
+65,775
+44,635
+Other assets
+31 December
+Stage 1 and
+The Group closely monitors collateral of credit-impaired financial assets.
+5,557,859
+354,755
+397,032
+5,814,126
+733
+4,751
+51,366
+391,548
+5,722,593
+Total
+Off-balance sheet
+2,312,837
+143,891
+5,203,104
+76,754
+5,417,094
+39,434
+46,615
+5,331,045
+Subtotal
+As at 31 December 2018, the fair value of collateral of credit-impaired loans and advances to customers
+is RMB38,007 million. The fair value of collateral of credit-impaired financial assets at amortized cost is
+RMB13,935 million.
+Stage 2 and
+282
+Ping An Insurance (Group) Company of China, Ltd.
+Stage 1 and
+(decrease)
+1 January
+between
+between
+Transfer
+Transfer
+Transfer
+between
+Net increase/
+Stages transfers
+The following tables explain the changes in the gross carrying amount and loss allowance of the main
+financial assets between the beginning and the end of the annual period due to these factors:
+(b) Expected credit loss (continued)
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Annual Report 2018
+Annual Report 2018
+836,462
+Ping An Insurance (Group) Company of China, Ltd.
+850,620
+The Group internally grades the financial instruments based on the credit quality and risk characteristics.
+The credit rating of the financial instruments could further be classified as "low risk”, “medium risk”, “high
+risk" and "default" according to the internal rating scale. “Low risk” means that the asset quality is good,
+there is sufficient evidence to show that the asset is not expected to have default, or there is no reason
+to suspect that the asset had incurred default. "Medium risk" means that the asset quality is acceptable or
+there are factors revealing potential negative impact on the asset quality, but there is no sufficient reason
+to suspect that the asset had incurred default. "High risk” means that there is factors revealing significant
+adverse impact on the asset quality, but there is no event indicating incurred default; The criteria of
+"default" are consistent with those of "credit-impaired".
+(b) Expected credit loss (continued)
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+284
+Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
+Note 2: Changes in PDS, EADs, and LGDs in the current year, arising from regular refreshing of inputs to models and stages transfers.
+1,180
+492
+158
+530
+Subtotal
+524
+42
+The following table contains an analysis of the credit risk grading of loans and advances to customers
+and financial assets at amortized cost. The carrying amount of financial assets below also represents the
+Group's maximum exposure to credit risk on these assets.
+14
+Loans and advances to customers:
+Credit grade
+High risk
+12,203
+849,814
+Medium risk
+148
+1,016,991
+Low risk
+Total
+Purchased
+credit-impaired
+Stage 3
+Lifetime ECL
+31 December 2018
+Stage 2
+Lifetime ECL
+12-month ECL
+Stage 1
+ECL staging
+(in RMB million)
+13,203
+468
+1
+2,116
+(454)
+3,980
+Stage 3
+347
+(1,745)
+1,446
+24
+(80)
+702
+Stage 2
+at amortized cost
+5,571
+(1,446)
+(482)
+1,745
+Stage 3
+7,387
+8,422
+(42)
+43
+Stage 2
+value through other
+comprehensive income
+655
+(14)
+(43)
+24
+158
+530
+Stage 1
+Debt financial assets at fair
+13,305
+1,658
+3,225
+Subtotal
+3,759
+32,834
+Default
+(347)
+(5,571)
+2,061,651
+Carrying amount
+Loss allowance
+15,363
+5,871
+2,067,222
+Gross carrying amount
+15,363
+Default
+1,847
+9,156
+High risk
+2,926
+145,506
+(7,387)
+Medium risk
+-
+7,976
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+286
+The banking business of the Group is exposed to potential liquidity risk. The Group utilizes multiple
+regulatory methods, establish comprehensive liquidity risk management framework, effectively recognize,
+measure, monitor and control liquidity risk, maintain sufficient liquidity level to satisfy various funds
+requirement and to face adverse market status. In case of monitoring liquidity risks effectively, the Group
+pays attentions to the funds resources and diversified utilization, keep relatively high liquidity assets
+consistently. The Group monitors the sourcing and usage of funds, deposit to loan ratio, and quick ratio on
+a daily basis. Moreover, when adopting various benchmarks for management of liquidity risk management
+measurement benchmarks, the Group compares the expected results against the ones derived from stress
+tests, critically assesses the potential impact to the future liquidity risk, and formulates remedial actions
+according to specific situations. The Group seeks to mitigate the liquidity risk of the banking business by
+optimizing the assets and liabilities structure, and maintaining stable deposits, etc.
+The Group is exposed to liquidity risk on insurance policies that permit surrender, withdrawal or other
+forms of early termination. The Group seeks to manage its liquidity risk by matching to the extent possible.
+the duration of its investment assets with the duration of its insurance policies and to ensure that the
+Group is able to meet its payment obligations and fund its lending and investment operations on a timely
+basis.
+Liquidity risk is the risk of not having access to sufficient funds or being unable to realize an asset in a
+timely manner at a reasonable price to meet the Group's obligations as they become due.
+2,075,151
+(13,305)
+2,088,456
+15,363
+11,003
+148,432
+1,913,658
+Total
+(4) LIQUIDITY RISK
+5,524
+1,017,139
+862,017
+46,037
+1,098
+Purchased
+credit-impaired
+37,254
+1,862,894
+Carrying amount
+(54,033)
+(28,988)
+(7,931)
+(17,114)
+Loss allowance
+1,983,875
+58,682
+45,185
+1,880,008
+Gross carrying amount
+58,682
+58,682
+29,694
+1,912,560
+1,929,842
+Ping An Insurance (Group) Company of China, Ltd. 285
+Stage 3
+Lifetime ECL
+Stage 2
+Lifetime ECL
+Stage 1
+12-month ECL
+ECL staging
+31 December 2018
+Low risk
+Individual customers
+(in RMB million)
+Financial assets at amortized cost:
+(b) Expected credit loss (continued)
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Annual Report 2018
+3,740
+Credit grade
+Financial assets
+banks and other financial
+institutions - due from and
+placements with banks and
+other financial institutions
+Assets purchased under
+31 December 2017
+Past due but not impaired
+31 December 2017
+305,986
+40,974
+34,358
+29,051
+21,984
+20,432
+18,434
+17,839
+16,579
+16,343
+Cash and amounts due from
+16,070
+(in RMB million)
+China Minsheng Banking Corp. Ltd.
+Others
+(3) CREDIT RISK (CONTINUED)
+(a) Credit risk management (continued)
+Credit quality of amounts due from banks and other financial institutions (continued)
+(in RMB million)
+PBC
+Top five commercial banks
+Bank of China Limited
+Bank of Communications Co., Ltd.
+Industrial and Commercial Bank of China Limited
+Industrial Bank Co., Ltd.
+China Bohai Bank Co., Ltd.
+Other major banks and financial institutions
+China Construction Bank Corporation
+Bank of Shanghai Limited
+China Zheshang Bank Co., Ltd.
+Agricultural Bank of China Limited
+Aging analysis of financial assets
+(513)
+264,077
+Not due
+and not
+impaired
+11,151
+6,454
+14,761
+32,366
+28,952
+1,705,186
+Including:
+Corporate customers
+807,406
+5,978
+3,587
+14,705
+24,270
+18,944
+Stage 1
+1,643,868
+802,127
+customers
+99,310
+Overdue
+Less than
+30 days
+Overdue
+31 to
+90 days
+Overdue
+More than
+90 days
+Total past
+due but not
+impaired
+Impaired
+Total
+189,268
+1,400
+1,400
+52
+reverse repurchase
+agreements
+99,251
+59
+59
+Loans and advances to
+43
+190,720
+Stage 3
+3,447
+Stage 2
+to customers
+17,266
+(49)
+(5,175)
+957
+9,592
+11,941
+Stage 1
+Loans and advances
+2018
+Write-offs
+31 December
+and
+Stage 3
+(889)
+and
+Stage 3
+9,600
+(9,402)
+54,187
+other comprehensive income
+(45,804)
+48,788
+3,440
+47,763
+Subtotal
+28,990
+(45,804)
+9,402
+49
+38,231
+(5,263)
+Stage 3
+7,931
+5,175
+Stage 2
+32,375
+(Note 1)
+(b) Expected credit loss (continued)
+(3) CREDIT RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
+310,901
+90,816
+220,085
+Subtotal
+841
+(Note 2)
+328
+513
+Stages transfers
+Net
+Ping An Insurance (Group) Company of China, Ltd. 283
+Charge/
+(recover)
+increase/
+Stage
+2018
+and
+for the year
+(decrease)
+Impairment provision (in RMB million)
+Stage 2
+1 January
+Stage 1
+Transfer
+between
+between
+Transfer
+Transfer
+between
+Stage 1
+Other businesses and
+elimination
+Other businesses and
+(6,949) (13,382)
+The Group
+(0.9)
+11.7
+10.8
+business
+57.0
+(2.8)
+79,541
+business
+Fintech & healthtech
+Fintech & healthtech
+22.3
+19.5
+43,161
+556,508 473,351
+business
+36.3
+31,658
+50,679
+(48.1)
+17.6
+2018
+N/A
+Other information about insurance business's net profit attributable to shareholders of the parent
+company
+(4.7)
+business
+The Group follows the International Financial Reporting Standards 9 - Financial Instruments (the "new
+accounting standards") from January 1, 2018. The insurance subsidiaries continue to follow the old
+standards for financial instruments when preparing their respective statutory financial statements
+because they qualify for a temporary exemption. In accordance with the Group's accounting policies,
+the insurance subsidiaries separately prepare financial statements and notes under the new standards
+for Group consolidation purposes. Reconciliations between net profit attributable to shareholders of the
+parent company in the insurance business's statutory financial statements and statements under the new
+standards are presented below to allow comparison with peers.
+35.5
+30.8
+(3.0)
+26.7
+23.7
+Change
+(pps)
+2017
+elimination
+Operating ROEV of the life and health insurance business
+(%)
+Operating return on embedded value (Operating ROEV)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+18
+(0.1)
+22.0
+21.9
+The Group
+N/A
+N/A
+Operating ROEV of the Group
+management
+128,791
+Other asset
+(0.1)
+11.6
+11.5
+Banking business
+8.1
+139,224
+Banking business
+(3.3)
+20.0
+16.7
+insurance business
+10.3
+69,804
+77,014
+insurance business
+Property and casualty
+Property and casualty
+3.1
+37.6
+40.7
+(in RMB million)
+11.5
+insurance business
+Asset management business
+management
+88,854
+15.4
+Other asset
+(2.1)
+8.0
+5.9
+Securities business
+8.3
+25,842
+27,976
+Securities business
+(4.5)
+20.6
+16.1
+Trust business
+(9.2)
+19,509
+17,717
+Trust business
+Including:
+Including:
+(2.4)
+17.1
+14.7
+Asset management business
+77,009
+Profit attributable to
+shareholders of the
+parent company
+6,250
+statements under the
+Note: (1) Activity rate of agents = annual total of monthly agents
+who issued policies/annual total of monthly onboard
+agents
+Annual Report 2018
+20
+20
+Agent income
+0.7
+6,294
+(RMB per agent
+per month)
+1.22
+1.22
+65.5 -2.9 pps
+62.6
+1.1
+48,243
+48,789
+4.8
+1.26
+1.32
+60,786
+64,401
+7.3
+67,357
+72,294
+Ping An Insurance (Group) Company of China, Ltd.
+NBV (in RMB million)
+Agent productivity
+and income
+Agent channel NBV
+(in RMB million)
+Average number of
+agents per month
+(in million)
+NBV per agent
+(RMB per agent
+per year)
+Activity rate of
+agents (1) (%)
+New individual life
+insurance policies
+per agent (policies
+per agent per
+month)
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Life maintained steady business growth
+under the value creation strategy. Ping An Life
+continued to develop the agent channel and boost
+the written premium. As at December 31, 2018, sales
+agents increased by 2.3% from the beginning of 2018
+to 1.42 million. The bancassurance channel improved
+its business mix. The telemarketing channel
+maintained a large market share. The internet
+channel further optimized its product mix.
+160,450
+88.2
+25-month persistency
+ratio
+income Surrender
+Premium
+Distribution
+channel
+(in RMB million)
+91.8 -0.4 pps
+91.4
+ratio
+13-month persistency
+Change
+2017
+2018
+(%)
+OPERATIONS OF INSURANCE PRODUCTS
+Top five products of Ping An Life in terms of
+premium income are presented below.
+Business data of Ping An Life are as follows:
+Life and Health Insurance Business
+Business Analysis
+Ping An Insurance (Group) Company of China, Ltd. 21
+Annual Report 2018
+Ping An Life pursued Al-powered transformations
+under the "technology+” strategy. In sales
+management, Ping An Life applied Al-based
+solutions to multiple scenarios including agent
+team expansion, training, team management, and
+sales models. Ping An Life developed a set of
+innovative Al-enabled solutions to agent retention
+and productivity promotion. Since Al-based
+screening and interview functionalities went live,
+they have been applied to screening of over 11
+million potential agents. Moreover, via backtesting
+on historical data, our Al-based screening model
+achieved an accuracy rate of 95.4% in identifying
+agents who would remain with us for 13 months.
+In customer development, the upgraded "Jin Guan
+Jia" app can recommend products according to
+customer profiles and facilitate management of
+customer segments. As of the end of 2018, the
+"Jin Guan Jia" app had 184 million registered
+users and over 26 million monthly active users.
+In customer services, Al has enabled Ping An
+Life to significantly reduce turnaround times of
+underwriting, policy administration and claims.
+by upgrading "Smart Customer Services." Of the
+nearly 20 million insurance applications received as
+of December 31, 2018, 96% were underwritten by AI
+automatically, even in real time. Of the nearly 40
+million online policy administration cases handled
+via "Smart Customer Services," 90% were processed
+by Al automatically with a daily average of around
+24,000 cases and a shortest turnaround time of
+three minutes. An innovative task-based robot was
+launched, replacing traditional menu clicks with
+smart interactive Q&As; the robot was accessed
+more than 100,000 times per day on average. Ping An
+Life continued to upgrade the "Smart Quick Claim"
+service. Of the 3.81 million claims, 60% were settled
+within 30 minutes, the shortest turnaround time
+being 26 seconds. Designated family doctors were
+assigned to nearly 60% or 33 million of customers,
+handling 2.2 online consultations per customer.
+All the customers enrolled after 2016 have been
+assigned family doctors. In 2018, Ping An Life's net
+promoter score (NPS) increased by 6.0 pps from the
+beginning of 2018. Going forward, Ping An Life will
+apply Al to more scenarios to improve customer
+services and business management.
+Ping An Life developed protection products,
+optimized services, and diversified service
+scenarios under the "product+" strategy. Ping An
+Life continued to prioritize the protection products.
+On the one hand, Ping An Life tapped various
+market segments, launched the premium-returned
+critical illness insurance product "Fu Man Fen" for
+adults, and reached higher-end customers of critical
+illness insurance. On the other hand, Ping An Life
+strengthened competitiveness of its protection
+products by increasing the number of covered
+critical illnesses to more than 80. Ping An Life
+continued to further the "product +" strategy. Ping
+An Life increased interactions between customers,
+agents and itself by optimizing the reward rules for
+"Ping An RUN" and creating more service scenarios.
+In this way, Ping An Life improved customer
+experience, increased customer stickiness, and
+enhanced customer development.
+Ping An Life provides individuals and groups with
+life insurance products through its nationwide
+service network of 42 branches (including 7
+telemarketing centers) and over 3,300 business
+outlets.
+in statutory financial
+2017 Change (%)
+In 2018, China's economy grew steadily despite
+the volatile world economy. As financial reforms
+continued, transformations of the insurance industry
+were in full swing. Remaining customer-centric, the
+Company carried out "product+" and "technology+"
+strategies on the basis of strict compliance and risk
+management. In 2018, NBV of the life and health
+insurance business grew by 7.3% year on year to
+RMB72,294 million. NBV grew by 16.9% year on year
+in the second half of 2018, 16.7 pps faster than in the
+first half. Agent channel NBV rose 5.9% year on year
+driven by a 4.8% increase in the average number of
+agents per month and a 1.1% rise in annual NBV per
+agent. The NBV margin was up 4.4 pps year on year.
+In particular, the NBV margin of the agent channel
+reached 57.1%, up 7.2 pps year on year.
+107.0
+35,658
+73,825
+2017 Change (%)
+2018
+2017 Change (%)
+2018
+2017 Change (%)
+2018
+Total of
+insurance business
+Property and casualty
+insurance business
+Life and health
+insurance business
+instruments (2)
+for financial
+accounting standards
+under the new
+financial statements
+Profit attributable to
+shareholders of the
+parent company in
+adjustments (1)
+Investment income
+financial instruments
+standards for
+old accounting
+13,145
+2018
+13,307
+77.6
+The Company conducts the life and health insurance
+business through Ping An Life, Ping An Annuity, and
+Ping An Health.
+BUSINESS OVERVIEW
+Al is widely used within our life and health insurance business. Since Al-
+based screening and interview functionalities went live, they have been
+applied to screening of over 11 million potential agents. Via backtesting on
+historical data, our Al-based screening model achieved an accuracy rate of
+95.4% in identifying agents who would remain with us for 13 months.
+In 2018, operating profit after tax rose 35.1% year on year to RMB71,345
+million. The residual margin stood at RMB786,633 million, up 27.6% from the
+beginning of 2018.
+In 2018, operating ROEV of the life and health insurance business was
+30.8%. As the Company continued to optimize the business mix amid
+industry restructuring, value of new business (NBV) rose 7.3% year on
+year to RMB72,294 million. NBV rose 16.9% year on year in the second half
+of 2018 versus 0.2% in the first half. Agent channel NBV rose 5.9% year on
+year driven by a 4.8% increase in average number of agents per month and
+a 1.1% rise in annual NBV per agent. Overall NBV margin reached 43.7%,
+up 4.4 pps year on year which included a 57.1% NBV margin in the agent
+channel which was up 7.2 pps year on year.
+Life and Health Insurance Business
+Business Analysis
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd. 19
+Annual Report 2018
+(2) In accordance with rules for transition to the new accounting standards for financial instruments, the Company does not need
+to restate comparable figures for 2017.
+Notes: (1) Adjustments mainly arise from changes in classification, measurement, and impairment of financial assets under the new
+accounting standards for financial instruments.
+43.2
+48,965
+70,129
+(8.2)
+62.4 12,215 13,307
+35,658
+57,914
+N/A
+N/A (16,841)
+N/A (930)
+(15,911)
+(1.2) 86,970 48,965
+178,824
+5.9
+Life and health
+1,680
+3,012
+24,818
+71,345 12,274
+7,236
+7,236(2)
+265
+265
+Annual Report 2018
+Operating profit attributable to
+non-controlling interests
+parent company
+to shareholders of the
+Operating profit attributable
+Operating profit (E=A-B-C-D)
+non-operating items (D)
+Impact of one-off material
+rate change (C)
+Impact of discount
+(12,853)
+(12,853)
+variance (¹) (B)
+Short-term investment
+Excluding:
+9,017
+(4,090) 120,452
+7,748 (4,090) 125,804
+12,215
+health and casualty
+Property
+Life and
+2017
+Business Analysis
+Performance Overview
+MANAGEMENT DISCUSSION AND ANALYSIS
+17
+Ping An Insurance (Group) Company of China, Ltd.
+13,231
+(94)
+978
+753
+81
+4
+10,424
+59
+1,026
+(3,996) 112,573
+6,770
+8,264
+1,599
+3,008
+14,394
+70,320
+insurance
+9,017 14,984
+3,012
+Other
+businesses
+and
+Fintech &
+healthtech
+business
+business
+Other asset
+Securities management
+business
+Trust
+business
+Banking
+business
+insurance
+business
+insurance
+business
+health and casualty
+Property
+Life and
+2018
+Net profit attributable to
+(in RMB million)
+In 2018, the Group's operating profit attributable to shareholders of the parent company grew by 18.9%
+year on year to RMB112,573 million. The basic operating earnings per share was RMB6.31, up by 18.8% year
+on year. The life and health insurance business's operating profit attributable to shareholders of the parent
+company rose by 34.9% year on year to RMB70,320 million.
+The operating profit after tax which excludes fluctuations of the above non-operating items can provide a
+clearer and more objective representation of the Company's business performance and trend.
+Note: (1) Refer to "Significant Accounting Policies" in the Notes to Consolidated Financial Statements in the 2018 Annual Report for
+information about the discount rate.
+Impacts of one-off non-operating items are material items that management considered to be
+non-operating income and expenses.
+The impact of discount rate (1) change is the effect on insurance contract liability of the life and health
+insurance business due to changes in the discount rate;
+Short-term investment variance, which is the variance between the actual investment return of the life
+and health insurance business and the EV ultimate investment return assumption, net of associated
+relevant impact on insurance and investment contract liability. The investment return of the life and
+health insurance business is locked at 5% after excluding the short-term investment variance;
+Due to the long-term feature of the majority business of the life and health insurance business, the measure
+of operating profit has been applied to more appropriately evaluate business performance. Operating profit
+after tax is based on net profit from financial statements, excluding items that are of short-term, volatile or
+one-off nature, including:
+OPERATING PROFIT OF THE GROUP
+88.0
+elimination
+1,680
+The Group
+parent company
+24,818
+12,274
+58,757
+Net profit (A)
+13,048
+(94)
+978
+753
+81
+4
+59 10,424
+843
+non-controlling interests
+Net profit attributable to
+107,404
+(3,996)
+14,006
+8,264
+1,599
+3,008
+14,394
+12,215
+57,914
+shareholders of the
+insurance
+Banking
+business
+Operating profit attributable to
+94,708
+(2,700)
+5,420
+7,108
+2,043
+3,953
+13,449
+13,307
+52,128
+parent company
+to shareholders of the
+Operating profit attributable
+105,809
+(2,647)
+5,488
+7,503
+2,123
+3,957
+23,189
+13,372
+52,824
+Operating profit (E=A-B-C-D)
+non-controlling interests
+10,850
+696
+9,740
+Life and health
+Change
+(pps)
+2017
+2018
+(%)
+(%)
+Change
+December
+31, 2017
+31, 2018
+(in RMB million)
+December
+company
+Operating ROE
+Equity attributable to shareholders of the parent
+(3) Numbers may not match totals due to rounding.
+(2) The impact of one-off non-operating item in 2018 referred to the fair value revaluation gain, as required by the accounting
+standards, of the convertible bonds issued by Lufax Holding to the Group as the consideration of Puhui transaction. The fair
+value of the convertible bonds significantly increased due to Lufax Holding's Series C financing. The one-off material item that
+management considered to be non-operating income and expense in 2017 was the financial gain from Ping An Good Doctor's
+restructuring.
+Notes: (1) Short-term investment variance is the variance between the actual investment return and the EV ultimate investment return
+assumption (5%), net of the associated impact on insurance and investment contract liability.
+11,101
+53
+68
+395
+80
+4
+65
+10,850(2)
+Impact of one-off material
+non-operating items (D)
+(21,213)
+Net profit attributable to
+89,088
+(2,700)
+16,270
+7,108
+2,043
+3,953
+13,449
+13,307
+35,658
+parent company
+business
+shareholders of the
+Net profit attributable to
+(in RMB million)
+The Group
+and
+elimination
+business
+Other
+businesses
+Fintech &
+healthtech
+Other asset
+Securities management
+business business
+Trust
+business
+business
+non-controlling interests
+485
+65
+9,740
+4,532
+(21,213) -......
+rate change (C)
+Impact of discount
+4,532
+variance(¹) (B)
+Short-term investment
+Excluding:
+99,978
+(2,647)
+16,338
+insurance business
+7,503
+3,957
+23,189
+13,372
+36,143
+Net profit (A)
+10,890
+53
+68
+395
+80
+4
+2,123
+0.2 pps
+The operating profit after tax which excludes
+fluctuations of the above non-operating items could
+provide a clearer and more objective representation
+of the Company's business performance and trend.
+The operating profit of the life and health insurance
+business is analyzed below:
+Sales agents,
+43,903
+34,537
+27.1
+Annuity
+15,679
+8,189
+91.5
+accounting standards
+74,586
+36,143
+106.4
+Investment-linked insurance
+1,502
+1,582
+(5.1)
+health insurance
+Investment income
+Accident & short-term
+2018
+207,856
+187,374
+10.9
+Universal insurance
+111,029
+98,790
+12.4
+Traditional life insurance
+100,449
+79,218
+26.8
+Long-term health insurance
+90,105
+66,205
+36.1
+2017 Change (%)
+Participating insurance
+adjustments(1)
+N/A
+The written premium of the life and health insurance
+business is analyzed below by region:
+Commission expenses on insurance operations
+(in RMB million)
+2018
+2017 Change (%)
+Health insurance
+32,198
+26,159
+23.1
+(in RMB million)
+2018
+2017 Change (%)
+Accident insurance
+7,205
+7,130
+1.1
+Life and Health Insurance Business
+(15,829)
+Business Analysis
+Ping An Insurance (Group) Company of China, Ltd. 25
+Total
+570,523
+475,895
+19.9
+Profit in financial statements
+under the new accounting
+standards for financial
+instruments (2)
+58,757
+36,143
+Yingyue Rensheng
+Profit in statutory financial
+statements under the old
+for financial instruments
+Notes: (1) Adjustments mainly arise from changes in classification,
+measurement, and impairment of financial assets under
+the new accounting standards for financial instruments.
+(2) In accordance with rules for transition to the new
+accounting standards for financial instruments, the
+Company does not need to restate comparable figures
+for 2017.
+Annual Report 2018
+26
+Change (%)
+2017
+(in RMB million)
+391,956
+295,165
+32.8
+Other net revenue and
+Agent channel
+353,343
+268,259
+31.7
+expenses
+(5,870)
+(1,427)
+311.4
+Bancassurance channel
+10,001
+6,741
+Renewed business
+48.4
+(30.2)
+79,384
+30.0
+insurance operations
+(84,142)
+(77,754)
+8.2
+Including: regular
+Administrative expenses (1)
+(50,202)
+(47,569)
+5.5
+premium
+12,322
+12,063
+2.1
+Total investment income (2)
+113,811
+Profit before tax
+81,259
+50,671
+20,252
+8.2
+Renewed business
+61
+32
+90.6
+Total
+570,523
+475,895
+19.9
+Notes: (1) Administrative expenses include the administrative
+expenses, taxes and surcharges on investment
+operations and impairment losses on receivables and
+others under the segmented income statement.
+(2) Total investment income includes interest revenue from
+non-banking operations, investment income, share of
+profits and losses of associates and jointly controlled
+entities, impairment losses on investment assets, and
+interest expenses on assets sold under agreements
+to repurchase and placements from banks and other
+financial institutions under the segmented income
+statement.
+Net profit reconciliations between the life and health
+insurance businesses' statutory financial statements
+and statements under the new accounting standards
+for financial instruments are presented below to
+allow comparison with peers.
+(in RMB million)
+The written premium of the life and health insurance
+business is analyzed below by product type:
+2018
+21,907
+New Business
+8.3
+20,284
+60.4
+Income tax
+(22,502)
+(14,528)
+Telemarketing, internet
+54.9
+and others
+Guangdong
+28,612
+41.9
+Net profit
+58,757
+36,143
+62.6
+Group business
+21,968
+20,165
+102,697
+84,870
+21.0
+(2,001)
+32.6
+value changes
+(36,067)
+640
+N/A
+Policyholder dividends
+16,445
+13,129
+25.3
+Impairment losses on
+Net increase in insurance
+investment assets
+(200)
+96
+(2,653)
+N/A
+contracts
+expenses of insurance
+Change (%)
+Death, injury and
+medical care benefits
+23,966
+18,897
+26.8
+Net investment income (1)
+114,169
+107,827
+5.9
+Reinsurer's share of claim
+Realized gains (2)
+1,482
+5,248
+(71.8)
+Profit or loss from fair
+reserves
+186,043
+198,428
+0.8
+Claims paid grew by 21.5% year on year, primarily
+due to continued growth in the short-term health
+insurance business.
+Annuity payments increased sharply year on year as
+some products matured in 2018.
+Maturity and survival benefits decreased by 19.9%
+year on year because survival benefits of some
+insurance products peaked in 2017.
+Death, injury and medical care benefits were
+26.8% higher year on year, driven by growth in the
+long-term health insurance business.
+Policyholder dividends climbed 25.3% year on year
+as a result of growth in the participating insurance
+business.
+Net increase in insurance reserves decreased by
+6.2% year on year, mostly due to business growth
+and movement of the benchmarking yield curve for
+measuring reserves for insurance contracts.
+Interest credited to policyholder contract deposits
+was down 27.1% year on year as lower investment
+income decreased the interest payment on universal
+insurance accounts.
+Annual Report 2018
+Notes: (1) Net investment income includes interest income from
+deposits and debt financial assets, dividend income
+from equity financial assets, operating lease income
+from investment properties, and the share of profits
+and losses of associates and jointly controlled entities.
+(2) Realized gains include realized capital gains from
+securities investments.
+(3) Net exchange gains or losses on investment assets
+denominated in foreign currencies are excluded from
+computation of the above yields. Average investment
+assets used as the denominator are computed in line
+with principles of the Modified Dietz method.
+In 2018, the net investment yield of the life and
+health insurance business was 5.2%, down 0.6 pps
+year on year, largely because of lower dividend
+income from equity investments and the larger
+scale of the portfolio. In 2018, the domestic and
+international capital markets were quite volatile.
+After the life and health insurance subsidiaries
+implemented the new accounting standards for
+financial instruments, assets carried at fair value
+through profit or loss increased sharply, resulting
+in wider fluctuation in gains or losses from fair
+value changes. As a result, the total investment
+income dropped by 30.2% year on year and the total
+investment yield declined 2.5 pps to 3.6%.
+INCOME TAX
+The income tax increased sharply year on year due
+to rising taxable income driven by business growth.
+Ping An Insurance (Group) Company of China, Ltd.
+323,494 320,957
+Total
+-2.5 pps
+6.1
+(6.2)
+Interest credited to
+Total Investment Income
+79,384
+113,811
+(30.2)
+policyholder contract
+2017
+deposits
+23,873
+(27.1)
+Net investment yield (3) (%)
+Total investment yield (3) (%)
+5.2
+5.8
+-0.6 pps
+3.6
+17,407
+15,680
+2018
+(19.9)
+20.3
+Beijing
+29,988
+26,431
+13.5
+Sub-total
+231,007
+193,830
+19.2
+Total
+570,523
+475,895
+19.9
+In 2018, the commission expense of the insurance
+business (mainly paid to the Company's sales
+agents) increased by 8.2% year on year due to
+expansion of the insurance business.
+Administrative expenses
+26,179
+(in RMB million)
+31,498
+17.6
+Life insurance and others
+44,739
+44,465
+0.6
+Shandong
+34,825
+29,149
+19.5
+Total
+84,142
+77,754
+8.2
+Jiangsu
+31,999
+27,201
+Zhejiang
+2018
+Claims and policyholders' benefits
+(in RMB million)
+15,836
+13,032
+21.5
+Total
+50,202
+47,569
+5.5
+Annuities
+22,725
+7,371
+208.3
+Maturity and survival
+benefits
+22,186
+27,709
+Claims paid
+insurance contracts
+(29.5)
+61
+2018
+2017 Change (%)
+Operating expenses
+49,276
+Surrenders
+21,539
+20,519
+Total Investment Income
+(in RMB million)
+5.0
+883
+2017 Change (%)
+46,766
+742
+5.4
+19.0
+Impairment losses on
+Claim expenses of
+receivables and others
+43
+Tax and surcharges
+20,384
+62.6
+Commission expenses of
+10,108
+115.2
+Operating profit before
+tax (E=A+B+C+D)
+Income tax (F)
+98,043
+72,912
+34.5
+(26,698)
+(20,088)
+32.9
+Operating profit after
+tax (G)
+71,345
+52,824
+35.1
+(12,853)
+4,532
+21,749
+N/A
+(10.4)
+5,048
+Short-term investment variance, which is the
+variance between actual investment return of
+the life and health insurance business and the
+EV ultimate investment return assumption, net
+of associated relevant impact on insurance and
+investment contract liability. The investment
+return of the life and health insurance business
+is locked at 5% after excluding the short-term
+investment variance;
+The impact of discount rate (1) change is the
+effect on insurance contract liability of the life
+and health insurance business due to changes
+in the discount rate;
+Impacts of one-off non-operating items are
+material items that management considered to
+be non-operating income and expenses.
+Note: (1) Refer to "Significant Accounting Policies" in the Notes
+to Consolidated Financial Statements in the 2018 Annual
+Report for information about the discount rate.
+(in RMB million)
+2018
+2017 Change (%)
+Release of residual
+margin (A)
+62,287
+49,811
+25.0
+Return on net worth (1) (B)
+Spread income (2) (C)
+Operating variance and
+others (D)
+8,959
+7,357
+21.8
+5,637
+Due to the long-term feature of the majority of the
+life and health insurance business, the Company
+introduced the measure of operating profit to
+more appropriately evaluate business performance.
+Operating profit after tax is based on net profit
+from financial statements, excluding items that are
+of short-term, volatile or one-off nature, including:
+265
+58,757
+N/A
+Expected interest growth
+28,498
+22,642
+25.9
+Release of residual margin
+Lapse variances and others
+(62,287) (49,811)
+26,617
+25.0
+20,357
+30.8
+Closing residual margin
+786,633
+616,319
+27.6
+Note: Figures may not match totals due to rounding.
+5.4
+(21,213)
+168,426
+business
+36,143
+62.6
+Short-term investment
+variance (3) (H)
+Impact of discount
+rate change (1)
+Net profit (J=G+H+I)
+Notes: (1) Return on net worth is the investment return
+on shareholder equity based on the EV ultimate
+investment return assumption (5%).
+(2) Spread income is the expected investment return
+from assets backing contract liability based on the EV
+ultimate investment return assumption (5%) exceeding
+the interest required on contract liability.
+(3) Short-term investment variance is the variance
+between actual investment return and the EV ultimate
+investment return assumption (5%), net of associated
+relevant impact on insurance and investment contract
+liability.
+(4) Figures may not match totals due to rounding.
+As at December 31, 2018, the residual margin of the
+life and health insurance business was RMB786,633
+million, up 27.6% from the beginning of 2018 due to
+contribution from new business.
+Annual Report 2018
+(in RMB million)
+2018
+Opening residual margin
+Contribution from new
+616,319
+454,705
+2017 Change (%)
+35.5
+177,485
+ANALYSIS OF OPERATING PROFIT AND PROFIT
+SOURCES
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd.
+16,869
+301
+Retail (1)
+57,309
+and others
+10.2
+Xiyue Rensheng
+Sales agents,
+Corporate
+2,362
+2,062
+14.5
+Annuity for Children
+Bancassurance
+(participating)
+Bancassurance
+15,570
+Sales agents,
+(in thousand)
+Annuity (participating)
+Bancassurance
+38,974
+165
+Zunhong Rensheng
+Sales agents,
+December
+31, 2018
+December
+31, 2017
+Change
+(%)
+Endowment Insurance
+(participating)
+Bancassurance
+19,350
+163
+Number of customers
+Ping An Fu Whole Life
+Insurance
+44
+Total
+59,671
+0.4
+Number of
+bancassurance
+relationship managers
+3,151
+3,159
+(0.3)
+Number of
+telemarketing agents
+36,344
+29,837
+21.8
+Note: (1) The number of retail customers is counted on the basis
+of the number of holders of in-force policies. As at
+December 31, 2018, individual policyholders and insureds
+totaled 95.946 million.
+22
+Annual Report 2018
+4,916
+4,937
+representatives
+insurance sales
+54,066
+10.4
+Xiyue Rensheng
+Sales agents,
+Annuity for Adults
+Bancassurance
+Distribution network
+Ping An Insurance (Group) Company of China, Ltd. 23
+(participating)
+51
+Number of individual
+life insurance
+sales agents
+1,417,383 1,385,987
+2.3
+Number of group
+14,166
+24
+52,004
+Life and Health Insurance Business
+Retail business
+548,555
+455,611
+20.4
+separated out
+from universal life
+New Business
+156,599
+160,446
+(2.4)
+and investment-
+linked products
+Agent channel
+130,715
+136,657
+Less: Premium deposits
+(4.3)
+Change (%)
+2018
+570,523
+2017
+Change (%)
+475,895
+19.9
+Less: Premium deposits
+Written premium
+The written premium of the life and health insurance
+business is analyzed below by policyholder type and
+channel:
+of policies without
+significant
+insurance risk transfer
+(5,654)
+(5,886)
+(3.9)
+(in RMB million)
+2017
+(93,169)
+(81,367)
+14.5
+Including: regular
+Earned premium
+384,567
+21.1
+premium
+4,252
+4,803
+(11.5)
+Claims and policyholders'
+benefits
+(323,494)
+(320,957)
+0.8
+Telemarketing, internet
+Business Analysis
+21.5
+388,642
+472,359
+Gross written premium
+Including: regular
+Premium income
+471,700
+388,642
+21.4
+premium
+124,394
+Written premium
+128,437
+Reinsurance premium income
+659
+N/A
+Bancassurance channel
+5,500
+8,109
+(32.2)
+(3.1)
+2018
+465,583
+ANALYSIS OF FINANCIAL STATEMENTS
+741,727
+680,450
+9.0
+8,677
+7,895
+9.9
+1,690
+1,254
+34.8
+Actual capital
+764,727
+703,450
+8.7
+8,677
+7,895
+Core capital
+(%)
+Change
+Ping An Health
+December
+31, 2017
+SOLVENCY MARGIN
+(in RMB million)
+As at December 31, 2018, the solvency margin ratios of Ping An Life, Ping An Annuity and Ping An Health
+met regulatory requirements. The solvency margin ratios of Ping An Life, Ping An Annuity and Ping An
+Health declined from the beginning of 2018 due to dividend distribution and business development.
+Ping An Life
+(in RMB million)
+December
+31, 2018
+December
+9.9
+Change
+(%)
+31, 2018
+Ping An Annuity
+December
+31, 2017
+Change
+December
+(%)
+31, 2018
+31, 2017
+1,690
+December
+34.8
+Comprehensive
+solvency margin
+ratio (%) (regulatory
+requirement ≥100%)
+218.8
+234.1 -15.3 pps
+249.8
+265.1 -15.3 pps
+305.5
+327.2 -21.7 pps
+(2) For details of subsidiaries' solvency margin, please visit the Company's website (www.pingan.cn).
+(3) Figures may not match calculation due to rounding.
+Annual Report 2018
+MANAGEMENT DISCUSSION AND ANALYSIS
+1,254
+Ping An Insurance (Group) Company of China, Ltd.
+327.2 -21.7 pps
+305.5
+Notes: (1) Core solvency margin ratio = core capital/minimum capital; comprehensive solvency margin ratio = actual capital/minimum
+capital.
+249.8
+265.1 -15.3 pps
+300,453
+16.3
+3,473
+2,978
+16.6
+Minimum capital
+349,513
+383
+44.4
+Core solvency margin.
+ratio (%) (regulatory
+requirement ≥50%)
+226.5 -14.3 pps
+553
+212.2
+70,251
+51,142
+112,552
+9,493
+270,332
+1,070,752
+980,598
+Derivative cash flows
+26,894
+5,252,160
+9,083,427
+1,058,152
+721,765
+Bonds payable
+487,585
+40,914
+131,071
+131,112
+184,488
+45,622
+45,622
+Policyholder dividend payable
+52,357
+32,168
+Derivative financial instruments settled
+14,987
+1,044
+4,158
+Other liabilities
+on a net basis
+(1,059)
+on a gross basis
+(in RMB million)
+Total
+policyholders
+31 December 2018
+Undated
+years
+Over 5
+1 to 5
+years
+months
+3 to 12
+1 to 3
+months
+1 months
+Less than
+(18,600)
+574,945
+(593,545)
+The table below summarizes the remaining contractual maturity profile of the Group:
+(7,111)
+(6,742)
+4,501
+(5,560)
+256,252 284,253
+(262,994) (291,364)
+29,939
+(33,627)
+(3,688)
+(3,494)
+21
+(17)
+395
+(1,400)
+(2,493)
+- Cash outflow
+- Cash inflow
+Derivative financial instruments settled
+Investment contract liabilities for
+796,216
+5,158,102
+8,526
+84,563
+340,249
+222,766
+140,112
+institutions
+Due to banks and other financial
+7,244,000
+818,203
+1,925,623
+2,090,725
+1,175,568
+940,946
+Assets sold under agreements to
+292,935
+571
+28,391
+16,967
+35,743
+28,464
+Other assets
+112,028
+2,170
+74,753
+29,624
+Credit commitments
+5,481
+Finance lease receivable
+110,136
+repurchase
+134,154
+134,154
+2,257
+9,125
+23,790
+Insurance contract liabilities
+64,414
+15
+1,665
+2,256
+60,478
+Insurance payables
+8,522
+5,672
+2,826
+24
+Accounts payable
+2,016,750
+2,957
+375,752
+432,426
+424,848
+780,767
+brokerage customers
+Customer deposits and payables to
+14,201
+568
+5,049
+4,329
+4,255
+Other financial liabilities held for trading
+5,193,274
+59,113
+596,238
+215,584
+The table below summarizes the minimum regulatory capital for the Group and its major insurance
+subsidiaries and the regulatory capital held against each of them.
+Core capital
+Regulatory capital held
+Minimum regulatory capital
+Core Solvency margin ratio
+Comprehensive solvency margin ratio
+Core capital
+Regulatory capital held
+Minimum regulatory capital
+Core Solvency margin ratio
+Comprehensive solvency margin ratio
+31 December 2018
+The Group
+(7) CAPITAL MANAGEMENT (CONTINUED)
+Ping An Life
+1,258,768
+741,727
+77,057
+1,290,268
+764,727
+85,557
+349,513
+38,236
+211.1%
+212.2%
+201.5%
+216.4%
+218.8%
+Ping An
+Property &
+Casualty
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+74,040
+121,003
+31 December 2017
+Credit commitments
+62,590
+106,045
+166,735
+63,871
+95,052
+288
+Annual Report 2018
+588,263
+494,293
+Ping An Insurance (Group) Company of China, Ltd.
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+(4) LIQUIDITY RISK (CONTINUED)
+Management expects the credit commitments will not be entirely used during the commitment period.
+The assets and liabilities related to investment-linked contracts which are regarded as insurance contracts
+are presented as policyholder account assets and liabilities in respect of insurance contracts. The assets
+and liabilities related to investment-linked contracts which are regarded as investment contracts are
+presented as policyholder account assets and liabilities in respect of investment contracts. The assets and
+liabilities of each investment-linked fund are segregated from each other and from the rest of the Group's
+invested assets for record keeping purposes. As the investment risks of investment-linked contracts were
+fully borne by policyholders, the assets and liabilities related to investment-linked contracts were not
+included in the analysis of risk management. Investment-linked contracts are repayable on demand. The
+Group manages liquidity risk related to the investment-linked contracts by investing mainly in assets with
+high liquidity, as disclosed in Note 38.
+(5) MISMATCHING RISK OF ASSETS AND LIABILITIES
+The objective of the Group's asset and liability management is to match assets with liabilities on the basis
+of both the duration and interest rate. In the current regulatory and market environment, however, the
+Group is unable to invest in sufficient assets with long enough duration to match that of its life insurance
+and investment contract liabilities. When the current regulatory and market environment permits, however,
+the Group will lengthen the duration of its assets by matching the new liabilities of lower guarantee rates,
+while narrowing the gap of existing liabilities of higher guarantee rates.
+(6) OPERATIONAL RISK
+Operational risk is the risk of loss resulting from inadequate or failure of proper internal controls on
+business processes, employees and systems or from uncontrollable external events. Operational risk in this
+context includes legal risk, but does not include strategic risk and reputational risk. The Group is exposed
+to many types of operational risks in the conduct of its business. The Group manages operational risk by
+establishing and continuously improving risk management framework, formalizing policies and standards,
+using management tools and reporting mechanism, strengthening communication and enhancing training
+to staff members.
+(7) CAPITAL MANAGEMENT
+The Group's capital requirements are primarily dependent on the scale and products of insurance business,
+and the type of business that it undertakes, as well as the industry and geographic location in which it
+operates. The primary objectives of the Group's capital management are to ensure that the Group complies
+with externally imposed capital requirements and to maintain healthy capital ratios in order to support its
+business and to maximize shareholders' value.
+The Group manages its capital requirements by assessing shortfalls, if any, between the reported and
+the required capital levels on a regular basis. Adjustments to current capital levels are made in light of
+changes in economic conditions and risk characteristics of the Group's activities. In order to maintain or
+adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to ordinary
+shareholders or issue capital securities.
+The Group has formally implemented China Risk Oriented Solvency System issued by the CIRC since 1
+January 2016 by reference to the 'Notice on the Formal Implementation of China Risk Oriented Solvency
+System by CIRC. The Group adjusted the objective, policy and process of capital management. As at 31
+December 2018, the Group was compliant with the relevant regulatory capital requirements.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 289
+FINANCIAL STATEMENTS
+223.8%
+31 December 2017
+Ping An
+Property &
+Casualty
+The Group
+The following table also shows the Group's maximum exposure to the unconsolidated structured entities
+representing the Group's maximum possible risk exposure that could occur as a result of the Group's
+arrangements with structured entities. The maximum exposure is contingent in nature and approximates
+the sum of direct investments made by the Group.
+The size of unconsolidated structured entities and the Group's funding and maximum exposure are shown
+below:
+31 December 2018
+(in RMB million)
+Size
+Carrying amount
+Unconsolidated structured entities
+The Group's
+maximum
+exposure
+Interest held by the Group
+Securitization
+89,581
+5,183
+5,183
+Assets management products
+managed by affiliated entities
+Assets management products
+managed by third parties
+Wealth management products
+managed by affiliated entities
+1,686,384
+236,694
+236,694
+Investment income and
+service fee
+service fee
+Investment income and
+Note 1
+443,679
+443,679
+Investment income
+537,781
+6,156
+6,156
+96,713
+The Group uses structured entities in the normal course of business for a number of purposes, for example,
+structured transactions for customers, to provide finance to public and private sector infrastructure
+projects, and to generate fees from managing assets on behalf of third-party investors. These structured
+entities are financed through the issue of notes or units to investors. Refer to Note 3.(6) for the Group's
+consolidation consideration related to structured entities.
+95,850
+(8) THE GROUP'S MAXIMUM EXPOSURE TO STRUCTURED ENTITIES
+Ping An Insurance (Group) Company of China, Ltd.
+Ping An Life
+1,115,365
+680,450
+70,095
+1,146,865
+703,450
+78,595
+533,775
+300,453
+36,141
+209.0%
+226.5%
+194.0%
+214.9%
+234.1%
+217.5%
+The Group's solvency ratio is calculated based on the relevant regulations promulgated by the CIRC, which
+is an indicator of the overall solvency position of a financial conglomerate.
+The banking business measures the capital adequacy ratio in accordance with the 'Capital Rules for
+Commercial Banks (Provisional)' issued by the CBRC in June 2012. According to the requirements, Risk
+weighted assets for credit risk is measured by Weighted Approach, Risk weighted assets for market risk is
+measured by Standardised Approach, and risk weighted assets for operation risk is measured by the Basic
+Indicator Approach.
+The banking operation's core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio and capital
+adequacy ratio are shown below:
+Core Tier 1 capital adequacy ratio
+Tier 1 capital adequacy ratio
+Capital adequacy ratio
+290
+Annual Report 2018
+31 December 2018
+31 December 2017
+8.54%
+9.39%
+11.50%
+8.28%
+9.18%
+11.20%
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+12,760
+Ping An Insurance (Group) Company of China, Ltd.
+7,956
+agreements
+Financial assets held under resold
+55,285
+54,547
+1,834
+Policy Loans
+167,784
+6,989
+105,906
+39,773
+15,116
+Finance lease receivable
+23,392
+1,820
+-
+6,551
+7,423
+6,729
+2,689
+Accounts receivable
+67,150
+-
+32
+10,344
+13,447
+20,887
+22,440
+Premium receivables
+-
+85,867
+5,505
+Other assets
+Investment income and
+service fee
+-
+repurchase
+Assets sold under agreements to
+19,641
+861
+1,580
+17,193
+7
+profit or loss
+Financial liabilities at fair value through
+826,183
+7,608
+101,944
+231,511 341,198
+143,922
+Due to banks and other financial
+institutions
+8,145,649
+821,308
+102,649
+847
+93,602
+111,666
+410
+14,191
+2,159,941 2,465,765
+16,234
+1,333,491
+1,018,463
+346,681
+17,972
+53,405
+2,240,209
+189,108
+424,717
+3,050,989
+-
+7,405
+5,462
+836
+24,947
+statutory deposits for insurance
+operations
+482,303
+19,299
+135,813
+89,601
+99,348
+138,242
+Total
+248,567
+Undated
+Over 5
+31 December 2018
+1 to 5
+years
+3 to 12
+months
+3 months
+on demand
+Less than
+Repayable
+Balances with the Central Bank and
+Cash and amounts due from banks and
+other financial institutions
+(in RMB million)
+The table below summarizes the remaining contractual maturity profile of the financial assets, financial
+liabilities and insurance contract liabilities of the Group (excluding balances of investment-linked contracts)
+based on undiscounted contractual cash flows/expected cash flows.
+(4) LIQUIDITY RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+years
+287,217
+Financial assets at fair value through
+profit or loss
+-
+1,682,740
+939,296
+83,377 334,406
+579,429 617,167
+29,496
+Loans and advances to customers
+11,170
+Financial assets at amortized cost
+222,639
+222,639
+-
+through other comprehensive income
+Equity financial assets at fair value
+394,130
+-
+178,945
+151,191
+48,256
+15,258
+480
+other comprehensive income
+Debt financial assets at fair value through
+901,919
+350,102
+152,196
+199,434
+100,932
+39,097
+60,158
+589,400
+189,108
+Customer deposits and payables to
+brokerage customers
+141
+34,862
+510,594
+2,024
+148,707
+101,731
+138,314
+119,818
+Total
+Undated
+Over 5
+years
+1 to 5
+years
+3 to 12
+months
+Fixed maturity investments
+Less than
+3 months
+31 December 2017
+statutory deposits for insurance
+operations
+Balances with the Central Bank and
+other financial institutions
+Cash and amounts due from banks and
+(in RMB million)
+(4) LIQUIDITY RISK (CONTINUED)
+51. RISK AND CAPITAL MANAGEMENT (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 287
+(1,031)
+Repayable
+on demand
+41,554
+292,432
+1,888
+428,625
+1,683
+Accounts receivable
+45,694
+54
+13,314
+12,371
+15,912
+4,043
+Premium receivables
+1,920,621
+356,122
+564,950
+517,173
+432,182
+50,194
+Loans and advances to customers
+646,290
+546,944
+320,083
+3,504,514
+1,539,172
+25,389
+33,307
+15,548
+12,785
+12,317
+Equity investments
+1,202,731
+271,259
+121
+11,812
+-
+920,695
+(921,726)
+116
+(56)
+Policyholder dividend payable
+56,082
+31,018
+17,789
+5,671
+1,604
+liabilities for policyholders
+Insurance and Investment contract
+73,461
+5,952,795
+-
+(33,974) 5,988,623
+573
+9,779
+-
+-
+2,161,169
+-
+2,208
+341,253
+533,807
+6,784
+3,044
+343
+(2,197)
+Insurance contract liability
+4,015
+65,829
+Insurance payables
+491,195
+2,185
+810
+Accounts payable
+792,706
+52,591
+51,641
+-
+Bonds payable
+489
+11,330
+(11,214)
+388,765
+(388,821)
+32,581 488,019
+(34,161) (487,530)
+(1,580)
+685
+15
+(35)
+(449)
+897
+257
+Annual Report 2018
+- Cash outflow
+Cash inflow
+on a gross basis
+Derivative financial instruments settled
+on a net basis
+Derivative financial instruments settled
+Derivative cash flows
+10,132,143
+-
+204,749
+586,585
+-
+35,714
+3,221
+323,186 160,876
+31,203 28,188
+1,246,816 617,510 6,068,392
+66,809
+32,468
+1,033,891
+1,165,534
+109,669
+Other liabilities
+52,591
+Wealth management products
+managed by third parties
+72,061
+14,837
+other comprehensive income
+institutions measured at fair value through
+Placements with banks and other financial
+222,639
+1,722
+66,682
+154,235
+1,722
+1,722
+Unlisted equity investments
+66,682
+66,682
+Preferred shares
+154,235
+154,235
+Stocks
+comprehensive income
+Equity financial assets at fair value through other
+310,901
+16,751
+258,769
+Loans and advances to customers measured at fair
+value through other comprehensive income
+Total financial assets
+Financial liabilities
+3,756
+8,477
+Total financial liabilities
+8,477
+Financial liabilities at fair value through profit or loss
+22,247
+22,247
+3,202
+3,202
+6,898
+6,898
+35,381
+12,147
+Others
+Currency forwards and swaps
+Interest rate swaps
+Derivative financial liabilities
+1,445,833
+61,687
+61,687
+165,426
+861,289
+419,118
+3,756
+12,147
+51,587
+16,751
+34,836
+85,138
+280,037
+4
+other investments
+Wealth management investments and
+89,640
+10,346
+79,294
+Stocks
+200,753
+365,179
+128
+131,861
+Funds
+169,367
+151,024
+18,343
+Bonds
+Financial assets at fair value through profit or loss
+Financial assets
+Level 3 Total fair value
+31 December 2018
+Level 2
+68,764
+7,532
+29,779
+229,502
+85,266
+259,314
+223,933
+35,381
+other investments
+Wealth management investments and
+Bonds
+comprehensive income
+21,911
+-
+21,911
+510,171
+2,276
+7,622
+7,622
+12,013
+12,013
+Debt financial assets at fair value through other
+Others
+Currency forwards and swaps
+Interest rate swaps
+Derivative financial assets
+824,939
+2,276
+Level 1
+966
+966
+Total financial assets
+932,414
+362,073
+390,924
+774,972
+171,299
+255,114
+348,559
+236,228
+171,259
+64,969
+Other equity investments
+259,938
+5,610
+254,328
+Equity securities
+56,935
+5,380
+51,555
+Security investment funds
+221,871
+Financial liabilities
+Derivative financial liabilities
+Interest rate swaps
+Currency forwards and swaps
+Annual Report 2018
+296
+32,010
+614
+22,320
+9,076
+Total financial liabilities
+14,060
+614
+4,370
+40
+9,076
+17,950
+17,950
+2,002
+2,002
+Note 1
+15,848
+15,848
+100
+100
+Others
+Other financial liabilities held for trading
+179,155
+42,676
+Bonds
+970
+10,993
+21,528
+Security investment funds
+63,801
+59,661
+4,140
+Bonds
+Carried at fair value through profit or loss
+Financial assets
+33,491
+(in RMB million)
+31 December 2017
+Level 2
+Level 1
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 295
+Annual Report 2018
+39,222
+Level 3 Total fair value
+16,975
+Equity securities
+281
+Available-for-sale financial assets
+16,192
+1,860
+14,107
+225
+16,192
+1,860
+14,107
+225
+Others
+16,697
+Currency forwards and swaps
+Derivative financial assets
+141,250
+8,118
+90,767
+42,365
+26,980
+7,148
+19,832
+Other equity investments
+16,978
+Interest rate swaps
+(in RMB million)
+179,417
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+Available-for-sale
+222,639
+2,097,405
+2,075,151
+Financial assets at amortized cost
+222,639
+comprehensive income
+Equity financial assets at fair value through other
+310,901
+310,901
+comprehensive income
+Debt financial assets at fair value through other
+141,250
+824,939
+141,250
+824,939
+Financial assets at fair value through profit or loss
+Financial assets
+2017
+2018
+2017
+2018
+Derivative financial assets
+21,911
+Held-to-maturity
+Loans and receivables
+1,661,301
+1,929,842
+1,660,864
+1,929,842
+Loans and advances to customers
+318,236
+285,959
+318,236
+285,959
+statutory deposits for insurance operations
+31 December
+Balances with the Central Bank and
+457,524
+483,891
+457,524
+other financial institutions
+Cash and amounts due from banks and
+851,510
+16,192
+1,206,471
+21,911
+775,098
+775,098
+16,192
+1,243,768
+847,198
+483,891
+31 December
+31 December
+31 December
+476,103
+Note 1
+Investment income and
+service fee
+175,338
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
+The following table shows an analysis of financial instruments recorded at fair value by level of the fair
+value hierarchy:
+14,837
+Investment income
+Unconsolidated structured entities
+31 December 2017
+(in RMB million)
+476,103
+1,337,658
+Carrying amount
+Securitization
+59,223
+2,426
+The Group's
+maximum
+exposure
+Interest held by the Group
+2,426
+Investment income and
+service fee
+Assets management products
+managed by affiliated entities
+Assets management products
+managed by third parties
+Size
+Financial assets held under resold agreements
+Investment income
+508,770
+Fair values
+Carrying values
+(in RMB million)
+The following table sets out the carrying values and fair values of the Group's major financial instruments
+by classification:
+(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS
+The Group's financial instruments mainly consist of cash and amounts due from banks and other financial
+institutions, term deposits, bonds, funds, stocks, loans, borrowings, deposits from other banks and financial
+institutions, customer deposits and payables to brokerage customers, etc.
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Wealth management products
+managed by affiliated entities.
+Wealth management products
+managed by third parties
+Ping An Insurance (Group) Company of China, Ltd. 291
+The Group's interest in unconsolidated structured entities are recorded as wealth management investments
+under financial assets at fair value through profit or loss, financial assets at fair value through other
+comprehensive income and financial assets at amortized cost and beneficial right under trust schemes
+under financial assets held under resold agreements.
+Note 1: These assets management products and wealth management products are sponsored by third party financial institutions and the
+information related to size of these structured entities were not publicly available.
+Investment income
+26,545
+26,545
+Note 1
+service fee
+Investment income and
+3,030
+3,030
+Annual Report 2018
+92,951
+175,338
+92,951
+Fair value of financial assets and liabilities not carried at fair value
+The assets and liabilities of the investment-linked business are not included in the above financial assets
+and liabilities.
+271,673
+183,097
+271,673
+183,097
+Other liabilities
+8,522
+9,779
+555,701
+8,522
+451,283
+556,875
+9,779
+Bonds payable
+Accounts payable
+1,952,695
+2,114,344
+1,952,695
+2,114,344
+brokerage customers
+Customer deposits and payables to
+133,981
+The following describes the methodologies and assumptions used to determine fair values for those
+financial instruments which are not recorded at fair value in the financial statements, i.e., financial assets at
+amortized costs and loans and receivables.
+Financial assets and liabilities for which fair value approximates to carrying value
+For financial assets and financial liabilities that have a short term maturity (less than three months), it is
+assumed that the carrying amounts approximate to their fair values. This assumption is also applied to term
+deposits, and savings accounts without a specific maturity. For other variable rate instruments, adjustment
+are also made to reflect the subsequent changes in the market rate after initial recognition.
+Floating rate loans and advances to customers of the Group are repriced within one year, and the interest
+rates are adjusted according to the statutory interest rate announced by the PBC. Thus, the carrying
+amounts approximate to their fair values.
+99,296
+For the year ended 31 December 2018
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED)
+Fixed rate financial instruments
+The fair value of fixed rate financial assets and liabilities carried at amortized cost is estimated by
+comparing market interest rates when they were first recognized with current market rates for similar
+financial instruments. The estimated fair value of fixed interest bearing deposits is based on discounted
+cash flows using prevailing money market interest rates for financial products with similar credit risk and
+maturity. For quoted debts issued, the fair values are determined based on quoted market prices. For those
+debts issued where quoted market prices are not available, a discounted cash flow model is used based on
+a current interest rate yield curve appropriate for the remaining term to maturity and credit spreads.
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY
+The Group uses the following hierarchy for determining and disclosing the fair values of financial
+instruments:
+Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. A market is regarded
+as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
+group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring
+market transactions on an arm's length basis. The main quoted market price used for financial assets held
+by the Group is the current bid price. Financial instruments included in Level 1 comprise primarily equity
+investments, fund investments and bond investments traded on stock exchanges and open-ended mutual
+funds;
+Level 2: either directly (such as price) or indirectly (such as calculated based on price) other than quoted
+prices included within Level 1 that are observable for the asset or liability;
+189,028
+Level 3: inputs which are based on parameters other than observable market data (unobservable inputs).
+Valuation methods for Level 2 and Level 3 financial instruments
+For Level 2 financial instruments, valuations are generally using observable market inputs, or recent quoted
+market prices. The valuation providers typically gather, analyze and interpret information related to market
+transactions and other key valuation model inputs from multiple sources, and through the use of widely
+accepted internal valuation models, provide a theoretical quote on various securities. Debt securities are
+classified as Level 2 when they are valued at recent quoted price from Chinese interbank market or from
+public valuation service providers. The fair value of debt investments denominated in RMB is determined
+based upon the valuation results by the China Central Depository & Clearing Co., Ltd. All significant inputs
+are observable in the market.
+For Level 3 financial instruments, prices are determined based on the significance of the unobservable
+factors to the overall fair value measurement, and valuation methodologies such as discounted cash flow
+models and other similar techniques.
+294
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 293
+Annual Report 2018
+The level of fair value measurement is determined by the lowest level input that is significant to the
+entire measurement. As such, the significance of a particular input should be considered from an overall
+perspective in the fair value measurement.
+133,981
+450,142
+Assets sold under agreements to repurchase
+31 December
+Fair values
+Carrying values
+69,829
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+189,028
+Accounts receivable
+22,798
+72,061
+22,798
+Finance lease receivable
+165,214
+112,028
+165,214
+112,028
+Annual Report 2018
+292
+143,891
+69,829
+143,891
+31 December
+31 December
+(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED)
+2018
+780,530
+803,154
+780,530
+803,154
+Due to banks and other financial institutions
+14,060
+16,975
+14,060
+16,975
+Financial liabilities at fair value through profit or loss.
+17,950
+22,247
+17,950
+22,247
+31 December
+Derivative financial liabilities
+Other assets
+2017
+2018
+2017
+(in RMB million)
+99,296
+Financial liabilities
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+Total
+(2) NET DEBT RECONCILIATION:
+(in RMB million)
+This section sets out an analysis of net debt and movements in net debt of current year.
+Short term
+borrowings
+Long term
+borrowings
+Bonds payable
+Cash flows
+Balance as at 1 January 2018
+55. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
+(CONTINUED)
+(6,939)
+109,165
+302
+(1) KEY MANAGEMENT PERSONNEL COMPRISE THE COMPANY'S DIRECTORS, SUPERVISORS,
+AND SENIOR OFFICERS AS DEFINED IN THE COMPANY'S ARTICLES OF ASSOCIATION
+The summary of compensation of key management personnel for the year is as follows:
+56. COMPENSATION OF KEY MANAGEMENT PERSONNEL
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+686,708
+551,761
+82,331
+52,616
+90,310
+Balance as at 31 December 2018
+518
+1,154
+544
+Other non-cash movements
+Foreign exchange adjustments
+650,758
+40,674
+451,283
+106,899
+(27,987)
+(38,238)
+2,215
+(6,939)
+FINANCIAL STATEMENTS
+138,240
+Annual Report 2018
+76,289
+74,448
+Increase in investment contract liabilities for policyholders
+234,521
+213,435
+Increase in insurance contract liabilities
+721
+6,580
+Increase in insurance payables
+124,423
+62,110
+Increase in customer deposits and payables to brokerage customers
+(26,107)
+other financial institutions
+(Decrease)/Increase in amounts due to banks and
+(78,685)
+Increase in policyholder dividend payable
+Ping An Insurance (Group) Company of China, Ltd. 301
+6,969
+(Decrease)/Increase in assets sold under agreements to
+121,283
+206,260
+(36,886)
+(48,158)
+158,169
+254,418
+Net cash flows from operating activities
+Income tax paid
+Cash generated from operations
+49,604
+(68,564)
+(Decrease)/Increase in other liabilities
+7,787
+(7,940)
+repurchase of the banking and securities business
+6,406
+2018
+undertaking
+Salaries and other short term employee benefits after tax
+Individual income tax
+2,875
+4,172
+T
+44
+2
+1,940
+2,186
+-
+SUN Jianyi
+3,667
+5,190
+44
+2
+2,221
+2,923
+-
+MA Mingzhe (iii)
+income tax
+Total
+LEE Yuansiong (iv)
+-
+4,319
+4,003
+CAI Fangfang
+-
+16,012
+3,040
+3,335
+YAO Jason Bo
+2,852
+4,309
+69
+Individual
+64
+1,940
+2,208
+-
+REN Huichuan
+6,178
+8,401
+37
+42
+-
+28
+2017
+scheme
+Other
+employee
+benefits
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 303
+Annual Report 2018
+The long-term benefits attributed to year 2014 for key management personnel other than directors and
+supervisors were paid in 2017 as the required payment conditions had been fulfilled. The amount paid after
+tax was RMB2,447.5 thousand and was disclosed in the Announcement regarding the Resolutions of the
+Board of Directors of the Company dated 17 August 2017.
+The long-term benefits attributed to year 2015 for key management personnel other than directors and
+supervisors were paid in 2018 as the required payment conditions had been fulfilled. The amount paid after
+tax was RMB483.7 thousand and was disclosed in the Announcement regarding the Resolutions of the Board
+of Directors of the Company dated 21 August 2018.
+23
+32
+34
+24
+Salaries and other short term employee benefits after tax
+Individual income tax
+2017
+49
+73
+2018
+(in RMB million)
+(2) COMPENSATION OF KEY MANAGEMENT PERSONNEL OTHER THAN DIRECTORS AND
+SUPERVISORS IS AS FOLLOWS:
+Part of compensation of key management personnel is subject to deferred payment requirement for a
+period of 3 years in accordance with the 'Guidance of insurance company's compensation management'
+issued by the CIRC. Unpaid balances subject to deferred payment requirement were included in the total
+compensation payable to the key management personnel.
+The estimated amount of total compensation has been provided in the Group's 2018 financial statements.
+The total compensation for certain key management personnel has not yet been finalized in accordance
+with relevant policies. The remaining compensation will be disclosed in a separate announcement when
+approved.
+49
+76
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+56. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
+(3) DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+Housing
+allowance
+Discretionary
+bonuses(ii)
+Salaries
+Fees
+Remunerations
+of the company
+or its subsidiary
+of the affairs
+with the
+management
+services in
+connection
+Employer's
+contribution
+to a
+retirement
+benefit
+receivable
+in respect of
+director's other
+Emoluments
+director
+in respect of
+accepting
+office as
+received or
+receivable
+2018
+Directors
+(in RMB thousand)
+For the year ended 31 December 2018:
+The remuneration of every director and supervisor is set out below:
+received or
+Decrease/(Increase) in other assets
+Balances with the Central Bank
+(1,221)
+53. TRANSFERRED FINANCIAL ASSETS
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 299
+Annual Report 2018
+Part of the financial instruments transfer into Level 3 in the year 2018 and 2017 because of the change of the
+valuation inputs.
+During the year 2018, there were no significant transfers between Level 1 and Level 2 fair value
+measurements.
+Transfers
+1,446
+1,415
+31
+30
+30
+1,416
+1,415
+1
+Carried at fair value through profit or loss
+Available-for-sale
+Total
+The Group enters into transactions in the normal course of business by which it transfers recognized
+financial assets to third parties or to structured entities. In some cases where these transfers may give
+rise to full or partial derecognition of the financial assets concerned. In other cases where the transferred
+financial assets do not qualify for derecognition as the Group has retained substantially all the risks and
+rewards of these financial assets, the Group continued to recognize the transferred financial assets.
+Unrealized gains
+Transferred financial assets that do not qualify for derecognition include securitized loans and debt
+securities held by counterparties as collateral under repurchase agreement.
+Other transferred financial assets that do not qualify for derecognition mainly include debt securities
+held by counterparties as collateral under repurchase agreements. The counterparties are allowed to sell
+or repledge those securities sold under repurchase agreements in the absence of default by the Group,
+but has an obligation to return the securities at the maturity of the contract. If the securities increase or
+decrease in value, the Group may in certain circumstances require or be required to provide additional
+collateral. The Group has determined that it retains substantially all the risks and rewards of these
+securities and therefore has not derecognized them.
+(in RMB million)
+54. CASH AND CASH EQUIVALENTS
+Assets securitization
+Repurchase transactions
+(in RMB million)
+2,112
+4,299
+4,299
+2,112
+2,961
+2,961
+1,836
+1,836
+Carrying amount
+associated
+liabilities
+31 December 2017
+Carrying
+amount assets
+Carrying amount
+associated
+liabilities
+Carrying
+amount assets
+31 December 2018
+The following table analyses the carrying amount of the above mentioned financial assets transferred to
+third parties that did not qualify for derecognition and their associated financial liabilities:
+The Group's subsidiaries, Ping An Bank, Ping An Securities and Ping An Financial Leasing, entered into loan
+securitization transactions. The Group has determined that it retains substantially all the risks and rewards
+of certain securitized loans and therefore has not derecognized them.
+Realized gains
+(in RMB million)
+2017
+24,428
+2018
+to customers at fair
+value through other
+comprehensive income
+Loans and advances
+1,722
+697
+1,025
+2018
+income
+at fair value through
+other comprehensive
+Equity financial assets
+16,751
+921
+(148,319)
+153,923
+(1,000)
+11,226
+-
+2018
+3,414,352
+(3,376,952)
+(141)
+61,687
+10,709
+9,603
+(141)
+1,106
+(141)
+through other comprehensive income
+Loans and advances to customers at fair value
+921
+921
+Cash and amounts due from banks and other financial institutions
+Cash on hand
+9,929
+Total
+Unrealized gains
+Realized gains
+326
+Financial assets at fair value through profit or loss
+Debt financial assets at fair value through
+other comprehensive income
+(in RMB million)
+2018
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
+The gains or losses of level 3 financial instruments included in the statement of income for the year are
+presented as follows:
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+9,603
+Term deposits
+Due from banks and other financial institutions
+Placements with banks and other financial institutions
+131
+78,409
+52,105
+Operating profit before working capital changes
+Net impairment loss of financial assets
+1,709
+40,814
+581
+128
+11,167
+18,227
+946
+Others impairment loss on other assets
+Loan loss provisions, net of reversals
+Provision for doubtful debts and others, net
+Foreign exchange losses
+Interest expenses on non-banking operations
+716
+Fair value losses on available-for-sale equity investments
+(transfer from equity)
+(3,271)
+Changes in operating assets and liabilities:
+Decrease/(Increase) in balances with the Central Bank
+41,589
+(18,299)
+agreements of the banking and securities business
+(Increase)/Decrease in assets purchased under reverse repurchase
+(364)
+(206,451)
+(302,291)
+Increase in loans and advances to customers
+(651)
+Increase in reinsurers' share of insurance liabilities
+523
+(255)
+28,284
+(Increase)/Decrease in inventories
+49,779
+Decrease/(Increase) in accounts receivable
+(10,369)
+(21,456)
+Increase in premium receivables
+(41,146)
+57,442
+other financial institutions
+Decrease/(Increase) in amounts due from banks and
+(49,709)
+677
+Fair value losses/(gains) on investments at fair value through
+profit or loss
+(195,233)
+13,185
+2,534
+32,898
+41,899
+30,003
+53,667
+127,569
+112,574
+7,773
+4,228
+5,019
+6,800
+Annual Report 2018
+300
+The carrying amounts disclosed above approximate their fair values at year end.
+31 December 2017
+31 December 2018
+Total
+Financial assets held under resold agreements
+Bonds
+85,531
+93,008
+308,024
+308,664
+Investment income
+1
+38
+Losses on disposal of investment properties, property and
+equipment, intangible assets and settled assets
+2,394
+2,898
+Amortization of intangible assets
+5,618
+6,284
+(192,757)
+Depreciation
+134,740
+2017
+163,151
+2018
+Profit before tax
+(in RMB million)
+(1) RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH FLOWS FROM OPERATING
+ACTIVITIES:
+55. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
+Ping An Insurance (Group) Company of China, Ltd.
+Adjustments for:
+2,207
+XIONG Peijin
+26
+132
+518
+132
+518
+127
+503
+132
+518
+518
+132
+125
+495
+187
+778
+55
+23
+2,944
+4,169
+518
+58
+132
+132
+18
+397
+488
+GAO Peng (x)
+32
+370
+597
+PAN Zhongwu
+518
+Supervisors
+36,985
+244
+79
+311
+132
+518
+53
+208
+24,437
+24
+4,740
+6,297
+208
+OUYANG Hui (ix)
+518
+GE Ming
+518
+SUN Dongdong
+518
+WONG Oscar Sai Hung
+Stephen Thomas Meldrum
+518
+503
+income
+518
+LIU Chong
+518
+YANG Xiaoping
+495
+Soopakij CHEARAVANONT
+YIP Dicky Peter
+518
+WOO Ka Biu Jackson (ix)
+311
+33
+2,853
+4,068
+65
+23
+5,640
+7,397
+33
+2,959
+4,049
+3,806
+5,084
++4
+89
+98
+14,774
+16,637
+5,143
+Subtotal
+WANG Zhiliang (x)
+321
+263
+7
+PAN Zhongwu
+WANG Zhiliang
+LIN Lijun
+CAI Fangfang
+YAO Jason Bo
+REN Huichuan
+LEE Yuansiong
+SUN Jianyi
+Discretionary bonuses are determined on the achievement of targeted profit of the Company, the personal performance and
+approved by the compensation committee of the board of directors.
+MA Mingzhe
+(ii)
+Other non-monetary benefits include share purchase scheme, in 2015, the Company has adopted an employee share purchase
+scheme for the key employees of the Company and its subsidiaries. In 2018, the vesting condition of the shares purchased during the
+year 2015, 2016 and 2017 for attribution part of year 2018 was achieved. As at 27 April 2018, the shares of MA Mingzhe, SUN Jianyi, LEE
+Yuansiong, REN Huichuan, YAO Jason Bo, CAI Fangfang, LIN Lijun, WANG Zhiliang and PAN Zhongwu were allocated to personal
+accounts at respective employee's request and the closing price was RMB60.89 per share and the vested shares net of tax are
+summarised as follows:
+(i)
+(3) DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+56. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Name
+(iii)
+MA Mingzhe is the Chief Executive Officer of the Company.
+Shares
+306
+GAO Peng resigned as Employee Representative Supervisor on 6 August 2017, took over by WANG Zhiliang on the same day.
+WOO Ka Biu Jackson resigned as Independent Non-executive Director of the Company on 6 August 2017, took over by OUYANG Hui
+on the same day.
+(x)
+(ix)
+(viii) Stephen Thomas Meldrum resigned as Independent Non-executive Director of the Company on 23 May 2018.
+(vii) XIONG Peijin resigned as Non-executive Director of the Company on 23 May 2018.
+LIN Lijun resigned as Independent Non-executive Director of the Company on 23 May 2018.
+(vi) Wang Yongjian was appointed as Non-executive Director of the Company on 13 July 2018.
+(v)
+(iv) The long-term benefits attributed to year 2015 for LEE Yuansiong were paid in 2018 as the required payment conditions had been
+fulfilled. The amount after tax paid to LEE Yuansiong were RMB605.0 thousand respectively and was disclosed in the Announcement
+regarding the Resolutions of the Board of Directors of the Company dated 21 August 2018.
+6,842
+11,969
+1,757
+51,179
+115,511
+226,589
+101,314
+266,074
+226,589
+Ping An Insurance (Group) Company of China, Ltd. 305
+63 3 3 2 2
+Annual Report 2018
+41,174
+ZHANG Wangjin
+132
+518
+518
+GU Liji
+155
+634
+30
+480
+13
+954
+38
+13
+332
+1,085
+62
+24
+233
+496
+480
+120
+HUANG Baokui
+374
+139
+155
+15,804
+18,043
+6,659
+Total
+1,367
+4,189
+130
+50
+57
+1,030
+1,406
+1,516
+Subtotal
+132
+518
+518
+25,804
+1,940
+32
+32
+42
+214
+-
+214
+Stephen Thomas Meldrum (viii)
+134
+526
+526
+Subtotal
+OUYANG Hui
+526
+526
+GE Ming
+134
+526
+526
+SUN Dongdong
+134
+134
+526
+4,823
+15,146
+565
+942
+WANG Zhiliang
+322
+1,140
+68
+26
+27
+17,364
+376
+PAN Zhongwu
+Supervisors
+24,341
+37,910
+-
+211
+305
+61
+643
+526
+WONG Oscar Sai Hung
+132
+72
+265
+9
+5
+3
+62
+186
+-
+Soopakij CHEARAVANONT
+LIN Lijun (v)
+4,296
+59
+64
+4,625
+6,454
+37
+42
+26
+2,853
+518
+518
+132
+518
+518
+YIP Dicky Peter
+52
+205
+205
+XIONG Peijin (vii)
+63
+236
+236
+Wang Yongjian (vi)
+132
+518
+518
+LIU Chong
+130
+510
+510
+YANG Xiaoping
+17
+35
+78
+1,637
+Directors
+(in RMB thousand)
+income tax
+Total
+undertaking
+Individual
+or its subsidiary
+of the company
+MA Mingzhe (iii)
+accepting
+office as
+director
+of the affairs
+in respect of
+to a
+retirement
+benefit
+Other
+employee
+benefits
+Housing
+allowance
+Discretionary
+bonuses(ii)
+Salaries
+Fees
+scheme
+2,817
+2,258
+SUN Jianyi
+7
+221222
+181
+487
+LIN Lijun
+1,939
+2,118
+CAI Fangfang
+3,039
+3,222
+YAO Jason Bo
+1,829
+2,119
+REN Huichuan
+3,589
+3,772
+LEE Yuansiong
+1,939
+2,102
+with the
+management
+30
+services in
+connection
+received or
+receivable
+44
+941
+1,585
+1,538
+Subtotal
+130
+510
+510
+61
+HUANG Baokui
+510
+510
+ZHANG Wangjin
+132
+518
+518
+GU Liji
+775
+130
+146
+4,315
+1,489
+Employer's
+contribution
+Remunerations
+Emoluments
+2017
+For the year ended 31 December 2017:
+(3) DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+56. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+304
+25,830
+42,225
+357
+366
+105
+16,087
+18,949
+6,361
+Total
+received or
+receivable
+in respect of
+director's other
+at fair value through
+other comprehensive
+Ping An Insurance (Group) Company of China, Ltd.
+Additions
+At 1 January
+(in RMB million)
+2017
+Available-for-sale
+financial assets
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 297
+Annual Report 2018
+8,118
+85,266
+Additions
+1,416
+40
+(775)
+(112,161)
+2,756
+97,487
+4,721
+89,971
+81,853
+4,721
+8,118
+2017
+2018
+9,929
+Disposals
+Transfers into Level 3
+Transfers out of Level 3
+Debt financial assets
+171,299
+30
+2,168
+(3,302)
+14,096
+(61,072)
+119,147
+100,232
+Annual Report 2018
+298
+At 31 December
+Total gains in income
+Additions
+Disposals
+At 1 January
+(in RMB million)
+At 31 December
+At 1 January
+(in RMB million)
+At 31 December
+Total gains in income
+Settlement
+Issue
+Disposals
+At 1 January
+(in RMB million)
+At 31 December
+Total gains in other comprehensive income
+Total gains in income
+Carried at fair value through profit or loss
+At 31 December 2018/2017
+For the year ended 31 December 2018
+Transfers into Level 3
+Financial assets
+(in RMB million)
+555,701
+555,701
+489,499
+489,499
+66,202
+66,202
+Total
+Bonds payable
+Financial liabilities
+2,097,405
+2,097,405
+93,554
+1,963,798
+40,053
+Total
+93,554
+1,963,798
+40,053
+Financial assets at amortized cost
+Total gains in income
+Total fair value
+Level 3
+31 December 2018
+Level 2
+Level 1
+(in RMB million)
+(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
+The following table shows an analysis of financial instruments not recorded at fair value but for which fair
+value is disclosed by level of the fair value hierarchy:
+52. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
+(CONTINUED)
+Annual Report 2018
+Held-to-maturity
+Bonds
+Financial assets
+Financial liabilities
+Total
+Disposals
+Additions
+At 1 January 2018/2017
+Change in accounting policy
+(in RMB million)
+Reconciliation of movements in Level 3 financial instruments measured at fair value is as follows:
+Financial assets and liabilities for which fair value approximates carry value are not included in the above
+disclosure.
+450,142
+450,142
+381,170
+68,972
+381,170
+68,972
+At 31 December 2017/2016
+31 December 2017
+Level 2
+376
+1,206,471
+376
+1,157,439
+1,157,439
+48,656
+48,656
+Total fair value
+Level 3
+Bonds payable
+Level 1
+Total
+1,206,471
+Customer deposits and payables to brokerage customers
+Ping An Good Doctor
+Accounts receivables and other receivables
+317
+6,539
+15,786
+4,104
+1,720
+11,022
+3,468
+Ping An Healthcare Technology
+441
+Accounts receivables and other receivables
+42
+Customer deposits and payables to brokerage customers
+452
+Accounts payables and other payables
+19
+Accounts receivables and other receivables
+Accounts payables and other payables
+18,789
+Ping An Insurance (Group) Company of China, Ltd.
+Accounts payables and other payables
+9
+Other expenses to
+128
+1
+322
+655
+In 2016, in addition to transactions and balances stated above, the Group transferred 100% share holding
+of Gem Alliance Limited to Lufax, which issued convertible bonds amounting to US$1,953.8 million to the
+Group as the consideration. As at 31 December 2018, the Group still held these convertible bonds.
+308
+Annual Report 2018
+17,501
+58. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
+CP Group Ltd.
+Customer deposits and payables to brokerage customers
+Lufax
+31 December 2018
+1
+31 December 2017
+2
+Customer deposits and payables to brokerage customers
+Loans and advances to customers
+(3) THE SUMMARY OF BALANCES OF THE GROUP WITH RELATED PARTIES IS AS FOLLOWS:
+(in RMB million)
+OneConnect
+Available-
+for-sale
+Loans and advances to customers
+9,467
+The Group leases office premises and staff quarters under various rental agreements. Future minimum lease
+payments under non-cancellable operating leases are as follows:
+(in RMB million)
+Within 1 year
+1 to 5 years
+More than 5 years
+(3) CREDIT COMMITMENTS
+(in RMB million)
+Bank acceptances
+Guarantees issued
+Letters of credit issued
+Subtotal
+Unused limit of credit cards and loan commitments
+Total
+Credit risk weighted amounts of credit commitments
+31 December 2018
+31 December 2017
+6,124
+6,902
+Other revenues from
+3,545
+3,593
+6,897
+5,922
+3,304
+Accounts payables and other payables
+Accounts receivables and other receivables
+Annual Report 2018
+41
+3,046
+267
+336
+Ping An Insurance (Group) Company of China, Ltd. 309
+FINANCIAL STATEMENTS
+Customer deposits and payables to brokerage customers
+Notes to Consolidated Financial Statements
+59. COMMITMENTS
+(1) CAPITAL COMMITMENTS
+The Group had the following capital commitments relating to property development projects and
+investments:
+(in RMB million)
+Contracted, but not provided for
+Authorized, but not contracted for
+(2) OPERATING LEASE COMMITMENTS
+31 December 2018
+31 December 2017
+For the year ended 31 December 2018
+Interest expenses to
+1
+OneConnect
+1
+1
+1
+-
+2
+RMB22,000,001 RMB25,000,000
+RMB25,000,001 - RMB28,000,000
+-
+12,278
+Under PRC tax regulations, individual income tax is calculated at progressive rates with a cap of 45%.
+The effective income tax rates of the five highest paid individuals in Mainland China of the Group
+were approximately 41.67%-42.97% (2017: 30.04%-43.45%) for 2018 and the average effective tax rate was
+approximately 41.90% (2017: 39.70%).
+58. SIGNIFICANT RELATED PARTY TRANSACTIONS
+(1) THE COMPANY'S RELATED PARTIES WHERE SIGNIFICANT INFLUENCE EXISTS
+INCLUDING CERTAIN SHAREHOLDERS ARE SET OUT BELOW:
+Name of related parties
+Charoen Pokphand Group Co., Ltd. ('CP Group Ltd.')
+Shenzhen Investment Holdings Co. Ltd.
+Relationship with the Company
+Parent of shareholders
+Shareholder
+As at 31 December 2018, CP Group Ltd. indirectly held 9.19% equity interests in the Company and is the
+largest shareholder of the Company.
+Annual Report 2018
+1
+2017
+Ping An Insurance (Group) Company of China, Ltd. 307
+2018
+-
+57. FIVE HIGHEST PAID INDIVIDUALS
+The five individuals whose emoluments were the highest in the Group were not included in the key
+management members (2017: 3) whose emoluments were reflected in the analysis presented in Note 56.
+Details of emoluments of the remaining highest paid individuals are as follows:
+(in RMB million)
+2018
+90
+Salaries and other short term employee benefits after tax
+2017
+35
+The number of non-key management personnel whose emoluments after tax fell within the following bands
+is as follows:
+RMB7,000,001 - RMB10,000,000
+RMB10,000,001
+-
+RMB13,000,000
+RMB13,000,001 RMB16,000,000
+RMB16,000,001
+-
+RMB19,000,000
+RMB19,000,001
+RMB22,000,000
+FINANCIAL STATEMENTS
+Notes to Consolidated Financial Statements
+For the year ended 31 December 2018
+48
+39
+211
+490
+2,467
+2,246
+746
+898
+216,071
+133
+Other expenses to
+1,285
+Ping An Healthcare Technology
+Interest expenses to
+Other revenues from
+49
+81
+490
+Other expenses to
+32
+25
+25
+1
+58. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
+(2) THE SUMMARY OF SIGNIFICANT RELATED PARTY TRANSACTIONS IS AS FOLLOWS:
+(in RMB million)
+CP Group Ltd.
+Premiums income from
+Claims expenses to
+Rental income from
+Goods purchased from
+Lufax
+Interest revenue from
+Interest income from
+Other revenues from
+Other expenses to
+Ping An Good Doctor
+Interest expenses to
+Other revenues from
+2018
+2017
+39
+2-22
+24
+4
+1
+Interest expenses to
+13,996
+106
+1,359
+■Millward Brown & WPP
+Ranked No. 43 on the Brand ZTM Top 100 Most
+Valuable Global Brands list, again No. 1 among
+global insurance brands, and No. 3 among global
+financial brands on the list
+Ranked No. 8 on the Brand ZTM Top 100 Most
+Valuable Chinese Brands list, again the highest-
+ranking Chinese insurance brand on the list, and
+No. 2 among Chinese financial institutions on the
+list
+Brand Finance
+Ranked No. 1 on the Brand Finance Insurance 100
+2018 list
+■Interbrand
+Ranked No. 6 on the Best China Brands 2018 list
+316
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+72,250
+395
+12,164
+2,347
+178
+BRAND
+128,737
+The Annual Responsibility & Contribution Award
+The Most Respected Enterprise in China for 17
+consecutive years
+Best Investor Day
+Best Corporate Governance
+Best IR Professionals
+Best ESG/SRI Metrics
+Best CEO - MA Mingzhe
+Best CFO - YAO Jason Bo
+■The Chamber of Hong Kong Listed Companies
+Hong Kong Corporate Governance Excellence
+Awards 2018
+■ Corporate Governance Asia Magazine
+Best Investor Relations Company
+Asia's Best CEO - MA Mingzhe
+CORPORATE SOCIAL RESPONSIBILITY
+■ People's Daily
+A Recommended Case of Targeted Poverty
+Alleviation
+■World Economic and Environmental Conference
+The International Carbon-Value Award 2018 - The
+Green Responsibility Award
+■The Economic Observer
+■Southern Weekly
+Best IR Team
+As at 31 December 2018
+442
+(346)
+policy
+Change in accounting
+202,695
+Total
+profits
+59,072
+395
+12,164
+2,251
+76
+As at 31 December 2017 128,737
+Retained
+General
+reserve
+Surplus
+reserve fund
+Others
+reserves
+(48)
+442
+(346)
+- 46
+As at 1 January 2018
+150
+(33,270)
+(33,270)
+150
+Share purchase scheme
+Others
+Dividend declared
+Other comprehensive
+income
+46,402
+202,693
+59,118
+46,402
+Profit for the year
+395
+12,164
+2,251
+28
+128,737
+(2)
+■Institutional Investor (US)
+CORPORATE GOVERNANCE
+Most Honored Company in Asia
+29,238
+29,238
+income
+Other comprehensive
+Dividend declared
+Appropriations to
+surplus reserves
+Share purchase scheme
+Other capital reserve
+pick-up from
+associates and jointly
+controlled entities
+(172)
+(172)
+-- (19,194)
+Profit for the year
+(19,194)
+191,693
+395
+Share
+investment
+(in RMB million)
+premium
+reserve
+Others
+Surplus
+reserve fund
+General
+reserve
+Retained
+profits
+Total
+As at 1 January 2017
+128,737
+248
+1,121
+11,366
+49,826
+798
+135
+(798)
+According to the Company's articles of association, the Company shall set aside 10% of its net profit
+determined in its statutory financial statements, prepared in accordance with PRC Accounting Standards,
+to a statutory surplus reserve fund. The Company can cease such profit appropriation to this fund
+if its balance reaches 50% of the Company's registered share capital. The Company may also make
+appropriations from its net profit to the discretionary surplus reserve fund provided the appropriation is
+approved by a resolution of the shareholders. These reserves cannot be used for purposes other than those
+for which they are created. Profits are used to offset prior year losses before allocations to such reserves.
+Subject to resolutions passed in shareholders' meetings, the statutory surplus reserve fund, discretionary
+surplus reserve fund and capital reserve can be transferred to share capital. The balance of the statutory
+surplus reserve fund after transfers to share capital shall not be less than 25% of the registered capital.
+In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic
+or other losses as incurred by companies operating in the insurance, banking, trust, securities, futures
+and fund businesses. The Group's respective entities engaged in such businesses would need to make
+appropriations for such reserves based on their respective year-end profit or risk assets, as determined in
+accordance with PRC Accounting Standards, and based on the applicable PRC financial regulations, in their
+annual financial statements. Such reserves are not available for profit distribution or transfer to capital.
+In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
+is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
+Standards and (ii) the retained profits determined in accordance with IFRSS.
+Ping An Insurance (Group) Company of China, Ltd. 315
+FINANCIAL STATEMENTS
+Honors and Awards
+In 2018, Ping An maintained its leading brand value, received
+wide recognition and praise, and won various honors and
+awards from domestic and foreign rating agencies and
+media in respect of comprehensive strength, corporate
+governance, and corporate social responsibility.
+CORPORATE STRENGTH
+■ Fortune
+Ranked No. 29 on the Fortune Global 500 list,
+and No. 5 among the global financial services
+companies
+■ Fortune China
+Ranked No.4 on the Fortune China 500 list, and
+maintained the first place among Chinese insurers
+and among mixed-ownership companies
+■ Forbes
+Ranked No.10 on the Forbes Global 2000 list and
+No.1 among global insurance conglomerates, and
+again topped the list of Chinese insurers
+■Institutional Investor (US)
+(2) RESERVE MOVEMENT OF THE HOLDING COMPANY (CONTINUED):
+64. BALANCE SHEET AND RESERVE MOVEMENT OF THE HOLDING COMPANY
+(CONTINUED)
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+135
+1,145
+1,145
+Others
+(150)
+(150)
+As at 31 December 2017
+premium
+1,037
+19,439
+2,251
+12,164
+395
+59,072
+202,695
+314
+Annual Report 2018
+76
+(in RMB million)
+128,737
+Share
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 311
+Annual Report 2018
+The employees of the Group are entitled to participate in and make contributions to various government
+sponsored funds for housing purposes. The Group contributes on a monthly basis to these funds based
+on certain percentages of the salaries of the employees. The Group's liability in respect of these funds is
+limited to the contributions payable in each period.
+(2) HOUSING BENEFITS
+(1) PENSION
+12,072
+10,666
+4,784
+2,274
+5,092
+5,614
+2,196
+2,778
+For the year ended 31 December 2018
+31 December 2017
+60. EMPLOYEE BENEFITS (CONTINUED)
+The Group makes monthly contributions for medical benefits to the local authorities in accordance with
+relevant local regulations for the employees. The Group's liability in respect of employee medical benefits is
+limited to the contributions payable in each period.
+64. BALANCE SHEET AND RESERVE MOVEMENT OF THE HOLDING COMPANY
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+312
+Certain comparative figures have been reclassified or restated to conform to the current year's
+presentation.
+63. COMPARATIVE FIGURES
+Except for the item listed above, the Group does not have significant events after the reporting period
+need to disclose.
+On 12 March 2019, the Board of Directors of the Company approved the Resolution of the Profit Distribution
+Plan for 2018, and declared a final cash dividend of 2018 in the amount of RMB1.10 per share as disclosed in
+Note 16.
+DESCRIPTION OF PROFIT DISTRIBUTION
+62. EVENTS AFTER THE REPORTING PERIOD
+No provision has been made for pending assessments, lawsuits or possible violations of contracts when
+the outcome cannot be reasonably estimated or management believes the probability is low or remote. For
+pending lawsuits, management also believes that any resulting liabilities will not have a material adverse
+effect on the financial position or operating results of the Group or any of its subsidiaries.
+Owing to the nature of the insurance, bank and other financial services business, the Group is involved in
+contingencies and legal proceedings in the ordinary course of business, including, but not limited to, being
+the plaintiff or the defendant in litigations and arbitrations. Legal proceedings mostly involve claims on the
+Group's insurance policies and other claims. Provision has been made for probable losses to the Group,
+including those claims where management can reasonably estimate the outcome of the lawsuits taking into
+account any applicable legal advice.
+61. CONTINGENT LIABILITIES
+The Group has adopted an employee share purchase scheme for the key employees of the Company and
+its subsidiaries. Refer to Note 36 for more details.
+(4) SHARE PURCHASE SCHEME
+(3) MEDICAL BENEFITS
+31 December 2018
+60. EMPLOYEE BENEFITS
+More than 5 years
+588,263
+140,336
+190,531
+353,957
+397,732
+55,763
+83,757
+50,039
+62,821
+248,155
+251,154
+31 December 2017
+31 December 2018
+FVOCI
+22,257
+494,293
+194,921
+176,352
+Credit commitments disclosed in the table above do not include the financial guarantees accounted for as
+insurance contracts by the Group.
+1 to 5 years
+Within 1 year
+(in RMB million)
+The Group leases its investment properties under various rental agreements. Future minimum lease
+receivables under non-cancellable operating leases are as follows:
+27,682
+34,429
+31 December 2017
+(1) BALANCE SHEET OF THE HOLDING COMPANY:
+31 December 2018
+Contracted but not provided for
+The Group's investment commitments to jointly controlled entities are as follows:
+(4) INVESTMENT COMMITMENTS
+59. COMMITMENTS (CONTINUED)
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+310
+(5) OPERATING LEASE RENTAL RECEIVABLES
+(in RMB million)
+The employees of the Group are mainly covered by various defined contribution pension plans. The Group
+makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
+relevant government authorities that are responsible for the pension liability to retired employees. Under
+such plans, the Group has no other significant legal or constructive obligations for retirement benefits
+beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
+Group life insurance but the amounts involved are insignificant.
+Cash and amounts due from banks and other financial institutions
+Financial assets held under resold agreements
+1,165
+1,073
+25
+25
+11,800
+9,119
+220,975
+234,351
+59,072
+72,250
+143,623
+143,821
+18,280
+18,280
+233,965
+10,217
+244,568
+12,990
+233,965
+Assets
+(2) RESERVE MOVEMENT OF THE HOLDING COMPANY:
+Financial
+assets at
+64. BALANCE SHEET AND RESERVE MOVEMENT OF THE HOLDING
+COMPANY (CONTINUED)
+For the year ended 31 December 2018
+Notes to Consolidated Financial Statements
+FINANCIAL STATEMENTS
+Ping An Insurance (Group) Company of China, Ltd. 313
+Annual Report 2018
+Director
+YAO Jason Bo
+Director
+Director
+MA Mingzhe
+The balance sheet of the Company was approved by the Board of Directors on 12 March 2019 and was
+signed on its behalf.
+244,568
+4,469
+SUN Jianyi
+73
+Equity
+Equity and liabilities
+Total assets
+Other assets
+Property and equipment
+Investments in subsidiaries and associates
+Equity investments
+Fixed maturity investments
+Debt financial assets at fair value through
+Financial assets at amortized cost
+Financial assets at fair value through profit or loss
+21,539
+2,436
+31 December 2018
+31 December 2017
+Share capital
+Reserves
+other comprehensive income
+Total equity
+199,543
+191,041
+Retained profits
+75
+3,001
+13,842
+2,143
+14,351
+7,088
+Other liabilities
+9,536
+Total equity and liabilities
+Liabilities
+Total liabilities
+Due to banks and other financial institutions
+9,396
+Income tax payable
+Ping An Healthcare and Technology Company Limited, an associate
+of the Company
+Ping An Wanjia Healthcare Investment Management Co., Ltd., a
+subsidiary of Ping An Good Doctor
+Autohome Inc., a subsidiary of Ping An Financial Technology
+Ping An Medical and Healthcare Management Co., Ltd., an associate
+of the Company
+Shenzhen Qianhai Credit Centre Co., Ltd., a subsidiary of Ping An
+Financial Technology
+Shanghai Jahwa United Co., Ltd., a subsidiary of Ping An Life
+Ping An E-wallet Electronic Commerce Co., Ltd., a subsidiary of Ping
+An Financial Technology
+OneConnect Financial Technology Co., Ltd., an associate of the
+Company
+Shenzhen Qianhai Financial Assets Exchange Co., Ltd., a subsidiary
+of Lufax Holding
+CP Group Ltd.
+The general name of companies under Lufax Holding engaging in
+businesses including financing guarantee, commercial factoring, and
+small lending
+Shanghai Lujiazui International Financial Asset Exchange Co., Ltd., a
+subsidiary of Lufax Holding
+Lufax Holding Co., Ltd., an associate of the Company
+Shenzhen Ping An Financial Services Co., Ltd., a subsidiary of Ping
+An Financial Technology
+Ping An Technology (Shenzhen) Co., Ltd., a subsidiary of the
+Company
+Ping An Real Estate
+Ping An Urban-Tech
+Shanghai Jahwa
+Autohome
+Ping An Urban Construction Technology (Shenzhen) Co., Ltd., a
+subsidiary of Ping An Financial Technology
+Qianhai Credit Centre
+Chongqing Financial Assets Exchange Co., Ltd., a subsidiary of Lufax
+Holding
+Ping An Real Estate Co., Ltd., a subsidiary of the Company
+Former CIRC
+318
+Ping An Health Konnect
+HKEX Listing Rules
+SSE
+HKEX
+PBC
+Ministry of Finance
+CBIRC
+Former CBRC
+The former China Insurance Regulatory Commission
+China Securities Regulatory Commission
+All premiums received from the policies underwritten by the
+Company, which are prior to the significant insurance risk testing
+and separating of hybrid risk contracts
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+The No.2 Interpretation of Accounting Standards for Business
+Enterprises (Cai Kuai [2008] No.11) issued by the Ministry of Finance
+The Accounting Standards for Business Enterprises and the other
+relevant regulations issued by the Ministry of Finance of the People's
+Republic of China
+Chinese Renminbi unless otherwise specified
+CSRC
+Written Premium
+IFRS
+No.2 Interpretation
+CAS
+RMB
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Charoen Pokphand Group Co., Ltd., the flagship company of CP
+Group
+OneConnect
+Ping An Futures
+Ping An Good Doctor
+Ping An Property & Casualty Insurance Company of China, Ltd., a
+subsidiary of the Company
+Ping An Life Insurance Company of China, Ltd., a subsidiary of the
+Company
+Ping An Insurance (Group) Company of China, Ltd.
+Ping An Securities (Hong Kong)
+Ping An Pioneer Capital
+Ping An Caizhi
+SSE Listing Rules
+Ping An Financial Technology
+Ping An Financial Leasing
+Ping An Overseas Holdings
+SDB, Original SDB, Shenzhen
+Development Bank
+Ping An Bank
+Ping An Asset Management
+Ping An Securities
+Ping An New Capital
+Ping An Trust
+Ping An Annuity
+Ping An Health
+Ping An Property & Casualty
+Ping An Life
+Ping An, Company, the Company,
+Group, the Group, Ping An Group
+In this report, unless the context otherwise indicates, the following expressions shall have the following
+meanings:
+Definitions
+Ping An Health Insurance Company of China, Ltd., a subsidiary of the
+Company
+Wanjia Healthcare
+Ping An Annuity Insurance Company of China, Ltd., a subsidiary of
+the Company
+Shenzhen Ping An New Capital Investment Co., Ltd., a subsidiary of
+Ping An Trust
+E-wallet
+QEX
+CQFAE
+Puhui Business
+Lufax
+Lufax Holding
+Ping An Financial Services
+Ping An Technology
+Definitions
+OTHER INFORMATION
+Ping An Insurance (Group) Company of China, Ltd. 317
+Annual Report 2018
+Ping An of China Securities (Hong Kong) Co., Ltd., a subsidiary of
+Ping An Securities
+Ping An Pioneer Capital Co., Ltd., a subsidiary of Ping An Securities
+Ping An Caizhi Investment Management Co., Ltd., a subsidiary of
+Ping An Securities
+Ping An Futures Co., Ltd., a subsidiary of Ping An Securities
+Shenzhen Ping An Financial Technology Consulting Co., Ltd., a
+subsidiary of the Company
+Ping An International Financial Leasing Co., Ltd., a subsidiary of the
+Company
+China Ping An Insurance Overseas (Holdings) Limited, a subsidiary
+of the Company
+Original Shenzhen Development Bank Co., Ltd., an associate of the
+Company since May 2010, became a subsidiary of the Company in
+July 2011. On July 27, 2012, its name was changed to "Ping An Bank
+Co., Ltd."
+Ping An Bank Co., Ltd., a subsidiary of the Company
+Ping An Asset Management Co., Ltd., a subsidiary of the Company
+Ping An Securities Co., Ltd., a subsidiary of Ping An Trust
+China Ping An Trust Co., Ltd., a subsidiary of the Company
+Corporate Governance Code
+SECRETARY OF THE BOARD OF DIRECTORS
+Model Code
+PricewaterhouseCoopers Zhong Tian LLP
+AUDITORS AND PLACES OF BUSINESS
+Domestic Auditor
+Limited
+PricewaterhouseCoopers Consultants (Shenzhen)
+CONSULTING ACTUARIES
+LOCATION OF REGULAR REPORTS AVAILABLE
+FOR INSPECTION
+www.hkexnews.hk
+www.sse.com.cn
+REGULAR REPORTS
+WEBSITES FOR THE PUBLICATION OF THE
+11/F, PricewaterhouseCoopers Center,
+Securities Times and Securities Daily
+China Securities Journal,
+DISCLOSURE OF A SHARE
+DESIGNATED MEDIA FOR INFORMATION
+www.pingan.cn
+COMPANY WEBSITE
+518033
+POSTAL CODE
+Futian District,
+No. 5033 Yitian Road,
+Ping An Finance Center,
+Shanghai Securities News,
+2 Link Square, 202 Hu Bin Road,
+Huangpu District, Shanghai, PRC
+Name of Certified Public Accountants
+Expertise Makes Life Simple
+PING AN
+This report is printed on environmental friendly paper
+manufactured from elemental chlorine-free pulp and acid free.
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+320
+Shenzhen
+The Bank of New York Mellon
+AMERICAN DEPOSITARY SHARES REGISTRAR
+Wan Chai, Hong Kong
+183 Queen's Road East,
+17M Floor, Hopewell Centre,
+Computershare Hong Kong Investor Services Limited
+H SHARE REGISTRAR
+Central, Hong Kong
+The Landmark, 15 Queen's Road,
+17th Floor, Edinburgh Tower,
+DLA Piper Hong Kong
+LEGAL ADVISOR
+PricewaterhouseCoopers
+22/F, Prince's Building,
+Central, Hong Kong
+International Auditor
+Kevin Chen HUANG
+YEUNG SHEUNG YUEN
+47th, 48th, 109th, 110th, 111th and 112th Floors,
+PLACE OF BUSINESS
+Shenzhen
+Futian District,
+LEGAL REPRESENTATIVE
+Ping An of China
+Short name of the Company (Chinese/English)
+中國平安
+Ping An Insurance (Group) Company of China, Ltd.
+Full name of the Company (Chinese/English)
+中國平安保險(集團)股份有限公司
+REGISTERED NAMES
+Corporate Information
+OTHER INFORMATION
+Ping An Insurance (Group) Company of China, Ltd. 319
+Annual Report 2018
+The Articles of Association of Ping An Insurance (Group) Company
+of China, Ltd.
+The Model Code for Securities Transactions by Directors of Listed
+Companies as contained in Appendix 10 to the HKEX Listing Rules
+The Securities and Futures Ordinance (Chapter 571 of the Laws of
+Hong Kong)
+The Corporate Governance Code as contained in Appendix 14 to
+the HKEX Listing Rules (formerly known as the Code on Corporate
+Governance Practices)
+The Rules Governing the Listing of Stocks on Shanghai Stock
+Exchange
+The Rules Governing the Listing of Securities on The Stock Exchange
+of Hong Kong Limited
+The Shanghai Stock Exchange
+The Stock Exchange of Hong Kong Limited
+The People's Bank of China
+Ministry of Finance of the People's Republic of China
+China Banking and Insurance Regulatory Commission
+The former China Banking Regulatory Commission
+Articles of Association
+MA Mingzhe
+SFO
+TYPE OF SECURITY AND LISTING PLACE
+H share The Stock Exchange of Hong Kong Limited
+No. 5033 Yitian Road,
+Ping An Finance Center,
+47th, 48th, 109th, 110th, 111th and 112th Floors,
+REGISTERED ADDRESS
+PR@pingan.com.cn
+IR@pingan.com.cn
+E-MAIL
++86 755 8243 1029
+FAX
++86 400 8866 338
+TELEPHONE
+LIU Cheng
+REPRESENTATIVE OF SECURITIES AFFAIRS
+YAO Jun
+COMPANY SECRETARY
+SHENG Ruisheng
+YAO Jun
+SUN Jianyi
+AUTHORIZED REPRESENTATIVES
+H share Ping An of China 2318
+601318
+A share 中國平安
+STOCK SHORT NAME AND CODE
+A share The Shanghai Stock Exchange
+Board Office of the Company
+In 2019, Ping An will forge
+ahead while remaining true to
+our original aspiration. Under
+the strategy of empowering
+financial services with
+technologies, empowering
+ecosystems with technologies,
+and empowering financial
+services with ecosystems,
+we will create greater
+value with expertise in five
+ecosystems, namely financial
+services, health care, real
+estate services, auto services,
+and smart city services. The
+traditional Chinese painting,
+reproduced with 3D lines,
+integrates a smart city with the
+beauty of nature to illustrate
+our philosophy of empowering
+the future with "finance +
+technology."
+2010 Annual Report
+11.2
+Debt schemes
+156,501
+5.6
+140,292
+5.7
+Wealth management products (1)
+285,663
+10.2
+242,761
+9.9
+Equity financial assets
+Stocks
+231,801
+8.3
+272,474
+11.1
+Equity funds
+44,276
+1.6
+33,226
+1.4
+Wealth management products (1)
+32,183
+3.4
+83,203
+4.0
+111,219
+139,169
+5.7
+Term deposits
+Debt financial assets
+Bond investments
+Bond funds
+Preferred stocks
+201,251
+7.2
+163,074
+6.6
+1.2
+1,270,765
+1,071,688
+43.7
+43,541
+1.6
+11,973
+0.5
+79,881
+2.9
+78,546
+3.2
+Policy loans
+45.4
+39,760
+1.6
+Unlisted equities
+December 31, 2018
+December 31, 2017
+(in RMB million)
+Carrying value
+%
+Carrying value
+%
+Financial assets carried at fair value through
+profit or loss (1)
+Fixed income
+Stocks
+23 112
+Other equity financial assets
+515,114
+45,771
+1.9
+310,886
+31,102
+1.3
+78,757
+2.8
+10,729
+0.4
+44,276
+1.6
+18.5
+4.1
+Equity funds
+Notes: (1) Wealth management products include trust plans from trust companies, products from insurance asset management
+companies, and wealth management products from commercial banks.
+(2) Other investments mainly include statutory deposits for insurance operations, three-month or longer-term financial assets
+purchased under reverse repurchase agreements, and financial derivatives.
+49,757
+1.8
+38,785
+1.6
+Long-term equity stakes
+93,225
+3.3
+58,413
+2.4
+Investment properties
+53,356
+INVESTMENT PORTFOLIO (BY ACCOUNTING MEASUREMENT)
+1.9
+2.0
+Other investments(2)
+24,669
+0.9
+28,341
+1.2
+Total investments
+2,794,620
+100.0
+2,449,474
+100.0
+47,769
+116,532
+%
+Carrying value
+Auto insurance
+42,994
+34,596
+24.3
+Non-auto insurance
+3,834
+2.904
+Accident and health insurance
+2,509
+1,473
+32.0
+70.3
+Total commission expenses
+49,337
+38,973
+26.6
+Commission expenses as a
+percentage of premium
+income (%)
+19.9
+18.0
+1.9 pps
+In 2018, commission expenses of insurance
+operations grew by 26.6% year on year, while their
+proportion in premium income climbed by 1.9 pps
+year on year, mainly due to premium income growth
+and intensified competition.
+Administrative expenses
+Change (%)
+(in RMB million)
+2017
+2018
+Net investment yield (3) (%)
+Total investment yield (3) (%)
+5.4
+5.8
+-0.4 pps
+4.4
+5.3
+-0.9 pps
+Auto insurance
+91,634
+89,563
+2.3
+(in RMB million)
+Non-auto insurance
+14,842
+45.0
+Accident and health insurance
+3,148
+2,069
+52.2
+Total claim expenses
+116,305
+106,474
+9.2
+Commission Expenses of Insurance Operations
+21,523
+Notes: (1) Net investment income includes interest income from
+deposits and debt financial assets, dividend income
+from equity financial assets, operating lease income
+from investment properties, and the share of profits
+and losses of associates and jointly controlled entities.
+(2) Realized gains include capital gains from securities
+investments.
+(3) Net exchange gains or losses on investment assets
+denominated in foreign currencies are excluded from
+computing of the above yields. Average investment
+assets used as the denominator are computed in line
+with principles of the Modified Dietz method.
+In 2018, affected by factors including the lower
+dividend income from equity investments and
+the larger scale of the portfolio, the property and
+casualty insurance business investment portfolio's
+net investment yield was 5.4%, down by 0.4 pps
+year on year. In 2018, capital markets at home and
+abroad fluctuated widely. After Ping An Property
+& Casualty implemented the new accounting
+standards for financial instruments, assets carried
+at fair value through profit or loss surged, while
+gains or losses from fair value changes became
+more volatile. The property and casualty insurance
+business investment portfolio's total investment
+income dropped by 5.6% year on year and the total
+investment yield was 4.4%, down 0.9 pps year on
+In 2018, administrative expenses rose by 6.9% year
+on year, mainly driven by continued growth in
+insurance business.
+Note: (1) Effective tax rate = income tax/profit before tax.
+In 2018, Ping An Property & Casualty's effective
+income tax rate grew by 7.9 pps year on year,
+largely due to the impact of an increase in income
+tax induced by the rising commission rates and
+business growth.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 31
+Business Analysis
+Investment Portfolio of Insurance Funds
+As of December 31, 2018, the Company's investment portfolio of insurance
+funds grew to RMB2.79 trillion by 14.1% from the beginning of 2018.
+In 2018, the portfolio's net investment yield and total investment yield
+were 5.2% and 3.7% respectively. Under the old accounting standards for
+financial instruments, the portfolio's total investment yield was 5.2%.
+The Company maintained robust asset-liability management, lengthened
+asset durations, and continued to narrow the duration gap between assets
+and liabilities. The Company improved risk management mechanisms,
+further refined risk limits, increased the monitoring frequency, and
+enhanced early warning and risk review to ensure that overall investment
+risks are controllable.
+The insurance funds are comprised of investable
+funds from the life and health insurance business
+and the property and casualty insurance business.
+7.9 pps
+The year 2018 witnessed mixed performance of the
+world's major economies. China's economy grew
+steadily and underwent some changes. The central
+government upheld a new development philosophy
+and continued the supply-side structural reform.
+China furthered the reform and opening-up, and
+strengthened infrastructure. The quality of China's
+economic growth improved. However, China's
+stock markets became more volatile and bond
+rates dropped due to the Fed's rate hikes, offshore
+market fluctuations, China-U.S. trade frictions, and
+risks in A share pledging.
+We constantly improved internal controls for
+investment risk management. First, the Company
+strengthened risk management under the C-ROSS,
+reviewed and enhanced risk appetite management,
+and optimized control mechanisms of market risks
+and credit risks. We implemented the C-ROSS Phase
+Il project to improve the solvency management
+system. Second, we carried out asset-liability
+risk management, improved the asset-liability
+management mechanism, and estimated and
+managed the asset-liability mismatch risk. Third,
+we continued to implement the framework for
+managing and monitoring insurance fund operations,
+and strictly conducted special risk management
+including five-category asset classification to ensure
+compliance of insurance fund utilization. Fourth,
+we explored Al technologies and applied smart
+early warning and knowledge graphs to investment
+risk management processes for efficient, effective
+investment risk warning and monitoring.
+32
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+INVESTMENT PORTFOLIO (BY CATEGORY)
+We optimized the presentation of investment assets for 2018 on the basis of risk management to provide
+clearer information, and restated comparable figures for the same period in 2017.
+December 31, 2018
+(in RMB million)
+Cash and cash equivalents
+Carrying value
+%
+We continued to improve asset allocation of
+insurance funds. The Company conducted in-depth
+macro-economic research, tracked hot issues and
+analyzed market rates. Based on these efforts,
+the Company increased allocation to tax-exempt
+bonds including central and local government
+bonds as well as long-duration low-risk bonds
+including financial bonds issued by policy banks.
+The Company further narrowed the duration
+gap between assets and liabilities to improve
+asset-liability matching although this remains
+challenging given a shortage of long duration
+assets in the domestic market. In addition, we
+dynamically adjusted proportions of equity assets in
+the portfolio, increased long-term equity stakes, and
+diversified the portfolio to reduce impacts of equity
+market volatility.
+54
+29.2
+Change
+year.
+2018
+2017
+Change (%)
+Operating expenses
+42,253
+Tax and surcharges
+1,284
+39,794
+1,349
+6.2
+Income Tax
+37.1
+(4.8)
+Effective tax rate (¹) (%)
+receivables and others
+1,223
+743
+64.6
+Total
+44,760
+41,886
+6.9
+2018
+2017
+Impairment losses on
+81,195
+2.9
+3,886
+7.20
+7.00
+2.08
+9.4
+5.75
+6.83
+4.23
+100.0
+5.84
+7.46
+3.96
+Notes: (1) The debt schemes and debt wealth management products were classified by industry in line with Shenyin Wanguo's industry
+classification.
+(2) Non-banking financial services refer to financial institutions other than banks, including insurers, asset management companies,
+and financial leasing companies.
+(3) Some industries have been grouped into "others" as they account for small proportions.
+There has been no default on the debt schemes and debt wealth management products held by Ping An,
+and overall risks are controllable. Over 98% of the debt schemes and trust plans held by Ping An have AAA
+external ratings, and about 2% of them have AA+ or AA external ratings. While some high-credit entities
+do not need credit enhancement for their financing, most of the assets have guarantees or collateral. In
+terms of industry and geographic distribution, we avoid high-risk industries and regions. Our target assets
+are mainly in the non-banking financial services, real estate, and expressway industries in developed and
+coastal areas including Beijing, Shanghai and Guangdong. In terms of investment timing and returns, Ping
+An seized time windows of large supplies of high-quality assets to boost overall portfolio yields.
+Equity wealth management products
+As at December 31, 2018, our investment in equity wealth management products totaled RMB32,183 million,
+accounting for 1.2% of the investable assets. The equity wealth management products held by Ping An are
+mainly products from insurance asset management companies. The underlying assets of these products are
+mainly tradable shares of domestic and foreign high-quality companies, indicating no significant liquidity
+risk. Private equity funds account for a tiny proportion; the exposure to them is small, and their underlying
+assets are mainly from the central and local governments' partnerships, with risks being controllable.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 35
+MANAGEMENT DISCUSSION AND ANALYSIS
+36
+86
+Business Analysis
+Banking Business
+2.7
+2.33
+5.40
+6.14
+5.50
+7.30
+2.89
+Infrastructure and development zones
+5.5
+5.69
+10.44
+7.59
+Others (water supply, environmental
+protection, railway...)
+Non-banking financial services
+Ping An Bank maintained stable, healthy business growth and realized a
+revenue of RMB116,716 million, up 10.3% year on year, and a net profit of
+RMB24,818 million, up 7.0% year on year.
+Real estate
+Others
+Total
+6.6
+5.84
+8.22
+4.74
+30.8
+5.73
+7.27
+3.77
+22.2
+Coal mining
+Ping An Bank made significant progress in its strategic transformation
+toward retail banking. In 2018, retail banking accounted for 53.0% and 69.0%
+of the Bank's revenue and net profit, up 8.9 pps and 1.4 pps year on year
+respectively. The proportions of retail deposits and loans rose by 4.7 pps
+and 8.0 pps from the beginning of 2018 to 21.7% and 57.8% respectively.
+Ping An Bank continues to de-risk itself. The Bank's deviation of non-
+performing loans was 97%, down 46 pps from the beginning of 2018. Both
+the balance and the percentage of loans more than 90 days overdue
+declined from the beginning of 2018.
+Ping An Bank's core tier 1 capital adequacy ratio was 8.54%, up 0.26 pps
+from the end of 2017. On January 25, 2019, the Bank issued RMB26 billion
+worth of A-share convertible corporate bonds to supplement the core tier
+1 capital.
+BUSINESS OVERVIEW
+December
+31, 2018
+December
+31, 2017
+Change
+(%)
+Deposits and loans (1)
+Loans and advances
+Including: Retail loans
+Corporate loans
+1,997,529
+1,704,230
+17.2
+1,154,013
+849,035
+35.9
+(in RMB million)
+843,516
+(1.4)
+Deposits
+2,128,557
+2,000,420
+6.4
+Including: Retail deposits
+461,591
+340,999
+35.4
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+855,195
+6.3
+In accordance with the Ministry of Finance's Circular
+on Releasing Financial Report Formats for Financial
+Companies for 2018 (Cai Kuai [2018] No.36), we
+reclassified the net interest revenue generated by
+financial assets carried at fair value through profit or
+loss from net interest revenue into net non-interest
+revenue, and did not restate comparable figures for
+the same period in 2017.
+(2)
+In 2018, Ping An Bank continued to implement the
+strategy of "technology-driven breakthroughs
+in retail banking and enhancement of corporate
+banking." The Bank attached great importance to
+boosting business, improving customer experiences,
+and enhancing risk management through
+technological innovation and application. Besides,
+the Bank enhanced its capability of serving the real
+economy and managed financial risks in an all-round
+manner, laying a solid foundation for future
+development.
+Ping An Bank maintained stable, healthy business
+growth. In 2018, the Bank's revenue increased by
+10.3% year on year to RMB116,716 million. Net profit
+rose by 7.0% year on year to RMB24,818 million.
+(in RMB million)
+Operating results
+Net profit
+2018
+2017 Change (%)
+24,818
+23,189
+7.0
+Net interest revenue
+Net non-interest revenue (2)
+74,745
+Loans and advances, deposits, and their components
+are exclusive of interest receivable.
+74,009
+41,971
+31,777
+32.1
+Operating efficiency
+Cost-to-income ratio (%)
+Net interest margin (%)
+30.32
+29.89
+0.43 pps
+2.35
+2.37
+-0.02 pps
+Notes: (1)
+1.0
+Change (%)
+Electric power
+9.73
+(2) Others include long-term equity stakes and investment properties.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 33
+MANAGEMENT DISCUSSION AND ANALYSIS
+Business Analysis
+Investment Portfolio of Insurance Funds
+INVESTMENT INCOME
+(in RMB million)
+Net investment income (1)
+2018
+2017
+Change (%)
+126,707
+121,340
+Realized gains (2)
+280
+4,118
+4.4
+(93.2)
+Profits/losses from fair
+value changes
+(37,099)
+648
+Impairment losses
+Notes: (1) The Company follows the new accounting standards for financial instruments from January 1, 2018. In accordance with rules
+for transition to the new accounting standards for financial instruments, the Company does not need to restate comparable
+figures for the same period in 2017.
+100.0
+2,449,474
+30.2
+0.2
+Financial assets carried at fair value through
+other comprehensive income (1)
+411,074
+14.7
+Financial assets measured at amortized cost (1)
+Others (2)
+1,721,808
+61.6
+146,624
+5.2
+Available-for-sale financial assets
+(387)
+Held-to-maturity investment
+Total investments
+2,794,620
+100.0
+106,203
+4.3
+-
+675,148
+27.6
+881,657
+36.0
+740,695
+Loans and receivables
+44
+Total investment income
+89,501
+As at December 31, 2018, the Company held
+RMB162,040 million worth of corporate bonds,
+which accounted for 5.8% of the investable assets.
+The overall credit rating has improved compared
+with the end of 2017. About 92% of the corporate
+bonds have AA and higher ratings while about 80%
+have AAA ratings. Credit quality of the portfolio
+remained sound as these corporate bonds are
+secure and risks are under control. For investment
+in corporate bonds, the Company carried out
+comprehensive risk management covering asset
+allocation, admission management and dynamic
+monitoring. The Company conducted strict rating
+and admission management, and reviewed and
+adjusted ratings to ensure that credit ratings
+reasonably reflected the credit profiles of bond
+issuers. Moreover, the Company conducted ex-ante
+monitoring of corporate bonds with potential risks
+on the basis of a name list, and established a rapid
+response mechanism to deal with negative opinions.
+The Company effectively identified and reported
+high-risk corporate bonds to enhance early warning
+and risk management.
+Debt schemes and debt wealth management
+products
+As at December 31, 2018, our investment in debt
+schemes and debt wealth management products
+totaled RMB442,164 million, accounting for 15.8%
+of the investable assets. We manage risks in debt
+schemes and debt wealth management products
+at three levels. The first level is asset allocation.
+We have developed a set of effective, robust asset
+allocation models. While keeping the overall risk
+within the risk appetite, we formulated a strategic
+asset allocation plan for each account, and set
+upper and lower limits on proportions of asset
+allocation. In tactical asset allocation, we gave
+opinions on capital allocation to non-standard debt
+instruments according to funds in each account,
+the return and liquidity demands, and similar
+assets' relative attractiveness. The second level is
+asset selection. The selection of assets is subject
+to strict internal and external requirements as
+well as the approval by clients. When selecting
+assets, we prefer projects located in developed
+areas and industry leaders encouraged by China's
+industry policies. The third level is post-investment
+management. Our post-investment management
+team closely monitors the assets. We have
+established a multi-dimensional risk warning
+framework covering all investment areas, assets, and
+instruments to ensure that overall investment risks
+are thoroughly assessed and controllable.
+34
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Structure and yield distribution of debt schemes and debt wealth management products
+Investment
+Nominal yield
+Maturity
+Corporate bonds in capital markets
+Industry
+(%)
+(year)
+Remaining
+maturity (year)
+Infrastructure
+34.9
+5.77
+9.12
+5.17
+Expressway
+16.5
+5.88
+proportion (%)
+5.41
+To allow comparison with peers, under the old
+accounting standards for financial instruments, the
+portfolio's total investment yield was 5.2%.
+(3) Net exchange gains or losses on investment assets
+denominated in foreign currencies are excluded from
+computation of the above yields. Average investment
+assets used as the denominator are computed in line
+with principles of the Modified Dietz method.
+(4) The Company follows the new accounting standards
+for financial instruments from January 1, 2018. The
+investment income data above for the current
+Reporting Period is under the new accounting
+standards for financial instruments. In accordance with
+rules for transition to the new accounting standards for
+financial instruments, the Company does not need to
+restate comparable figures for the same period in 2017.
+126,150
+N/A
+N/A
+(29.1)
+Total investment income
+under the old accounting
+standards for financial
+instruments
+125,970
+126,150
+Net investment yield (3) (%)
+5.2
+5.8
+In 2018, the portfolio's net investment yield was 5.2%,
+down 0.6 pps year on year. This was mainly due to
+the lower dividend income from equity assets and
+the larger scale of the portfolio. As domestic and
+foreign capital markets fluctuated widely, assets
+carried at fair value through profit or loss surged.
+Meanwhile, gains and losses from fair value changes
+became more volatile under the new accounting
+standards for financial instruments. The Company's
+total investment yield was 3.7%, down 2.3 pps year
+on year.
+Total investment yield (3³) (%)
+6.0
+Total investment yield under
+the old accounting
+standards for financial
+instruments (3)(%)
+5.2
+(0.1)
+-0.6 pps
+-2.3 pps
+6.0
+-0.8 pps
+Notes: (1) Net investment income includes interest income from
+deposits and debt financial assets, dividend income
+from equity financial assets, operating lease income
+from investment properties, and the share of profits
+and losses of associates and jointly controlled entities.
+(2) Realized gains include capital gains from securities
+investments.
+3.7
+2017
+December 31, 2017
+(in RMB million)
+7,478
+2,257
+1,324
+82.3%
+5,726
+Corporate property and
+casualty insurance
+14,834,461
+5,701
+2,687
+1,470
+8,422
+150
+6,325
+Solvency Margin
+As at December 31, 2018, Ping An Property &
+Casualty's solvency margin ratio met the regulatory
+requirement. The solvency margin ratio of Ping An
+Property & Casualty increased from the beginning of
+2018 as Ping An Property & Casualty implemented a
+proactive risk management strategy.
+(in RMB million)
+Change
+2018
+2017
+(%)
+Premium income
+Reinsurance premium income
+247,444
+215,984
+94.4%
+14.6
+600,225,807
+8,522
+liabilities
+Auto insurance
+55,213,568
+181,768
+170,117
+2018
+4,354
+97.4%
+132,594
+Guarantee insurance
+335,613
+Accidental injury insurance
+33,012
+13,789
+2,205
+88.6%
+46,411
+Liability insurance
+644,610,594
+8,463
+6,492
+3,309
+656
+89.9%
+19,414
+ratio
+82
+(22.6)
+insurance operations
+(49,337)
+(38,973)
+26.6
+Minimum capital
+38,236
+36,141
+5.8
+Administrative expenses (1)
+(44,760)
+(41,886)
+8.9
+6.9
+Core solvency margin ratio
+revenue
+6,964
+6,226
+11.9
+(%) (regulatory
+requirement ≥50%)
+201.5
+194.0
+7.5 pps
+Underwriting profit
+Reinsurance commission
+106
+78,595
+Actual capital
+Total premium income
+247,526
+216,090
+14.5
+Net earned premiums
+211,918
+188,219
+12.6
+December
+December
+Change
+85,557
+(in RMB million)
+31, 2017
+(%)
+Claim expenses
+(116,305)
+(106,474)
+9.2
+Core capital
+77,057
+70,095
+9.9
+Commission expenses of
+31, 2018
+8,480
+contract
+Underwriting
+profit
+44.6
+Market share(1) (%)
+21.0
+20.5
+0.5 pps
+Including:
+auto insurance (%)
+23.2
+22.7
+0.5 pps
+Combined ratio (%)
+Profit before tax
+Net profit
+ROE (%)
+6,547
+96.0
+-0.2 pps
+19,515
+18,899
+3.3
+12,274
+16.7
+13,372
+20.0
+(8.2)
+-3.3 pps
+Note: (1) The market share was calculated in accordance with the
+PRC insurance industry data published by the CBIRC.
+Annual Report 2018
+96.2
+Ping An Insurance (Group) Company of China, Ltd. 27
+9,465
+44.4
+Business Analysis
+Property and Casualty Insurance Business
+In 2018, Ping An Property & Casualty's premium income grew by 14.6% year
+on year, 3.0 pps faster than the market average. The combined ratio was
+96.0%, improved by 0.2 pps year on year; the ROE was 16.7%, indicating
+high quality of business.
+Ping An Property & Casualty enhanced claims services to build
+differentiated advantages. Through upgraded "510 City Superfast Onsite
+Investigation" services, we processed 96.4% of the urban onsite auto claim
+investigations within 5-10 minutes in daytime in 2018. The net promoter
+score at auto claim points of contact stayed above 80%.
+Ping An Property & Casualty applied new technologies to online customer
+development and improved the service system. The "Ping An Auto Owner"
+app had over 55 million registered users, over 34 million of whom linked
+their auto use with the app. In December 2018, the app had over 11 million
+monthly active users, topping the list of auto service apps in China.
+BUSINESS OVERVIEW
+The Company conducts property and casualty
+insurance business mainly through Ping An Property
+& Casualty. The business scope of Ping An Property
+& Casualty covers all lawful property and casualty
+insurance businesses including auto insurance,
+corporate property and casualty insurance,
+engineering insurance, cargo insurance, liability
+insurance, guarantee insurance, home contents
+insurance, accident and health insurance, as well as
+international reinsurance business.
+In 2018, China's economic growth remained stable
+and transformations continued. New growth drivers
+emerged for property and casualty insurance due
+to recoveries of domestic and foreign upstream
+industries including infrastructure, high technology
+and equipment manufacturing. Three provinces,
+namely Shaanxi, Guangxi and Qinghai, fully
+liberalized auto insurance premium rates after the
+third reform of commercial auto insurance premium
+rates was conducted in seven regions. Commercial
+auto insurance premium rates declined on average,
+unlocking reform dividends, benefiting customers,
+and improving the market environment.
+Ping An Property & Casualty maintained excellent
+business quality with strong management and risk
+screening capabilities. Ping An Property & Casualty
+is the second largest property and casualty insurer
+in China by premium income. In 2018, Ping An
+Property & Casualty's profit before tax rose 3.3%
+year on year. The net profit decreased 8.2% year on
+year due to the impact of an increase in income tax
+induced by the rising commission rates and business
+growth. Ping An Property & Casualty steadily
+expanded its share in the auto insurance market by
+following a robust marketing strategy, and realized
+fast growth in the non-auto insurance business. Ping
+An Property & Casualty worked with other members
+of the Group to expand the credit guarantee
+insurance business, keeping risks under control by
+means of fintechs.
+(in RMB million)
+Accident and health
+insurance
+2018
+Premium income
+Including:
+247,444
+215,984
+14.6
+auto insurance
+181,768
+170,508
+6.6
+Non-auto insurance
+56,211
+38,929
+2017 Change (%)
+Combined
+MANAGEMENT DISCUSSION AND ANALYSIS
+Business Analysis
+Expense ratio (¹) (%)
+Loss ratio (2) (%)
+41.1
+39.6
+1.5 pps
+54.9
+56.6
+-1.7 pps
+Combined ratio (%)
+96.0
+96.2
+-0.2 pps
+2017 Change (%)
+Notes: (1) Expense ratio = (commission expenses of insurance
+business administrative expenses - reinsurance
+commission revenue)/net earned premiums.
+Operating Data by Product Type
+Among all insurance products offered by Ping An
+Property & Casualty in 2018, the top five sources of
+premium income were auto insurance, guarantee
+insurance, liability insurance, accidental injury
+insurance and corporate property and casualty
+insurance. Premium income of these five insurance
+segments accounted for 95.9% of Ping An Property &
+Casualty's total premium income in 2018.
+Ping An Insurance (Group) Company of China, Ltd.
+Insurance
+Insured
+Premium
+Earned
+(in RMB million)
+amount
+income
+premium
+Claim
+expenses
+(2) Loss ratio = claim expenses/net earned premiums.
+28
+2018
+Combined Ratio
+Property and Casualty Insurance Business
+Under the Group's "technology + ecosystem"
+strategy, Ping An Property & Casualty improved
+the claim efficiency and built differentiated
+advantages. For eight years in a row, Ping An
+Property & Casualty has been honored as China's
+"No.1 Auto and Property & Casualty Insurance
+Brand" for industry-leading customer satisfaction.
+Ping An Property & Casualty provided "superfast,
+convenient, considerate" claims services under
+a "customer-centric" standard, keeping the net
+promoter score above 80% among auto claim
+points of contact. The “510 City Superfast Onsite
+Investigation" capabilities were enhanced. The
+"smart grid" can help Ping An Property & Casualty
+dynamically assign investigators based on their
+locations. The "smart management engine" can
+automatically plan the optimal paths. Under an
+OMO (Online Merge Offline) service model, 96.4%
+of daytime auto accidents in cities requiring onsite
+investigation were investigated offline within 5-10
+minutes. Moreover, Ping An Property & Casualty
+assessed losses within seconds via "Al-based
+image recognition" and settled claims online via
+"facial recognition." In this way, Ping An Property
+& Casualty provided 62.6% of its customers with
+one-stop video-based claims self-services.
+Ping An Property & Casualty applied technologies
+to online customer development and improved
+the service system. Ping An Property & Casualty
+provided one-stop auto use services and diverse auto
+aftermarket services via the "Ping An Auto Owner"
+app. As at December 31, 2018, the "Ping An Auto
+Owner" app had over 55 million registered users,
+over 34 million of whom linked their auto use with
+the app. Of these 34 million users, 26 million are auto
+insurance customers of Ping An Property & Casualty.
+In December 2018, the app had over 11 million
+monthly active users, topping the list of auto service
+apps in China. In 2018, Ping An Property & Casualty
+upgraded its Digital Risk System (DRS). The "online +
+offline" risk management system provided customers
+with superb service experience. In 2018, Ping An
+Property & Casualty provided over 12,000 corporate
+customers with disaster/loss prevention services
+and over 400 major engineering projects with risk
+monitoring services. These included 13 major disaster
+warning/prevention campaigns and 550,000 early
+warnings messages. In this way, Ping An Property &
+Casualty reduced underwriting risks and delivered
+business growth. Ping An Property & Casualty
+sought innovative risk management technologies by
+combining business with research. Ping An Property
+& Casualty built the industry's first fire experiment
+base and developed a fire control loT (Internet of
+things) platform to help customers reduce risks.
+Annual Report 2018
+NUMBER OF CUSTOMERS AND DISTRIBUTION
+NETWORK
+Ping An Property & Casualty distributed the
+products mainly through its network of 42 branches
+and over 2,660 sub-branches, sales service outlets
+and business outlets across China. Main distribution
+channels included in-house sales representatives,
+sales agents, insurance brokers, telemarketing,
+online marketing and cross-selling.
+Number of customers
+(in thousand)
+Retail
+Corporate
+Total
+Distribution network
+Number of direct sales
+representatives (1)
+December 31, December 31,
+2018
+2017
+Change (%)
+Ping An Property & Casualty pursued innovation and
+development, gaining expertise while maintaining
+strong profitability.
+60,577
+16.4
+1,959
+1,683
+16.4
+62,536
+53,746
+16.4
+9,272
+8,479
+9.4
+Note: (1) In 2018, Ping An Property & Casualty transformed the
+organizational structure for group business. The number
+of direct sales representatives of group business was
+calculated under the new organizational structure. And
+the data for 2017 was restated.
+52,063
+7,112
+91,633
+Comprehensive solvency
+17.4
+Shandong
+13,127
+11,158
+17.6
+Shanghai
+12,974
+13,568
+(4.4)
+Subtotal
+101,934
+87,190
+16.9
+Premium income in total
+247,444
+215,984
+14.6
+Reinsurance Arrangements
+Facing a developing global reinsurance market,
+Ping An Property & Casualty maintained a prudent
+approach to reinsurance and its close cooperation
+with reinsurance brokers and reinsurers. Ping An
+Property & Casualty fully leveraged reinsurance to
+scale up its underwriting and diversify operating
+risks. While ensuring the healthy and steady growth,
+Ping An Property & Casualty also empowered
+reinsurance with technologies. The reinsurance
+business of Ping An Property & Casualty received
+strong support in key reinsurance markets in
+Europe, the U.S., Bermuda and Asia. Ping An
+Property & Casualty has been in close cooperation
+with nearly 100 reinsurance companies and
+reinsurance brokers worldwide, including China
+Property & Casualty Re, Swiss Re, Munich Re and
+Hannover Re.
+30
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+MANAGEMENT DISCUSSION AND ANALYSIS
+12,705
+14,920
+Zhejiang
+14.5
+Others
+17,530
+7.1
+12,499
+5.8
+40.3
+Premium income in total
+247,444
+100.0
+215,984
+100.0
+Total Investment Income
+14.6
+Below is a breakdown of premium income for our
+property and casualty insurance business by region:
+(in RMB million)
+Guangdong
+2018
+2017 Change (%)
+43,788
+34,799
+25.8
+Jiangsu
+17,125
+14,960
+In 2018, Ping An Property & Casualty transformed
+its channel-based business model from being
+sales-focused to an OMO model of services and
+operations to facilitate business transformation and
+strategic development.
+(in RMB million)
+2018
+2017
+58
+56.9
+fair value changes
+(1,032)
+44
+N/A
+Inward reinsurance premium
+82
+106
+(22.6)
+Impairment losses on
+91
+Investment assets
+(51)
+266.7
+Non-auto insurance
+82
+106
+19.2
+Total investment income
+11,016
+11,667
+(5.6)
+Claim expenses
+(187)
+(54.2)
+Accident and health insurance
+17.6
+Change (%)
+(in RMB million)
+2018
+2017
+Change (%)
+Ceded premium
+14,881
+14.294
+4.1
+Net investment income(¹)
+13,438
+Profit or losses from
+12,810
+Auto insurance
+6,895
+7,524
+(8.4)
+Realized income (2)
+(1,203)
+(1,136)
+5.9
+Non-auto insurance
+7,895
+6,712
+4.9
+27.3
+(22.6)
+10.9
+14.0
+-0.9 pps
+19
+120
+(84.2)
+Profit before tax
+19,515
+18,899
+3.3
+Income tax
+(7,241)
+(5.6)
+(5,527)
+Net profit
+12,274
+13,372
+(8.2)
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 29
+Business Analysis
+Property and Casualty Insurance Business
+Reconciliations between net profit in Ping An Property & Casualty's statutory financial statements and
+statements under the new standards are presented below to allow comparison with peers.
+(in RMB million)
+Change
+31.0
+2018
+5.3
+Total investment yield (%)
+Other net revenue and expenses
+58,915
+Combined ratio (%)
+96.0
+96.2
+margin ratio (%)
+(regulatory
+Total investment income (2)
+11,016
+11,667
+requirement ≥100%)
+223.8
+4.4
+217.5
+Average investment assets
+249,576
+219,006
+Notes: (1) Core solvency margin ratio = core capital/minimum
+capital; comprehensive solvency margin ratio = actual
+capital/minimum capital.
+(2) For details of Ping An Property & Casualty's solvency
+margin, please visit the Company's website (www.
+pingan.cn).
+FINANCIAL ANALYSIS
+In 2018, Ping An Property & Casualty's profit before
+tax rose 3.3% year on year to RMB19,515 million.
+Net profit was RMB12,274 million, down 8.2% year
+on year, mainly due to the impact of an increase in
+income tax induced by the rising commission rates
+and business growth.
+Notes: (1) Administrative expenses include administrative
+expenses and impairment losses on receivables and
+others under the segmented income statement.
+(2) Total investment income includes interest revenue from
+non-banking operations, investment income, share of
+profits and losses of associates and jointly controlled
+entities, impairment losses on investment assets and
+interest expenses on assets sold under agreements
+to repurchase and placements from banks and other
+financial institutions under the segmented income
+statement.
+(3) The 2018 data are financial results of implementing the
+new accounting standards for financial instruments.
+In accordance with rules for transition to the new
+accounting standards for financial instruments, the
+Company does not need to restate comparable figures
+for 2017.
+6.3 pps
+2017
+-0.2 pps
+Profit in statutory financial statements under the old accounting standards
+for financial instruments
+24.0
+50,488
+23.4
+17.7
+Agencies
+57,442
+23.2
+32,047
+14.8
+79.2
+Cross-selling
+48,903
+19.8
+39,192
+18.1
+24.8
+Direct selling
+37,167
+15.0
+22,843
+62.7
+Telemarketing and online channels
+(%)
+59,426
+Car dealers
+10.6
+%
+13,209
+(%)
+13,372
+(1.2)
+Investment income adjustments (1)
+(935)
+N/A
+Profit in financial statements under the new accounting standards
+for financial instruments (2)
+12,274
+13,372
+(8.2)
+26,976
+(2) In accordance with rules for transition to the new accounting standards for financial instruments, the Company does not need
+to restate comparable figures for 2017.
+Premium Income
+Below is a breakdown of premium income for our property and casualty insurance business by channel:
+Amount
+2018
+%
+2017
+Change
+Amount
+Notes: (1) Adjustments mainly arise from changes in classification, measurement, and impairment of financial assets under the new
+accounting standards for financial instruments.
+Amount
+(in RMB million)
+Fees and commission revenue
+Monthly average assets
+held in trust
+Change (%)
+Fees and commission
+expenses
+2018
+(in RMB million)
+Fee rate of assets held in
+trust (¹) (%)
+Results of Operation
+2017
+3,801
+651,302
+(11.4)
+588,788
+(9.6)
+0.65
+0.66
+-0.01 pps
+(116)
+(276)
+(58.0)
+3,685
+4,016
+4,292
+was 192.2% (regulatory requirement ≥100%), and
+the ratio of net capital to net assets was 82.8%
+(regulatory requirement ≥40%), meeting regulatory
+requirements.
+Ping An Asset Management maintained steady business growth. As at
+the end of 2018, the investment assets under management (AUM) reached
+nearly RMB2.89 trillion, up 8.3% from the beginning of the year.
+The Company provides trust services through Ping
+An Trust and Ping An New Capital.
+(345)
+24.3
+Total fee and commission
+(8.2)
+expense
+(8,065)
+(5,051)
+59.7
+Net fee and commission
+revenue
+31,297
+30,674
+2.0
+Annual Report 2018
+MANAGEMENT DISCUSSION AND ANALYSIS
+42
+Business Analysis
+Asset Management Business
+Ping An Trust strengthened risk management, devised new strategies, and
+adopted new business models.
+Ping An Securities continued to outperform peers by pursuing business
+transformation and building differentiated advantages with the support of
+Group's integrated financial services model and technology.
+Ping An Financial Leasing focused on leasing markets in mature industries,
+and developed innovative industry benchmarks including Ping An
+Healthcare Diagnostics Center. Ping An Financial Leasing recorded strong
+net profit growth of 64.7% year on year.
+TRUST BUSINESS
+Business Overview
+In 2018, China's economy remained stable and
+the economic structure improved. Committed to
+responsible investment, Ping An Trust connected
+customers to opportunities in "institutional asset
+management, boutique alternative investment
+banking, and trust business." Ping An Trust
+constantly enhances product, investment and risk
+management capabilities. Under the new strategies,
+Ping An Trust will focus on its core businesses
+including "financial services, infrastructure
+investment, private equity, and investment banking"
+in the coming years. Ping An Trust has been
+improving its capacity to provide excellent products
+and services. In financial services, Ping An Trust
+provided institutional investors including financial
+institutions with quality trust products and premium
+asset management services. In infrastructure
+investment, Ping An Trust focused on industries
+including urban infrastructure, transportation
+and energy. Ping An Trust channeled private
+capital to China's key infrastructure projects. In
+private equity, Ping An Trust developed business
+in consumption upgrade, health care, modern
+services, cutting-edge technologies and advanced
+manufacturing, facilitating upgrade of the real
+economy. In investment banking, Ping An Trust
+mainly provided small and medium-sized financial
+institutions with comprehensive asset and liability
+management services. Leveraging the Group's
+technologies, Ping An Trust improved its smart
+risk management platform to well manage risks
+and empower business. Ping An Trust continued
+to upgrade the risk management framework
+featuring full participation, full-process control and
+full coverage of business. As at December 31, 2018,
+it had RMB17,145 million in net capital, while the
+ratio of net capital to the total of all risk capital
+Ping An Insurance (Group) Company of China, Ltd. 41
+(4) The 2018 data are financial results of implementing the
+new accounting standards for financial instruments.
+In accordance with rules for transition to the new
+accounting standards for financial instruments, the
+Company does not need to restate comparable figures
+for the same period in 2017.
+(1,039)
+Fees and commission revenue
+(in RMB million)
+2018
+2017
+Change (%)
+Fees and commission revenue
+3,801
+4,292
+(11.4)
+Investment category
+1,406
+2,163
+(35.0)
+Financing category
+1,913
+1,499
+27.6
+Administrative category
+482
+630
+(23.5)
+(429)
+December
+Assets held in trust
+In 2018, net profit of the trust business dropped
+by 23.9% year on year due to: (a) year-on-year
+decreases in exits from projects and dividend
+income; and (b) a year-on-year decrease in net
+fees and commission revenue as Ping An Trust
+proactively adjusted its business mix to comply with
+the new regulations on asset management.
+Administrative expenses (2)
+Total investment income (3)
+Other net revenue and
+expense
+MANAGEMENT DISCUSSION AND ANALYSIS
+Annual Report 2018
+(1,319)
+(21.2)
+1,104
+2,236
+(50.6)
+163
+42
+288.1
+Profit before tax
+Income tax
+3,913
+4,975
+(21.3)
+(901)
+(1,018)
+(11.5)
+3,012
+3,957
+(23.9)
+Net fees and commission
+revenue
+Net profit
+Notes: (1) Fee rate of assets held in trust = fees and commission
+revenue/monthly average assets held in trust.
+(2) Administrative expenses include administrative
+expenses, and impairment losses on receivables and
+others under the segmented income statement.
+(3) Total investment income includes interest revenue from
+non-banking operations, investment income, share of
+profits and losses of associates and jointly controlled
+entities, impairment losses on investment assets, and
+interest expenses on assets sold under agreements
+to repurchase and placements from banks and other
+financial institutions under the segmented income
+statement.
+Ping An Insurance (Group) Company of China, Ltd.
+Others
+revenue
+(4,213)
+11.9
+30.32
+29.89
+0.43 pps
+Total interest expenses
+(88,143)
+(74,059)
+19.0
+Net interest revenue
+74,745
+74,009
+1.0
+Net Fee and Commission Revenue
+(in RMB million)
+2018
+2017
+Change (%)
+Fee and commission revenue
+Settlement fee revenue
+2,477
+2,392
+3.6
+Wealth management fee
+In 2018, as Ping An Bank increased investment
+31,616
+in strategic transformation and technology
+development, the cost-to-income ratio rose by 0.43
+pps from the beginning of 2018.
+35,391
+8.1
+(in RMB million)
+Other net non-interest revenue is comprised of
+investment income, gains and losses from fair value
+changes, foreign exchange gains and losses, other
+business revenue, asset disposal gains and losses
+and other incomes. In 2018, other net non-interest
+revenue increased sharply year on year to RMB10,674
+million.
+Interest expenses
+Due to the PBC
+(4,299)
+(2,671)
+61.0
+Cost-to-income ratio
+(in RMB million)
+2018
+2017
+Change (%)
+Due to financial institutions
+(18,686)
+(19,155)
+(2.4)
+Deposits
+(49,638)
+(37,875)
+31.1
+Bonds payable
+(15,520)
+(14,358)
+General and administrative
+expenses
+Cost-to-income ratio (%)
+52.5
+Loan impairment loss
+1,365
+Note: (1) Effective tax rate = income tax/profit before tax.
+Account management fee
+revenue
+149
+156
+(4.5)
+Others
+1,663
+2,200
+(24.4)
+Total fee and commission
+revenue
+39,362
+35,725
+10.2
+Fee and commission expense
+Agency commission
+expense
+(1,210)
+(493)
+145.4
+Bank card fee expense
+(6,426)
+(6.2)
+In 2018, loan impairment losses increased by 7.0%
+year on year.
+3,046
+Asset custody fee revenue
+3,411
+(60.0)
+Agency commission
+Income tax
+revenue
+4,123
+3,350
+23.1
+Bank card fee revenue
+25,266
+18,511
+36.5
+Effective tax rate (¹) (%)
+2018
+2017
+Change
+23.00
+23.11
+-0.11 pps
+Advisory fee revenue
+1,463
+2,659
+(45.0)
+2,856
+31, 2018
+December
+Change (%)
+(6) The 2018 data are financial results of implementing the
+new accounting standards for financial instruments.
+In accordance with rules for transition to the new
+accounting standards for financial instruments, the
+Company does not need to restate comparable figures
+for the same period in 2017.
+OTHER ASSET MANAGEMENT BUSINESSES
+The other asset management business represents
+results of companies including Ping An Asset
+Management, Ping An Financial Leasing, and Ping
+An Overseas Holdings.
+Ping An Asset Management
+Ping An Asset Management is responsible for
+domestic investment management business of the
+Company. Entrusted with the insurance funds of
+the Company, Ping An Asset Management also
+provides investment products and third-party asset
+management services to other investors through
+various channels.
+Amid changes in political and economic landscapes,
+Ping An Asset Management upheld the philosophies
+of value investing and prudence. Ping An Asset
+Management conducted in-depth macro-economic
+research, seized market opportunities, prevented
+market risks, and created value for customers.
+Ping An Asset Management gave full play to its
+advantages in alternative investment to support
+the real economy, facilitate development of the
+society and enhance people's livelihood. In addition
+to serving Ping An's insurance businesses, Ping
+An Asset Management continued to optimize the
+third-party asset management business mix, improve
+business quality and satisfy customers' demands.
+Third-party AUM declined because entrusted
+assets from banks shrank and growth in premium
+income slowed down due to tightening regulation
+and deleveraging. Following the promulgation of
+the new regulations on asset management, Ping
+An Asset Management, as a leading asset manager
+in China, will continue to improve its investment
+capability and risk management. Ping An Asset
+Management is committed to providing investors
+with professional, efficient and premium asset
+management services.
+As a leading asset manager in China, Ping An
+Asset Management applied new technologies to
+investment research, investment decision-making,
+trade execution, risk management and so on. Going
+forward, Ping An Asset Management will increase
+investment to facilitate technology-powered
+transformation and innovation. Ping An Asset
+Management will leverage technology to enhance
+its core competitiveness and gain differentiated
+advantages.
+44
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Results of Operation
+(in RMB million)
+2018
+2017
+Net profit
+2,662
+2,581
+Revenue from third-party
+asset management
+1,754
+1,888
+(in RMB million)
+Assets under management
+statement.
+Including: AUM of
+(5) Other expenses include interest expenses on assets
+sold under agreements to repurchase and placements
+from banks and other financial institutions, other
+expenses, impairment losses on investment assets,
+and non-operating gains under the segmented income
+(2) Other revenue includes other revenues and other
+gains, foreign exchange gains or losses and operating
+lease income from investment properties under the
+segmented income statement. Other revenue and other
+gains exclude non-operating gains.
+52.7
+53.5
+20.0
+(3.7)
+-0.8 pps
+Finance costs
+(1,125)
+(580)
+Other expenses (5)
+(4,113)
+(2,170)
+94.0
+89.5
+Profit before tax
+2,014
+2,579
+(21.9)
+(334)
+(456)
+(26.8)
+1,680
+2,123
+(20.9)
+Income tax
+Net profit
+Notes: (1) Total investment income includes interest revenue from
+non-banking operations, investment income and share
+of profits and losses of associates and jointly controlled
+entities under the segmented income statement.
+Investment income excludes operating lease income
+from investment properties.
+(3) Administrative expenses include administrative
+expenses and impairment losses on receivables and
+others under the segmented income statement.
+(4) Cost-to-income ratio = administrative expenses/
+(revenue other expenses).
+Cost-to-income ratio (4) (%)
+December
+31, 2018
+2,889,616
+Change (%)
+234,657
+177,111
+32.5
+0.89
+0.91
+-0.02 pps
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 45
+MANAGEMENT DISCUSSION AND ANALYSIS
+46
+Business Analysis
+Fintech & Healthtech Business
+Lufax Holding maintained steady profit growth in wealth management,
+retail lending and government finance by seeking innovations and ensuring
+compliance. Lufax Holding completed its Series C financing from world-
+renowned institutional investors at a post-money valuation of USD39,400
+million.
+Ping An Good Doctor (Stock Code: 01833.HK) provides online-merge-offline
+health care services for over 265 million registered users. In 2018, Ping An
+Good Doctor's revenue was RMB3,338 million, up 78.7% year on year; net
+loss was RMB913 million, down 8.9% from 2017.
+OneConnect serves more than 3,000 financial institutions as a fintech
+service platform covering the whole industry chain. In 2018, OneConnect
+completed Series A financing at a post-money valuation of USD7,500
+million. Ping An HealthKonnect raised USD1,150 million in early 2018 at a
+post-money valuation of USD8,800 million.
+The Company conducts fintech & healthtech
+business via companies including Lufax Holding,
+Ping An Good Doctor, OneConnect, Ping An
+HealthKonnect, and Autohome.
+LUFAX HOLDING
+Lufax Holding is a world-leading comprehensive
+online wealth management and retail lending
+technology platform, and also provides
+financial institutions and local governments
+with comprehensive financial solutions. In 2018,
+Lufax Holding embraced changes in the industry
+and regulations by adjusting the business lines
+and product mix for wealth management, retail
+lending and government finance. By optimizing
+its cost structure, Lufax Holding recorded rapid
+profit growth. Lufax Holding completed its Series
+C financing from world-renowned institutional
+investors at a post-money valuation of USD39,400
+million.
+In wealth management, Lufax Holding provides
+the middle class with over 5,000 financial
+products. In 2018, amid industry adjustments
+and deleveraging, Lufax Holding embraced
+regulatory requirements and pursued business
+transformations and innovations. By applying new
+technologies including AI, Lufax Holding placed a
+robo-advisor on its platform to cut operating costs
+and optimize interactions. The newly launched
+customer management system KYC4.0 facilitates
+precise customer profiling and customized
+product recommendation on the basis of customer
+tagging and machine learning. Lufax Holding uses
+blockchains to link regulators and other parties
+in the wealth management field, facilitating more
+secure, transparent and efficient transaction
+processes. As at the end of 2018, Lufax had 40.35
+million registered users on its platform, up 19.3%
+from the beginning of 2018. AUM dropped by 20.0%
+from the beginning of 2018 to RMB369,414 million
+due to the asset structure adjustment and active
+product cleanup. AUM rebounded in the fourth
+quarter of 2018, up 2.1% from the end of September,
+driven by the product mix adjustment and business
+innovations.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Other net non-interest revenue
+December
+31, 2017
+December
+31, 2017
+December
+31, 2018
+Total assets
+2,668,805
+third-party asset
+management
+268,718
+305,881
+Ping An Financial Leasing
+Change (%)
+3.1
+(7.1)
+Change (%)
+8.3
+(12.1)
+Ping An Financial Leasing is a wholly-owned
+subsidiary of Ping An, specializing in financial
+leasing. Ping An Financial Leasing's goal is to
+become an expert leader in serving small and
+medium-sized enterprises (SMEs) and specialized
+markets with unique commercial vitality and
+scalability. To achieve this goal, Ping An Financial
+Leasing takes advantage of the Group's capital
+strength and strong brand, and the integrated
+financial service platform.
+Since it was founded, Ping An Financial Leasing
+has upheld the philosophy of "lending everything
+with the heart” and given full play to the industry's
+characteristics of "financing and leasing." Ping An
+Financial Leasing has proactively served the real
+economy and led many segments of the leasing
+market including health care, energy, metallurgy,
+engineering, education, culture, manufacturing, and
+processing. Moreover, Ping An Financial Leasing
+pioneered the "Innovative Leasing 2.0" concept,
+focusing on operating leasing, leasing + the internet,
+and industry operations. Ping An Financial Leasing
+developed many innovative business models
+including Ping An Healthcare Diagnostics Center.
+Ping An Financial Leasing has become an industry
+leader and innovation pioneer by increasing the
+depth and width of leasing business and extending
+the business models.
+Results of Operation
+(in RMB million)
+Revenue
+Net profit
+2018
+2017 Change (%)
+16,427
+3,292
+9,349
+75.7
+1,999
+64.7
+(in RMB million)
+Non-performing asset
+ratio (%)
+December
+31, 2017
+(3,632)
+Administrative expenses (3)
+(76.7)
+Other investments (1)
+42,418
+60,046
+(29.4)
+Financing category
+185,870
+167,081
+11.2
+Infrastructure industry
+financing
+12,421
+18,016
+(31.1)
+Real estate financing
+92,930
+47,028
+97.6
+Corporate loans
+72,753
+96,661
+(24.7)
+Pledge and other financing (2)
+49,966
+7,766
+11,644
+Financial institutions'
+Fee rate of assets held in
+trust (%)
+0.65
+0.66
+-0.01 pps
+Investment category (%)
+1.14
+1.60
+-0.46 pps
+Investment category
+100,829
+133,353
+(24.4)
+Financing category (%)
+1.10
+0.97
+0.13 pps
+Capital market investment
+46,767
+23,341
+100.4
+Administrative category (%)
+0.17
+0.17
+investment
+(3,497)
+5,376
+Administrative category (3)
+4,014
+4,255
+Fees and commission
+expenses
+(847)
+(811)
+4.4
+Net fees and commission
+revenue
+3,167
+3,444
+(8.0)
+Total investment income (1)
+4,654
+3,321
+40.1
+Other revenue(2)
+2,928
+2,196
+33.3
+Revenue
+10,749
+8,961
+Fees and commission revenue
+44.5
+(in RMB million)
+Change (%)
+247,425
+352,322
+(29.8)
+Total
+534,124
+652,756
+(18.2)
+Notes: (1) Other investments refer to investments other than the
+above, including structured equity investment, industrial
+investment, and other investment businesses.
+(2) Pledge and other financing refers to financing other
+than the above, including financing by pledging or
+acquiring securities, financial assets and other debts.
+(3) An administrative trust refers to a trust scheme under
+which a trust company, acting as the trustee, provides
+the trustor (beneficiary) with administrative and
+executive services for specified purposes.
+As at December 31, 2018, Ping An Trust had
+RMB534,124 million in assets under management,
+18.2% lower than at the beginning of 2018, as the
+assets under administration decreased due to the
+business mix adjustment under the new regulations
+on asset management.
+In 2018, the fees and commission revenue from trust
+business declined by 11.4% year on year, mainly
+due to a year-on-year decrease in floating fees and
+commission revenue of the investment business
+amid capital market volatility.
+SECURITIES BUSINESS
+Business Overview
+The Company provides securities brokerage, futures
+brokerage, investment banking, asset management,
+and financial advisory services through Ping An
+Securities and its subsidiaries including Ping An
+Futures, Ping An Caizhi, Ping An Securities (Hong
+Kong), and Ping An Pioneer Capital.
+In 2018, the capital market delivered lackluster
+performance amid changes in China's macro
+economic conditions and international trade
+frictions. Facing huge challenges, the securities
+industry recorded a year-on-year drop of 41.2% in
+net profit. Ping An Securities sought development
+by building differentiated advantages on the basis
+of the Group's integrated financial business model
+and technologies. In 2018, net profit of Ping An
+Securities dropped by 20.9% year on year, still better
+than industry average. In brokerage business, Ping
+An Securities continued to empower its business
+with technologies, strengthened internal and
+external cooperation, and integrated offline and
+online businesses. In addition, Ping An Securities
+conducted customer development on the basis
+of segmentation, and adopted technologies to
+upgrade customer services and improve customer
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 43
+Business Analysis
+Asset Management Business
+experience. The market share by trading volume in
+December 2018 was 3.14%, up 0.57 pps year on year.
+In investment banking, Ping An Securities improved
+its industry-specific expertise. Ping An Securities
+ranked among the top tier by the number of bonds
+and ABS underwritten. In trading business, Ping
+An Securities continued to optimize its revenue
+structure by developing the Fixed Income, Currency
+and Commodities (FICC) capacity and employing
+multiple trading strategies.
+Results of Operation
+2018
+2017
+(5.7)
+10.0
+Asset quality of the retail
+162,888
+Operating results of
+retail banking
+Revenue from retail banking
+% of revenue from
+61,883
+46,692
+32.5
+retail banking
+53.0
+44.1
+8.9 pps
+17,129
+15,679
+9.2
+69.0
+67.6
+1.4 pps
+Net profit from retail banking
+% of net profit from
+retail banking
+Change (%)
+2017
+2018
+(in RMB million)
+Life's products (in million)
+19.23
+16.29
+18.0
+Retail assets under
+management (AUM,
+in RMB million)
+1,416,796
+Ping An Bank strives to build a smart boutique
+corporate bank. In 2018, Ping An Bank focused
+on developing high-quality businesses, channels
+and projects of corporate banking. The Bank fully
+leverages technologies including cloud computing,
+blockchain and the internet of things to empower
+management and business innovation, and develop
+a smart boutique corporate banking system. As
+at the end of 2018, the "Ping An Pocket Finance"
+app had 280,000 registered users that contributed
+a trading volume of over RMB830 billion. In
+2018, transactions on the supply chain accounts
+receivable service platform (SAS) exceeded
+RMB10,000 million. The platform has provided
+financial services for 111 core enterprises and
+upstream medium, small and micro-businesses. As
+at the end of 2018, Ping An Bank reviewed 14,103
+customers through "KYB for Small Enterprises," and
+granted KYB loans of RMB10,700 million. Besides,
+the Bank fully implemented the asset-light financing
+strategy in developing boutique investment
+banking and interbank business. In 2018, the Bank
+underwrote RMB161.9 billion worth of bonds in the
+interbank market, up 54.0% year on year. Ping An
+Bank increased the value of interbank institutional
+customers by integrating asset management,
+trading and sales. As at the end of 2018, ET-Bank
+had cooperated with 2,079 customers, up 150 from
+the beginning of 2018.
+1,086,688
+Retail loans (in RMB million) 1,154,013
+849,035
+35.9
+Credit cards in
+circulation (in million)
+51.52
+38.34
+34.4
+30.4
+Note: (1) Retail customers include debit card holders and credit
+card holders, with duplicates removed.
+38
+62,984
+(13.4)
+17,955
+12,510
+43.5
+4,509
+3,343
+34.9
+54,552
+12,441
+(5.3)
+1,997,529
+1,704,230
+17.2
+34,905
+28,997
+20.4
+1.75
+13,144
+Customers holding Ping An
+Special mention
+Sub-standard
+1,612,249
+38
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Technology-driven business yielded strong
+results. Taking "technology-driven business" as
+the driver of strategic transformation, Ping An
+Bank increased investment in technology. In 2018,
+IT capital expenditure grew by 82% year on year.
+As at the end of 2018, the Bank's IT staff members
+(including outsourcing personnel) grew to nearly
+6,000, up over 44% from the beginning of 2018. Ping
+An Bank implemented agile transformation. Under
+the lean and agile R&D models, the Bank fully
+integrated technology with business to improve
+the product iteration speed, delivery quality, and
+customer experiences. In 2018, the Bank's business
+requirement development deliveries increased by
+over 100% year on year. Ping An Bank developed a
+leading technology platform. The Bank transformed
+its IT architecture from a centralized framework
+to a distributed one, and its infrastructure from
+a traditional framework to a cloud-based one, to
+support rapid business growth, transformation
+towards online operations, and product and service
+innovation. Ping An Bank continued to promote
+technological innovations. The Bank empowered its
+businesses with the Group's core technologies and
+resources including Al, blockchain, and cloud. In this
+way, Ping An Bank improved customer experiences,
+diversified financial products, innovated business
+models, optimized risk management and operational
+efficiency, and promoted smart management. For
+instance, Ping An Bank applied the robotic process
+automation (RPA) technology to various use cases,
+including background checking for corporate
+account opening and reporting of corporate
+account opening to the PBC. With these innovations,
+business processing efficiency rose by over 60%
+compared with manual operation.
+Asset quality improved markedly. To tackle
+external risks, Ping An Bank adjusted its business
+mix and strengthened recovery of non-performing
+assets (NPAs), which improved the asset
+quality significantly. As of the end of 2018, the
+non-performing loan ratio was generally stable, up
+0.05 pps from the beginning of 2018; special mention
+loans accounted for 2.73%, down 0.97 pps from the
+beginning of 2018. The balance of loans more than
+90 days overdue accounted for 1.70%, down 0.73 pps
+from the beginning of 2018. The provision coverage
+ratio of loans more than 90 days overdue grew by
+53.78 pps from the end of 2017 to 159.45%. The Bank's
+deviation of non-performing loans was 97%, down
+46 pps from the beginning of 2018. In 2018, Ping An
+Bank recovered NPAs of RMB18,744 million, up 96.7%
+year on year; 96.8% of the recovered amount was
+collected in cash, while the rest was in kind.
+(in RMB million)
+Loan quality
+Pass
+18.3
+Doubtful
+Total loans and advances
+Total non-performing loans
+Non-performing loan
+ratio (%)
+Deviation of non-performing
+loans (1) (%)
+December
+31, 2018
+31, 2017
+Change
+(%)
+1,908,072
+Loss
+56.6
+30.49
+(in million)
+vintage period
+48,708
+43.4
+Credit card receivables
+0.29
+0.35
+0.45
+0.48
+Xin Yi Dai unsecured loans granted
+(in RMB million)
+Auto loans granted (in RMB million)
+23.1
+Xin Yi Dai loans
+0.18
+0.20
+0.16
+0.27
+Auto loans
+0.16
+34,167
+0.18
+end of the 6-month
+6.78
+148,068
+Ping An Bank made significant progress in its
+strategic transformation toward retail banking.
+In 2018, Ping An Bank made significant progress
+in the transformation toward retail banking by
+optimizing its business mix on the basis of the
+Group's integrated financial business model and
+core technologies.
+Core KPIs of retail banking maintained rapid
+growth. As at the end of 2018, the Bank's retail
+assets under management (AUM) rose by 30.4%
+from the beginning of 2018 to RMB1,416,796 million.
+The balance of retail loans increased by 35.9%
+from the beginning of 2018 to RMB1,154,013 million.
+Ping An Bank increased customer assets and took
+deposits by adhering to the strategy of customer
+management and resource allocation. The Bank
+also raised settlement deposits by developing
+payroll and acquiring services, and boosted retail
+deposits by enhancing active liability products. As
+of December 31, 2018, the balance of retail deposits
+had grown by 35.4% from the beginning of 2018 to
+RMB461,591 million. Cross-selling's contributions
+to retail banking continued to grow. Customers
+referred by the cross-selling channel have lower
+non-performing loan ratios and better asset quality
+than proprietary channels.
+2018
+Ping An Bank pays close attention to risk
+management while developing business. As at the
+end of December 2018, the non-performing asset
+ratio of retail banking declined steadily. The retail
+non-performing loan ratio was 1.07%, down 0.11 pps
+from the beginning of 2018. Risks in the consumer
+finance industry were on the rise, amid the
+economic slowdown, the joint-debt risk and other
+negative factors. The non-performing asset ratios of
+credit card receivables and Xin Yi Dai stood at 1.32%
+and 1.00%, up 0.14 pps and 0.35 pps respectively
+from the beginning of 2018. The risk profile of the
+Bank's auto finance business remained stable. As at
+the end of December 2018, the non-performing loan
+ratio of the Bank's auto finance business was 0.54%,
+down 0.05 pps from the beginning of 2018. Since
+the end of 2017, Ping An Bank has adjusted its risk
+policies proactively to prevent the joint-debt risk
+and reduce the proportion of high-risk customers.
+The quality of new loans remained stable. According
+to a vintage analysis, cardholders' loans more than
+30 days overdue as at the end of a six-month period
+following credit card issuance accounted for 0.29%,
+down 0.06 pps year on year. Xin Yi Dai unsecured
+loans more than 30 days overdue as at the end of a
+six-month period following granting reached 0.18%,
+down 0.02 pps year on year. Auto loans more than
+30 days overdue as at the end of a six-month period
+following granting dropped by 0.02 pps year on year
+to 0.16%.
+Cross-selling
+Cross-selling
+channel's
+channel's contribution
+contribution percentage
+amount
+(%)
+39.0
+(%)
+2018
+2017
+2016
+2015
+Cross-selling channel's
+more than 30 days
+contributions to retail banking
+Credit cards issued (in million)
+overdue as at the
+The proportion of loans
+1.70
+0.12
+December 31, 2018
+Cross-selling
+channel's
+December
+31, 2017
+Change
+(%)
+3.4 pps
+Customer structure
+Retail customers (1)
+(in million)
+83.90
+31, 2018
+69.91
+Contribution to the
+number of the Group's
+retail customers (%)
+45.6
+42.2
+Customers holding
+products from other
+subsidiaries of the Group
+20.0
+0.12
+December
+In 2018, Ping An Bank increased investment in
+technologies and built a technology development
+team of over 3,200 employees dedicated to retail
+banking. We updated the "Ping An Pocket Bank"
+app, in which multiple financial technologies and
+services have been embedded. In December 2018,
+the app's monthly active users grew by 74.6% year
+on year to 25.88 million. Moreover, we built 136 new
+offline retail outlets under a "light, community-
+based, intelligent, and diversified" concept. We
+integrated the app and outlets into a smart OMO
+(Online Merge Offline) service system.
+Overall non-
+performing
+loan ratio
+non-
+performing
+loan ratio
+cross-selling channel
+Note: Vintage analysis, also known as static pool analysis of default
+rates, is a method of evaluating the credit quality of account
+holders by monitoring credit assets in accounts opened in
+different periods and analyzing the vintages. The proportion
+of loans more than 30 days overdue as at the end of the
+6-month vintage period = the balance of current-year new
+loans or credit card receivables more than 30 days overdue
+as at the end of the 6-month vintage period/the balance of
+current-year new loans or credit card receivables that have
+been on books for 6 months.
+Credit card receivables
+1.32%
+1.10%
+In 2018, Ping An Bank implemented the private
+banking strategy. With a fully-staffed private
+banking team, Ping An Bank significantly improved
+its abilities in terms of product supply and
+management, marketing and asset allocation,
+laying a solid foundation for a quick increase in
+assets under management (AUM). On the back of
+technology-powered investment advisory services
+and remote support, Ping An Bank can recommend
+the best asset allocation portfolios thorough
+the most suitable channel at the perfect time. In
+products, Ping An Bank fully integrated internal and
+external resources and established an open product
+platform for ongoing supply of excellent wealth
+management products.
+Xin Yi Dai unsecured loans
+0.45%
+Auto loans
+0.54%
+0.41%
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 37
+MANAGEMENT DISCUSSION AND ANALYSIS
+Business Analysis
+Banking Business
+1.00%
+0.05 pps
+47.75
+143
+(31,616)
+29.89
+(40,803)
+11.9
+0.43 pps
+7.0
+1,858,353
+1,602,503
+16.0
+Credit cost (3) (%)
+30.32
+(43,657)
+Other expenses
+2.55 -0.20 pps
+(3,210)
+69.4
+Profit before tax
+Income tax
+32,231
+30,157
+6.9
+(6,968)
+2.35
+(5,437)
+6.4
+Cost-to-income ratio (2) (%)
+Loan impairment loss
+Average balance of
+loans (including bill
+discount)
+Note: Capital requirements regarding credit risk, market risk and
+operational risk are measured by the weighted method,
+standard method, and basic indicator method respectively.
+867.7
+ratio (%) (regulatory
+requirement ≥ 8.5%)
+9.39
+9.18
+0.21 pps
+Revenue
+116,716
+Ping An Bank continued to make its outlets smarter
+and improved their geographic distribution. As at
+December 31, 2018, Ping An Bank had 80 branches
+and 1,057 business outlets. The Bank has opened or
+renovated 136 retail stores.
+105,786
+Capital adequacy ratio (%)
+(regulatory requirement
+General and administrative
+expenses
+(35,391)
+≥ 10.5%)
+11.50
+11.20
+0.30 pps
+10.3
+1,103
+Net profit
+23,189
+institutions
+10,933
+10,726
+Loans and advances
+118,184
+94,976
+1.9
+24.4
+Interest revenue from
+Due from financial
+investment
+34,078
+(16.8)
+Others
+1,406
+4,056
+(65.3)
+97
+Total interest revenue
+28,363
+24,818
+(5.4)
+4,002
+7.0
+40
+Annual Report 2018
+Notes: (1) Net interest margin = net interest revenue/average
+balance of interest-earning assets.
+(2) Cost-to-income ratio = general and administrative
+expenses/total revenue.
+(3) Credit cost = loan impairment loss/average balance of
+loans (including bill discount).
+(4) In accordance with rules for transition to the new
+accounting standards for financial instruments, the
+Company does not need to restate comparable figures
+for 2017.
+Ping An Bank continued to optimize the business
+mix as the retail loans grew in terms of size and
+proportion, and the return on interest-earning assets
+increased from the beginning of the year. In 2018,
+the net interest spread was 2.26%, up 0.06 pps year
+on year. The net interest margin was 2.35%, down
+0.02 pps year on year. The Bank has optimized its
+business mix, reversed the downward trend, and
+steadily raised the net interest margin quarter on
+quarter since the second quarter of 2018.
+4,232
+Ping An Insurance (Group) Company of China, Ltd.
+(in RMB million)
+2018
+2017
+Change (%)
+Interest revenue
+In 2018, the net fee and commission revenue of the
+Bank grew 2.0% year on year to RMB31,297 million
+mainly due to the increase in the bank card fee
+revenue.
+Due from the PBC
+Net Interest Revenue
+10,674
+(7,413)
+53.78 pps
+105.67
+Note: (1) Deviation of non-performing loans = Balance of loans
+more than 90 days overdue/Balance of non-performing
+loans
+Ping An Bank enhanced its financial strength by
+replenishing capital. Ping An Bank furthered the
+reform in capital management, and conducted
+robust capital management. As at the end of 2018,
+the core tier 1 capital adequacy ratio stood at 8.54%,
+up 0.26 pps from the end of 2017. In addition to
+stable internal sources of capital such as retained
+earnings, Ping An Bank forged ahead with the
+plans for issuing RMB26,000 million worth of A-share
+convertible corporate bonds and RMB30,000 million
+worth of qualified tier-2 capital bonds to seek
+capital replenishments from external sources. The
+Bank issued the RMB26,000 million worth of A-share
+convertible corporate bonds on January 25, 2019. The
+equity portion of RMB3,700 million has been directly
+calculated into the core tier 1 capital and the
+remaining portion will be used to replenish the core
+tier 1 capital after conversion to improve the Bank's
+capital adequacy.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 39
+Business Analysis
+Banking Business
+(in RMB million)
+159.45
+December
+31, 2018
+Change
+(%)
+Operating Results
+(in RMB million)
+2018
+2017 Change (%)
+Capital adequacy ratio
+Net interest revenue
+December
+31, 2017
+90 days overdue (%)
+for loans more than
+Provision coverage ratio
+-46 pps
+Balance of loans more than
+interest revenue
+90 days overdue
+33,984
+41,460
+(18.0)
+Percentage of loans more
+than 90 days overdue (%)
+Percentage of special
+mention loans (%)
+Impairment provision
+balance
+Loan loss provision ratio (%)
+Provision coverage ratio (%)
+1.70
+2.43
+-0.73 pps
+2.73
+3.70
+-0.97 pps
+(54,187)
+2.71
+155.24
+(43,810)
+2.57
+151.08
+23.7
+0.14 pps
+4.16 pps
+74,745
+74,009
+FINANCIAL ANALYSIS
+Core tier 1 capital
+5.1
+Net non-interest revenue
+41,971
+31,777
+32.1
+1.0
+adequacy ratio (%)
+Including: Net fee and
+commission
+(regulatory requirement
+≥ 7.5%)
+8.54
+8.28
+0.26 pps
+revenue
+31,297
+30,674
+2.0
+Tier 1 capital adequacy
+Other net non-
+2.37 -0.02 pps
+2.35
+Total risk weighted assets 2,340,236 2,226,112
+8.0
+Net core tier 1 capital
+199,782
+184,340
+8.4
+Net tier 1 capital
+Net interest margin (1) (%)
+204,293
+7.6
+Average balance of
+219,735
+3,186,151
+3,120,038
+2.1
+Net capital
+269,115
+249,227
+interest-earning assets
+11.0%
+Annual Report 2018
+27.6
+5.0%
+616,319
+786,633
+5.0%
+11.0%
+Ultimate investment return rate
+Risk discount rate
+Residual margin of L&H
+72,294
+52,128
+70,320
+shareholders of the parent company
+L&H operating profit after tax attributable to
+7.3
+67,357
+Ping An Insurance (Group) Company of China, Ltd. 51
+Value of one year's new business after cost of capital (NBV)
+34.9
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd.
+ANALYSIS OF EMBEDDED VALUE
+17,051
+Value of in-force insurance business written prior to June 1999
+Value of in-force insurance business written since June 1999
+-4.7 pps
+183,920
+212,922
+Including: Adjusted net asset value of L&H
+512,713
+602,155
+Adjusted net asset value (ANA)
+2017
+2018
+(in RMB million)
+December 31,
+December 31,
+Components of Economic Value
+The Standards for Actuarial Practice: Valuation Standard for Embedded Value of Life Insurance (the
+"Standards") issued by the China Association of Actuaries became effective in November 2016. The
+Company has disclosed the embedded value for 2018 in accordance with the Standards and China Risk
+Oriented Solvency System (C-ROSS).
+The calculation of the analysis of embedded value relies on a number of assumptions with respect to
+future experience. Future experience may vary from that assumed in the calculation, and these variations
+may be material. The market value of the Company is measured by the value of the Company's shares on
+any particular day. In valuing the Company's shares, investors take into account a variety of information
+available to them and their own investment criteria. Therefore, these calculated values should not be
+construed as a direct reflection of the actual market value.
+In accordance with the related provisions of the Rules for the Compilation of Information Disclosures by
+the Companies Offering Securities to the Public (No. 4) - Special Provisions on Information Disclosures by
+Insurance Companies, the Company has engaged PricewaterhouseCoopers Consultants (Shenzhen) Limited
+to review the reasonableness of the methodology, the assumptions and the calculation results of the
+Company's analysis of embedded value as at December 31, 2018.
+In order to provide investors with an additional tool to understand our economic value and business
+performance results, the Company has disclosed information regarding embedded value ("EV") in this
+section. The embedded value represents the shareholders' adjusted net asset value ("ANA") plus the value
+of the Company's in-force life and health insurance business ("L&H") adjusted for the cost of holding the
+required capital. The embedded value excludes the value of future new business.
+Analysis of Embedded Value and
+Operating Profit
+35.5%
+The Company prepared the embedded value and NBV results in accordance with the Standards for
+Actuarial Practice: Valuation Standard for Embedded Value of Life Insurance (the "Standards") which was
+promulgated by the China Association of Actuaries in November, 2016. Our responsibility, as independent
+actuaries, is to perform certain review procedures set out in our letter of engagement and, based on these
+procedures, conclude whether the embedded value methodology and assumptions are consistent with the
+Standards and available market information.
+Operating ROEV of L&H
+The EV and Operating Profit results, in all material aspects, are consistent with the methodology and
+assumptions stated in the Analysis of Embedded Value and Operating Profit chapter in the 2018 annual
+report.
+Based on our review procedures, we have concluded that the methodology and assumptions used in
+preparing the EV results are in compliance with the Standards and consistent with available market
+information;
+•
+OPINION:
+The preparation of the EV results requires assumptions and projections about future economic and financial
+situations, many of which are outside the control of the Company. Therefore, actual experience may differ
+from these assumptions and projections.
+Our review procedures included, but were not limited to, considering whether the methodology and
+assumptions of the EV results are consistent with the Standards and available market information,
+considering whether the methodology of the operating profit results is consistent with the disclosed
+methodology in the 2018 annual report, validating actuarial models on the basis of sample testing, and
+inspecting related documentation. In forming our conclusion, we have relied on the audited and unaudited
+data and information provided by the Company.
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+We also confirm that the EV and Operating Profit results disclosed in the Analysis of Embedded Value and
+Operating Profit chapter in the 2018 annual report are consistent with the results we reviewed.
+Review the operating profit of the Company, source of earning and residual margin related data of the
+life and health insurance business ("L&H”).
+•
+50
+50
+Review the sensitivity analysis of the embedded value and NBV;
+Review the embedded value, value of new business and interest margin of the Company as at
+December 31, 2018;
+We have reviewed the methodology and assumptions used in preparing the EV and Operating Profit
+results, including:
+16,758
+We have reviewed the Analysis of Embedded Value and Operating Profit of Ping An Insurance (Group)
+Company of China, Ltd. ("The Company") as at December 31, 2018. The EV and Operating Profit results
+include embedded value, value of one year's new business after cost of capital ("NBV"), valuation
+methodology and assumptions, first year premium of new business, profit margin of new business, interest
+margin, embedded value movement, sensitivity analysis, operating profit, source of earning and residual
+margin related data.
+Review the embedded value movement analysis, and
+PricewaterhouseCoopers Consultants (Shenzhen) Limited
+KEY DATA SUMMARY
+Jiang Hua Hua, Actuary
+March 12, 2019
+18.9
+23.5
+496,381
+613,223
+EV of L&H
+94,708
+112,573
+shareholders of the parent company
+Group operating profit after tax attributable to
+-3.0 pps
+21.5
+825,173
+26.7%
+23.7%
+1,002,456
+Change
+(%)
+2017/
+December
+31, 2017
+2018/
+December
+31, 2018
+Operating Return on EV (Operating ROEV) of Group
+EV of Group
+(in RMB million)
+30.8%
+418,534
+48,975
+Cost of capital
+2017 Change (%)
+2018
+Retail business
+(in RMB million)
+Value of new business
+FYP used to calculate value of
+new business
+are:
+The new business volumes measured by first year premium (FYP) and its new business value by segment
+2018
+Value of New Business
+MANAGEMENT DISCUSSION AND ANALYSIS
+53
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Policyholder dividends have been based on 75% of the interest and mortality surplus for individual
+participating business. For group participating business, dividends have been based on 80% of interest
+surplus only.
+Policyholder dividend
+Expense assumptions have been based on the Company's most recent expenses investigation.
+Expense assumptions mainly consist of acquisition expense and maintenance expenses assumptions.
+The unit maintenance expense was assumed to increase by 2% per annum.
+Expense
+Analysis of Embedded Value and
+Operating Profit
+2017 Change (%)
+133,417
+142,361
+To the directors of
+Protection & Saving hybrid
+4.4
+46,933
+(3.5)
+53,588
+51,701
+Long-term protection
+5.9
+60,786
+64,401
+(7.5)
+121,798
+112,712
+Agency
+7.2
+67,027
+71,874
+(6.3)
+8.
+7.
+Policy discontinuance rates have been based on the Company's recent experience studies. The
+discontinuance rates are pricing interest rate and product type specific.
+Discontinuance
+72,294
+(18,156)
+85,512
+88,889
+(16,596)
+2017
+2018
+Note: Figures may not match totals due to rounding.
+Value of one year's new business after cost of capital
+Cost of capital
+Value of one year's new business
+(in RMB million)
+496,381
+613,223
+Including: EV of L&H
+825,173
+1,002,456
+EV of Group
+(39,909)
+(35,284)
+67,357
+335,610
+The adjusted net asset value of the life and health insurance business is based on the unaudited
+shareholders' net asset value of the relevant life and health insurance business of the Company as
+measured in compliance with the Standards. This unaudited shareholders' net asset value is calculated
+based on the audited shareholders' net asset value in accordance with CAS by adjusting the relevant
+differences, such as reserves. The adjusted net asset value of other business is based on the audited
+shareholders' net asset value of the relevant business of the Company in accordance with CAS. The
+relevant life and health insurance business includes business conducted through Ping An Life, Ping An
+Annuity and Ping An Health. The values placed on certain assets have been adjusted to the market value.
+2
+Morbidity rate and accident rate assumptions have been based on the industry table or the Company's
+own pricing table. The trend of long-term morbidity deterioration has been taken into consideration.
+The loss ratios have been assumed to be within the range of 15% and 100% for short-term accident and
+health insurance business.
+6.
+Other incident rates
+5.
+The experience mortality rates have been based on 65% and 65% of China Life (2000-2003) table for
+male and female respectively for non annuitants. For annuitants, the experience mortality rates for
+the grant period have been based on 60% and 50% of China Life Annuity (2000-2003) table for male and
+female respectively.
+Mortality
+4.
+A 25% average income tax rate has been assumed. The percentage of investment returns that can be
+exempted from income tax has been assumed to be 12% in the next year and to be increased by 2%
+annually up to 16%.
+Taxation
+For non-investment-linked insurance funds, the future investment return is assumed to be 4.75%
+in the first year and remains at 5.0% from the second year. For the investment-linked fund, future
+investment returns have been assumed to be slightly higher than the above non-investment-linked
+fund investment returns assumption. These returns have been derived by consideration of the current
+capital market condition, the Company's current and expected future asset allocations and associated
+investment returns for a range of major asset classes.
+Investment return
+The discount rate for calculating the value of in-force and the value of new business of the life and
+health insurance business is assumed to be 11.0%.
+3.
+2.
+1. Risk discount rate
+The assumptions used in the embedded value calculation in 2018 have been made on a "going concern"
+basis, assuming continuation of the economic and legal environment currently prevailing in China.
+The calculation is in line with the Standards and capital requirement under C-ROSS. Certain portfolio
+assumptions were based on the Company's own recent experience as well as considering the more general
+China market and other life insurance markets' experience. The principal bases and assumptions used in the
+calculation are described below:
+Key Assumptions
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+52
+INDEPENDENT ACTUARIES REVIEW OPINION REPORT ON THE ANALYSIS OF EMBEDDED VALUE AND
+OPERATING PROFIT DISCLOSURES
+85.4
+As at December 31, 2018, the residual margin of L&H was RMB786,633 million
+(up by 27.6% from the beginning of the year). The release of residual
+margin of L&H was up by 25.0% year on year.
+Active investor users (1)
+11.17
+9.61
+16.2
+Accumulated borrowers
+10.28
+7.49
+37.2
+19.3
+Note: (1) Active investor users refer to users who made an
+Assets Under Management
+(in RMB million)
+December
+31, 2018
+December
+Change
+31, 2017
+(%)
+461,699
+investment or had a positive account balance in the
+past 12 months.
+33.83
+40.35
+Lufax's registered users
+Including: Revenue of
+As of December 31, 2018, OneConnect had provided
+services for 3,289 financial institutions, including
+590 banks, 72 insurers and 2,627 non-bank financial
+institutions in China. The Internet Finance Alliance
+of Small and Medium-sized Banks, with OneConnect
+as an initiator, covers 260 small and medium-sized
+Chinese banks whose assets totaled more than
+RMB47 trillion.
+Adhering to the model of “technology + business",
+OneConnect helps financial institutions to solve pain
+points in business development with cutting-edge
+technologies. OneConnect has launched mobile
+banking, smart marketing, smart risk management,
+supply chain finance, Yi Qi Yin, Smart Quick Claim,
+asset and liability management, ABS ecosystem, Yi
+Zi Guan and core banking cloud. Correspondingly,
+there are more than 270 systems and 47 product
+categories. In 2018, OneConnect established
+subsidiaries in Hong Kong, Singapore and Indonesia
+to serve local financial institutions. OneConnect
+has built the eTradeConnect platform, the world's
+first government-backed, blockchain-based
+trade platform, in cooperation with Hong Kong
+Monetary Authority. The eTradeConnect platform
+was launched in October 2018. As of December 31,
+2018, eTradeConnect had served 13 domestic and
+foreign banks. OneConnect has a world-leading
+fintech expert team recognized by authoritative
+international institutions for cutting-edge
+technologies including Al and blockchain.
+OneConnect is committed to building a
+world-leading fintech service cloud platform.
+OneConnect has launched Smart Banking Cloud,
+Smart Insurance Cloud, Smart Investment Cloud
+and an open tech-powered platform, providing
+end-to-end fintech solutions for various types of
+financial institutions. In early 2018, OneConnect
+completed Series A financing at a post-money
+valuation of USD7,500 million.
+ONECONNECT
+78.7
+1,868
+3,338
+MANAGEMENT DISCUSSION AND ANALYSIS
+In retail lending, Lufax Holding is a leading 020
+(Offline to Online) non-bank service platform in
+China with 14 years' experience in credit business,
+providing over 10.28 million customers with online
+services. Lufax Holding has established a unique
+platform that provides lending services to qualified
+micro-, small and medium-sized business owners
+and individuals, based on its extensive experience
+in lending and cutting-edge technologies. Lufax
+Holding serves tens of millions of borrowers by
+leveraging high-quality resources of institutions
+in the financial services ecosystem. Lufax Holding
+enables purely online loan application processes
+without physical outlets by applying facial and
+voiceprint recognition to customer identification and
+micro-expression recognition to loan underwriting.
+This greatly improves customer experience
+and operational efficiency. Lufax Holding has
+successfully gone through different credit cycles
+and liquidity squeezes, owing to its unique business
+models and extensive experience in lending. The
+credit risk borne by funding and credit enhancement
+providers remained low. As at December 31, 2018,
+Lufax Holding's balance of loans under management
+reached RMB375,006 million, up 30.0% year to date;
+the ratio of loans more than 30 days overdue (1) was
+2.3%.
+In government finance, Lufax Holding builds Smart
+Fiscal Cloud platforms for provincial and municipal
+governments across China, providing them with
+customized smart fiscal management solutions.
+As of the end of 2018, Lufax Holding had piloted
+projects in cities including Nanning, Changsha and
+Shenzhen to develop role models for smart fiscal
+management. Lufax Holding aims to assist local
+governments in "debt control, asset preservation,
+revenue boosting and cost saving."
+Note (1) The ratio of loans more than 30 days overdue refers to
+the proportion of loans more than 30 days (inclusive)
+overdue to the balance of loans under management.
+Number of Users
+(%)
+(in million)
+December
+31, 2018
+December
+Change
+31, 2017
+(20.0)
+family doctor
+375,006
+30.0
+(in million)
+265.19
+Consultations (in million)
+407.06
+192.84
+211.80
+37.5
+92.2
+Monthly active users in
+December
+(in million)
+Registered users
+2018
+54.66
+29.49
+Note: (1) Monthly active users refer to users who access Ping An
+Good Doctor's service or product platform via apps,
+WAP (Wireless Application Protocol) or plug-ins at least
+once in any given month.
+(in RMB million)
+Revenue
+2018
+2017 Change (%)
+(short-PPP)
+2017 Change (%)
+Change
+(%)
+December
+31, 2017
+December
+31, 2018
+Assets under management 369,414
+Balance of loans under
+management
+2018
+Trading Volume
+(in RMB million)
+2017 Change (%)
+Wealth management
+New loans
+1,475,008
+396,962
+2,117,485
+(30.3)
+343,792
+15.5
+PING AN GOOD DOCTOR
+Ping An Good Doctor (Stock Code: 01833.HK) went
+public on the HKEX's Main Board on May 4, 2018,
+and was included in the Southbound Trading of
+Shanghai-Hong Kong Stock Connect on September
+10, 2018. As an integral part of the Company's health
+care ecosystem strategy, Ping An Good Doctor
+leverages the Group's resources to expand its user
+base, providing users with one-stop high-quality
+health care services. As of December 31, 2018, Ping
+An Good Doctor had provided services for over 265
+million users, including 54.66 million monthly active
+users in December 2018. Ping An Good Doctor is the
+largest online health care platform in China.
+Ping An Good Doctor provides users with
+comprehensive family doctor services via
+Al-assisted in-house medical staff members and
+external doctors. These services include 24/7 online
+consultation, referral, registration, hospitalization
+arrangement, second medical opinions, and 1-hour
+drug delivery. Ping An Good Doctor also provides
+various offline services via its health care service
+network, as well as extensive health management
+offerings to help users embrace healthy lifestyles.
+As at the end of 2018, Ping An Good Doctor had
+over 1,000 in-house medical staff members and
+over 5,000 contracted external doctors (associated
+chief physicians or above at 3A hospitals). The
+1-hour drug delivery network covered 86 cities
+across China. The health care service provider
+network covered nearly 400 clinics of traditional
+Chinese medicine, over 1,300 checkup centers, over
+1,200 dental clinics, and over 120 medical cosmetic
+institutions.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 47
+Business Analysis
+Fintech & Healthtech Business
+Ping An Good Doctor improved its Al-based
+consultation/treatment system on the basis of
+over 407 million consultations and the expertise
+of its in-house medical staff members. In 2018, the
+in-house medical staff of Ping An Good Doctor
+and over 100 hospitals began to use this system for
+more efficient consultation and treatment. As at
+December 31, 2018, Ping An Good Doctor received
+535,000 consultations per day on average, up 45.4%
+year on year.
+Besides the domestic market, Ping An Good
+Doctor also shares resources and pursues joint
+development with leading companies overseas.
+In August 2018, Ping An Good Doctor signed an
+agreement to establish a joint venture with Grab,
+Southeast Asia's largest travel provider. Through
+this joint venture, Ping An Good Doctor will offer
+excellent Al-powered online health care services
+in Southeast Asia. Ping An Good Doctor acquired
+Wanjia Healthcare in October 2018 to develop our
+offline network, strengthen the closed loop, online-
+merge-offline healthcare services, and provide
+integrated services.
+288,434
+business
+Cost
+Gross profit
+partner insurers
+Number of
+41.8
+416
+590
+partner banks (1)
+Including: Number of
+23.0
+72
+2,675
+financial institutions
+225.5
+13.7
+44.6
+24.7
+1.86
+2.32
+Change
+(%)
+3,289
+14
+Number of
+other partner
+The operating ROEV of Group and of L&H were 23.7% and 30.8% respectively.
+In 2018, NBV of the life and health insurance business was RMB72,294
+million (up by 7.3% year on year). The year-on-year NBV growth in the
+second half was 16.9%.
+As at December 31, 2018, the embedded value of the Company hit a
+milestone by exceeding RMB1,000 billion and reaching RMB1,002,456 million
+(up by 21.5% from the beginning of the year).
+Analysis of Embedded Value and
+Operating Profit
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd. 49
+Annual Report 2018
+Autohome has also developed other competitive
+businesses, including data-based business.
+Autohome integrated data products including smart
+recommendation, smart online sales and smart
+marketing to help auto manufacturers and dealers
+to increase conversion rates. Meanwhile, Autohome
+is developing a closed loop of second-hand car
+trading by exploiting synergies from the strategic
+investment in ttpai.cn, an online platform for
+second-hand car trading. In addition, Autohome
+has made steady progress in the financial business,
+which consists of lending, financial leasing and
+insurance services to consumers and dealers.
+In 2018, Autohome recorded rapid business
+growth and RMB7,230 million in revenue, 11.8% of
+which was from online marketplace bussiness. By
+optimizing user experiences, Autohome realized
+steady traffic growth. In December 2018, the
+"Autohome" app had an average of 29 million daily
+unique visitors, up approximately 10% year on year.
+These achievements have solidified Autohome's
+leading role among auto service apps in China.
+Besides, Autohome enhanced user engagement
+and loyalty by providing customized contents and
+recommendations. Autohome increased users'
+interactions with auto manufacturers and dealers by
+applying new technologies including virtual reality
+(VR) and augmented reality (AR).
+Autohome, a leading internet auto service platform
+in China, is committed to developing a smart auto
+ecosystem under the strategy of "auto content,
+auto dealing, auto finance and auto lifestyle." In
+this ecosystem centering on data and technology,
+Autohome provides auto consumers with diverse
+products and services.
+AUTOHOME
+Ping An HealthKonnect is committed to becoming
+China's leading tech-powered managed care service
+platform. Centering on the social health insurance
+(SHI) cloud platform, Ping An HealthKonnect
+has developed industry-leading technologies like
+Al, blockchain, cloud computing and health risk
+profiling. On this basis, Ping An HealthKonnect
+provides comprehensive smart solutions and
+technical services for SHI, private insurers,
+medical service providers and individual users.
+The smart SHI services for users are professional,
+personalized, dynamic and integrated. In early 2018,
+Ping An Health Konnect raised USD1,150 million at a
+PING AN HEALTHKONNECT
+(1) In 2018, OneConnect optimized the definitions of
+partner banks and other partner non-bank institutions,
+and restated the comparable data for 2017. The new
+standard provides a more objective representation.
+17.0
+414.3
+2,245
+Note:
+2,627
+non-bank
+institutions (¹)
+31, 2017
+31, 2018
+December
+December
+supported
+2017 Change (%)
+2018
+Value of transactions
+Ping An Insurance (Group) Company of China, Ltd.
+(8.9)
+(1,002)
+49.0
+612
+912
+(913)
+93.2
+(1,256)
+(2,426)
+69.8
+242
+411
+Annual Report 2018
+48
+Net profit
+(in RMB trillion)
+The operating profit after tax attributable to shareholders of the parent
+company in 2018 was RMB112,573 million (up by 18.9% year on year). The
+L&H operating profit after tax attributable to shareholders of the parent
+company was up by 34.9% year on year.
+20.32
+76.4
+Number of partner
+nodes (thousand)
+Number of blockchain
+per partner bank
+Number of online products
+As of the end of 2018, Ping An HealthKonnect had
+provided SHI and private insurance management
+services in over 200 cities across China. Over 5,000
+hospitals had connected with its service platform.
+"City OneConnect" app, targeting individual users,
+had covered 69 cities.
+post-money valuation of USD8,800 million.
+527.2
+195
+1,223
+(million times)
+product use
+Smart Certification
+65.7
+931
+1,543
+(million times)
+product use
+Risk management
+11.52
+44,717
+Investment return decreased by 50bps per annum
+(13.7)
+613,223
+Opening ANA of other business
+[11]
+328,792
+Operating profit of other business
+[12]
+42,253
+Non-Operating profit of other business
+7,236
+Revaluation gain of the convertible bonds held by
+the Company due to the Series C financing of Lufax
+Holding
+Market value adjustment and
+12,998
+other variances
+Closing ANA of other business
+391,279
+before capital changes
+Dividends received
+Ping An Insurance (Group) Company of China, Ltd. 55
+389,233
+(225) Capital injection from the Company to Ping An Health
+(33,270) Dividends paid by the Company to shareholders
+Dividends received from Ping An Life
+Annual Report 2018
+Note: Figures may not match totals due to rounding.
+Capital injection from the Company to Ping An Health
+Dividends paid by Ping An Life to the Company
+54.84
+EV per share (in RMB)
+Closing EV
+Closing ANA of other business
+Dividends payout
+Capital injection
+31,449
+1,002,456
+(31,449)
+225
+Closing EV of L&H
+[6]=
+EV operating profit of L&H
+[5]
+Operating variances and others
+model changes
+608
+13,938
+153,109
+[4]
+11,361 Diversification effects between NB and in-force lower
+cost of capital
+9,582 Diversification effects within NB lower cost of capital
+Business written during the Reporting Period, cost of
+capital calculated at policy level
+of the Reporting Period calculated via prudent risk
+discount rate of 11%
+Unwinding of opening value of in-force and NBV
+Diversification effects with in-force
+Operating assumptions and
+MANAGEMENT DISCUSSION AND ANALYSIS
+Favorable operating experience
+Economic assumptions changes
+Shareholder dividends
+Capital injection
+[6+...+9]
+148,066
+[10]=
+EV profit of L&H
+[2+...+5]
+(12,233)
+Investment return variance
+Change in market value adjustment of free surplus
+during the Reporting Period
+7,191
+[8]
+Market value adjustment
+[7]
+[9]
+new business
+Analysis of Embedded Value and
+EV operating profit of Group was RMB195,362 million, which was comprised of RMB153,109 million of EV
+operating profit of L&H and RMB42,253 million of operating profit of other business. The main source of EV
+operating profit of L&H was NBV and expected return on opening EV.
+Risk discount rate
+10.5%
+11.0%
+11.5%
+1,066,337
+1,048,211
+1,031,468
+1,018,086
+969,631
+1,002,456
+987,999
+956,502
+944,338
+Risk discount rate
+(in RMB million)
+10.5%
+11.0%
+11.5%
+51,842
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+56
+555,105
+567,269
+Sensitivity of EV of L&H to investment return and risk discount rate
+580,397
+613,223
+628,853
+Central case
+658,978
+677,103
+Investment return increased by 50bps per annum
+642,235
+598,766
+Investment return decreased by 50bps per annum
+Central case
+Investment return increased by 50bps per annum
+23.7%
+127,989
+153,109
+170,569
+195,362
+2017
+26.7%
+2018
+[6]
+[13]=[6]+[12]
+Operating ROEV of Group
+Operating ROEV of L&H
+EV operating profit of L&H
+EV operating profit of Group
+(in RMB million)
+[14]=[13]/[[1]+[11])
+[15]=[6]/[1]
+Operating Profit
+30.8%
+Note: Figures may not match totals due to rounding.
+(in RMB million)
+A 10% decrease in fair value of equity asset
+•
+A 5% increase in the policyholders' dividend payout ratio
+A 10% increase in maintenance expenses
+•
+35.5%
+A 10% increase in policy discontinuance rates
+A 10% increase in mortality, morbidity and accident rates
+•
+Assumptions and model used in 2017
+Investment return and risk discount rate
+The Company has investigated the effect, on the embedded value of the Group, embedded value of the life
+and health insurance business and the value of one year's new business, of certain independently varying
+assumptions regarding future experience. Specifically, the following changes in assumptions have been
+considered:
+Sensitivity Analysis
+•
+Diversification effects within
+Sensitivity of EV of Group to investment return and risk discount rate
+NBV pre-risk diversified
+420
+330
+27.2
+Total
+165,446
+171,547
+(3.6)
+72,294
+67,357
+7.3
+Notes: (1) Figures may not match totals due to rounding.
+(2) "PPP" stands for Premium Payment Period.
+(3) Long-term protection products cover whole-life, term life, critical illness and long term accident insurance. Protection &
+Saving hybrid products (short-PPP) cover endowment and annuity products with PPP below 10 years. Protection & Saving
+hybrid products (long-PPP) cover endowment and annuity products with PPP of 10 years and above.
+(4) Tele, internet and others includes telemarketing, internet marketing and Ping An Health's retail business.
+(5) The differences between FYP used to calculate value of new business and FYP disclosed in MD&A are explained in the
+appendix.
+The profit margin of new business by segment:
+By FYP
+By ANP
+2018
+Long-term protection
+51.9%
+58.5%
+49.9%
+57.1%
+Agency
+9.7
+49.4%
+47.1%
+53.9%
+Retail business
+2017
+2018
+2017
+54.7%
+29,186
+32,030
+Group business
+6,929
+Short-term
+51.3
+3,431
+5,192
+1.7
+7,163
+9,204
+(long-PPP)
+Protection & Saving hybrid
+(6.6)
+8,113
+7,577
+72,294
+9,365
+94.7%
+(3.3)
+2,309
+20.7
+716
+865
+(38.4)
+7,492
+4,613
+2,657
+Bancassurance
+5,524
+6,608
+23.1
+13,071
+16,091
+15.1
+19.6
+87.6%
+Tele, internet and others
+87.9%
+Embedded Value Movement
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+54
+Note: Interest margin of traditional and participating products is defined to be the contribution of investment return exceeding minimum
+guaranteed return for customers and attributable to the Company, while interest margin of universal and unit-linked products is
+defined to be the present value of investment spread and management charges.
+66.0%
+76.5%
+The table below shows how the Company's embedded value changed from the opening balance of
+RMB825,173 million as at December 31, 2017 to the closing balance of RMB1,002,456 million as at December 31,
+2018.
+34.0%
+23.5%
+Life and Health Insurance Business
+as % of NBV
+Other margins
+Interest margin
+as % of NBV
+The interest margin and other margins (include mortality, expense and other margins) as percentages of
+value of one year's new business after cost of capital are shown below:
+Note: ANP (Annualised new premium) is calculated as the sum of 100 per cent of annualised first year premiums and 10 per cent of single
+premiums.
+Including: Long-term protection
+43.3%
+(in RMB million)
+Note
+93,237
+[3]
+94.6%
+NBV post-risk diversified, including:
+6,805
+ANA return
+2018
+38,522
+Expected embedded value growth
+45,326
+[2]
+496,381
+[1]
+Opening EV of L&H
+Unwinding of in-force value
+46.7%
+Expected return on opening EV
+43.7%
+38.5%
+32.2%
+38.3%
+Short-term
+39.4%
+37.3%
+32.4%
+55.4%
+16.9%
+18.0%
+39.3%
+Protection & Saving hybrid (short-PPP)
+16.9%
+15.6%
+Protection & Saving hybrid (long-PPP)
+Tele, internet and others
+55.2%
+42.3%
+1.6%
+41.1%
+Total
+1.1%
+1.3%
+Group business
+19.5%
+13.8%
+9.6%
+18.7%
+Bancassurance
+41.7%
+40.5%
+1.8%
+Brand Director of
+the Group
+Ping An Insurance (Group) Company of China, Ltd.
+Capital supplement
+bonds
+First 5 years: 3.90%
+Next 5 years: 4.90%
+(If not redeemed)
+Ping An Life
+2015
+10 years
+5,000
+Finance & Planning
+Department of
+member companies
+66
+Asset Risk
+Management
+Department of
+member companies
+Branding Department
+of member companies
+Information
+Security/Operations
+Department of
+member companies
+Risk Management/
+Compliance/Internal
+Audit Department of
+member companies
+Member
+companies
+Center
+10 years
+Group Asset
+Management
+Chief Investment
+Officer of the
+Group
+Branding Department
+of the Group
+Annual Report 2018
+2014
+Ping An Insurance (Group) Company of China, Ltd. 61
+8,000
+Total liabilities to total
+assets ratio
+December
+31, 2018
+Information
+Security/Operations
+Department of the
+Group
+December
+31, 2017
+Change
+90.4%
+90.9%
+-0.5 pps
+Note: Total liabilities to total assets ratio = Total liabilities/Total
+Assets.
+CAPITAL STRUCTURE
+The Group's long-term capital stability stems from
+the profits continuously generated by its various
+businesses. Furthermore, based on the capital
+plan, the Group ensures capital adequacy by
+using capital market instruments, issuing equity
+securities, subordinated bonds, capital supplement
+bonds, hybrid capital bonds and tier-2 capital
+bonds to raise capital. Adjustments are made to
+surplus capital through dividend distribution. As at
+December 31, 2018, the Group's equity attributable
+to shareholders of the parent company was
+RMB556,508 million, up 17.6% from the beginning of
+2018. The parent company's capital mainly comprises
+contributions from shareholders as well as proceeds
+from issuance of H shares and A shares.
+First 5 years: 5.90%
+Next 5 years: 7.90%
+(If not redeemed)
+Annual Report 2018
+Liquidity and Capital Resources
+The following table indicates the balances of subordinated bonds, capital supplement bonds, hybrid capital
+bonds and tier-2 capital bonds issued by the Group and main subsidiaries as at the end of 2018:
+Par value
+Issuer
+Туре
+(in RMB million)
+Coupon rate
+Issued year
+Maturity
+Ping An Life
+Subordinated bonds
+MANAGEMENT DISCUSSION AND ANALYSIS
+Officer/Co-CEOs
+of the Group
+224.2%
+Finance & Planning
+Center of the
+Group
+205.9%
+30% decrease in fair value of
+equity assets
+204.6%
+208.7%
+50bps decline in interest rate
+223.8%
+218.8%
+216.4%
+Central case
+Casualty
+204.4%
+Life
+Ping An
+Property &
+Ping An
+Ping An
+Comprehensive solvency margin ratio
+Stress test results about impacts of declines in interest rates and equity assets on Ping An Group, Ping An
+Life and Ping An Property & Casualty's solvency margin ratios as at December 31, 2018 are disclosed below:
+A stable solvency position ensures that the Company meets capital requirements specified by external
+institutions including regulators and rating agencies, and supports the Company in developing business and
+creating value for shareholders.
+(2) Figures may not match the calculation due to rounding.
+Notes: (1) Core solvency margin ratio = core capital/minimum capital; comprehensive solvency margin ratio = actual capital/minimum
+capital.
+All operating, investing and financing activities
+should meet the requirements of liquidity
+management. Ping An Group and its insurance
+subsidiaries implement separate management of
+their operating cash inflows and outflows. Allocation
+and deployment of funds are centralized through
+the pooling of cash inflows and outflows. The
+Company and its subsidiaries are therefore able to
+monitor cash flow status in a timely manner.
+1.5 pps
+Group
+219.8%
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 65
+Chief Financial
+Officer of the
+Group
+Internal Control
+Management
+Center of the
+Group
+Group Chief Risk
+Officer/Chief Internal
+Auditor/Compliance
+Officer
+Relations
+Management
+Committee
+Technology
+Development
+Committee
+Investor
+Investment
+Management
+Committee
+Group Risk Management
+Executive Committee
+Chairman: Group Chief
+Risk Officer
+Budget
+Management
+Committee
+Connected-party
+Transaction
+Management
+Committee
+Group Executive
+Committee
+Group Board of Directors
+Audit and Risk
+Management Committee
+Group
+Global Systemically
+Important Insurer
+Management
+Committee
+The Group proactively complies with the PRC Company Law and relevant laws, regulations and regulatory
+requirements, as well as the Articles of Association of Ping An Insurance (Group) Company of China, Ltd.
+and relevant corporate risk governance requirements. We have in place a comprehensive risk governance
+framework which holds the Group Board of Directors ultimately accountable, and which is directly upheld
+by the management. Supported closely by various committees and relevant departments, the framework
+covers risk management across all of the Group's members and business lines.
+RISK MANAGEMENT ORGANIZATIONAL STRUCTURE
+Amid evolving regulations in the changing domestic and global economic environments, Ping An has
+diversified its offerings under the "finance + technology" and "finance + ecosystem" strategy. Based
+on robust compliance management and internal control, the Group builds an effective enterprise risk
+management framework in line with international standards through risk quantification tools and risk
+performance appraisals, centering on capital management and being risk-appetite-oriented. By improving
+risk management and technology, and dynamically managing both individual and cumulative risks, the
+Company aims to achieve a balance between risk management and business development.
+For 30 years since its establishment, Ping An has regarded risk management as an integral part of its
+operations and business activities. We take steady steps to build an enterprise risk management system
+aligned with the Group's strategies and the nature of our business. We continuously optimize the risk
+management framework, standardize risk management procedures, and adopt qualitative and quantitative
+risk management methodologies to identify, evaluate and mitigate risks. Keeping risks under control, we
+promote sustainable business growth and build Ping An into a "world-leading technology-powered retail
+financial services group."
+RISK MANAGEMENT OBJECTIVES
+We strive to become a "world-leading technology-powered retail financial
+services group." To achieve this goal, we continuously optimize the risk
+management system and develop a risk management platform. By identifying,
+evaluating and mitigating risks, we achieve a balance between risks and returns
+which ultimately contributes to sustainable growth of the Group.
+Risk Management
+MANAGEMENT DISCUSSION AND ANALYSIS
+Chief Information
+Officer/Chief Operating
+Liquidity management of the Group comprises
+capital management and cash flow management.
+The Group has put in place a comprehensive capital
+management and decision-making mechanism.
+As part of this process, the Group's subsidiaries
+put forward their capital requirements based on
+their own business development needs. The parent
+company then submits its recommendations on
+the overall capital plan for the Group, based on
+the overall situation of the subsidiaries' business
+development. The Group Executive Committee
+then determines a final capital plan based on the
+strategic plan of the entire group before allocating
+capital accordingly.
+shareholder equity based on
+EV ultimate investment return
+assumption (5%)
+Liquidity refers to the availability of cash assets
+or cash supply to meet the financial requirements
+of the Company whenever needed. The aim of
+the Group's liquidity management is to meet the
+liquidity requirements of its operating, investing and
+financing activities while maximizing shareholders'
+returns by optimizing its financial resources
+allocation and capital structure.
+[6]
+98,043
+(26,698)
+72,912
+(20,088)
+L&H operating profit after tax
+[7]=[5+6]
+71,345
+52,824
+Investment return on
+Investment return from assets
+backing liability based on EV
+ultimate investment return
+assumption (5%) higher than
+interest required on liability
+Favorable operating experiences
+Note: Figures may not match totals due to rounding.
+[5]=[1+2+3+4]
+Residual margin is the present value of future profits with release pattern locked in at the time of policy
+issuance, resulting in stable release and immunity to capital market volatility. As at December 31, 2018,
+residual margin of the life and health insurance business was RMB786,633 million, which rose by 27.6% from
+the beginning of 2018 mainly due to contribution from new business. The movement of L&H residual margin
+has been illustrated below:
+2018
+2017
+Note
+Opening residual margin
+[1]
+616,319
+454,705
+Contribution from new business
+[2]
+177,485
+(in RMB million)
+L&H operating profit before tax
+Income tax
+10,108
+21,749
+214.9%
+58
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Source of Earning and Residual Margin Analysis of L&H
+The breakdown by source of earning of L&H operating profit has been shown as below.
+(in RMB million)
+Release of residual margin
+Return on net worth
+[1]
+[2]
+Spread income
+2018
+2017
+Note
+62,287
+49,811
+8,959
+7,357
+[3]
+5,048
+5,637
+Operating variances and other
+[4]
+168,426
+The Company manages its liquidity and capital
+resources from the perspective of the Group as a
+whole. The Budget Management Committee, Risk
+Management Executive Committee and Investment
+Management Committee under the Group Executive
+Committee are overseeing these essentials at
+group level. As the Group's liquidity management
+execution unit, the Treasury Division is responsible
+for the Group's treasury management functions
+including cash settlement management, cash flow
+management, funding management and capital
+management.
+Expected interest growth
+28,498
+FYP disclosed
+in MD&A
+Difference Reasons
+156,599
+Group business
+32,030
+21,907
+10,123
+Total
+165,446
+133,417
+Note: Numbers may not match totals due to rounding.
+In compliance with current accounting
+standards, group investment contracts
+are not included in FYP disclosed in
+MD&A, but included in FYP used to
+calculate value of new business due
+to their contribution to value of new
+business
+178,506
+(13,060)
+60
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+Liquidity and Capital Resources
+The Company manages its liquidity and capital resources from the
+perspective of the Group as a whole.
+As at December 31, 2018, the solvency of the Group was adequate. The
+comprehensive solvency margin ratio rose by 1.5 pps from the beginning
+of 2018 to 216.4%, higher than the regulatory requirement (100%).
+GENERAL PRINCIPLES
+(23,183) Guaranteed renewal and other short
+term products' renewal premiums are
+included in FYP disclosed in MD&A but
+not included in FYP used to calculate
+value of new business
+of new business
+FYP used to
+calculate value
+Retail business
+22,642
+Release of residual margin
+[4]
+(62,287)
+(49,811)
+Lapse variances and others
+[5]
+26,617
+20,357
+Business growth and favorable
+lapse experience
+Closing residual margin
+[6]=[1+...+5]
+786,633
+616,319
+Note: Figures may not match totals due to rounding.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 59
+MANAGEMENT DISCUSSION AND ANALYSIS
+Analysis of Embedded Value and
+Operating Profit
+Appendix
+The differences between FYP used to calculate value of new business and FYP disclosed in MD&A are
+explained below.
+12 months ended
+December 31
+(in RMB million)
+[3]
+216.4%
+(7,702)
+209.0%
+3,947
+(3,034)
+42,010
+11.5
+(3) Figures may not match totals due to rounding.
+(8,584)
+73.3
+(19,194)
+(33,270)
+88.9
+25,711
+N/A
+48,566
+35,570
+38,332
+Change (%)
+2017
+2018
+Closing balance of free cash
+Others
+Capital injection into subsidiaries
+Dividend out to shareholders
+Dividend from subsidiaries
+7.8
+38,332
+9.6
+62
+2016
+2017
+2018
+Given sustained business growth and confidence in our prospect, the Board of Directors proposed to
+increase total ordinary dividend per share for 2018 by 14.7% year on year to RMB1.72.
+According to Article 217 of the Articles of Association, the Company shall attach importance to the
+reasonable investment returns of investors in terms of its profit distribution. The profit distribution policy
+of the Company shall maintain its continuity and stability. The accumulated profit to be distributed in
+cash for any three consecutive years shall not be less than 30% of the average annual distributable profit
+realized in the three years, provided that the annual distributable profit of the Company (namely profit
+after tax of the Company after covering the losses and making contributions to the revenue reserve) is
+positive in value and such distributions are in compliance with the prevailing laws and regulations and
+the requirements of regulatory authorities for solvency ratio. In determining the specific cash dividend
+payout ratio, the Company shall take into account its profit, cash flow, solvency, operation and business
+development requirements. The Board of Directors of the Company shall be responsible for formulating
+and implementing a distribution plan according to the provisions of the Articles of Association. The Board
+of Directors will ensure the stability and continuity of the profit distribution policy, so that the Group can
+seize opportunities for growth in the future while maintaining financial flexibility.
+DIVIDEND DISTRIBUTION
+48,566
+1,157
+2,467
+6,492
+7,001
+31,449
+2018
+Total
+Ping An Bank
+Ping An Asset Management
+Ping An Trust
+Ping An Property & Casualty
+Ping An Life
+(in RMB million)
+The major cash outflows were the dividend to A and H shareholders of RMB33,270 million and capital
+injection into subsidiaries of RMB8,584 million. The major cash inflow was the dividend from subsidiaries of
+RMB48,566 million which is illustrated below:
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+Opening balance of free cash
+Growth of
+(in RMB million)
+FREE CASH OF THE HOLDING COMPANY
+1,500
+Hybrid capital debt
+instrument
+Ping An Bank
+10 years
+2017
+First 5 years: 5.10%
+3,500
+Capital supplement
+bonds
+Ping An Property &
+Casualty
+(If not redeemed)
+Next 5 years: 6.10%
+(If not redeemed)
+First 10 years: 5.70%
+Next 5 years: 8.70%
+(If not redeemed)
+Next 5 years: 5.79%
+2015
+First 5 years: 4.79%
+5,000
+Capital supplement
+bonds
+Ping An Property &
+Casualty
+Next 5 years: 4.82%
+(If not redeemed)
+10 years
+2016
+First 5 years: 3.82%
+10,000
+10 years
+2009
+15 years
+Ping An Bank
+10 years
+2016
+3.85%
+10,000
+Tier-2 capital bonds
+Ping An Bank
+10 years
+2014
+6.80%
+9,000
+Tier-2 capital bonds
+Ping An Bank
+10 years
+2014
+6.50%
+6,000
+Tier-2 capital bonds
+Ping An Bank
+15 years
+2011
+7.50%
+3,650
+Hybrid capital debt
+instrument
+The free cash of the Company includes bonds, equity securities, bank deposits and cash equivalents
+that the Company holds. They can be invested in subsidiaries or used in daily operations or for dividend
+distribution. As at December 31, 2018, the Company's free cash amounted to RMB42,010 million, up RMB3,678
+million compared with the beginning of the year.
+Cash dividend
+paid per share
+cash dividend
+Cash dividend
+The insurance group solvency margin represents the consolidated solvency margin calculated as if the
+parent company and its subsidiaries, jointly controlled entities and associates were a single reporting
+entity. The group solvency margin ratio is an important regulatory measure of an insurance group's capital
+adequacy.
+GROUP SOLVENCY MARGIN
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+64
+The Company believes that the liquid assets
+currently held, together with net cash generated
+from future operations and the short-term
+borrowings available, will be sufficient to meet the
+foreseeable liquidity requirements of the Group.
+(0.2)
+308,664
+308,024
+Total cash and cash
+equivalents
+The related solvency data under C-ROSS of the Group are as follows:
+(8.0)
+85,531
+Financial assets purchased
+under reverse repo
+agreements to mature
+within 3 months
+(80.8)
+13,185
+2,534
+Bonds to mature within
+3 months
+8.6
+202,471
+219,959
+Cash
+93,008
+(in RMB million)
+Core capital
+Actual capital
+211.1%
+11.7
+533,775
+596,238
+12.5
+1,146,865
+1,290,268
+12.9
+1,115,365
+1,258,768
+(%)
+2017
+2018
+Change
+December 31,
+December 31,
+requirement >=100%)
+ratio (regulatory
+solvency margin
+Comprehensive
+requirement >=50%)
+Core solvency margin.
+ratio (regulatory
+Minimum capital
+Change
+(%)
+December
+31, 2017
+December
+31, 2018
+(in RMB million)
+Under the model of integrated finance, the Company's ultimate goals are to support the Group's strategies.
+and maximize capital efficiency. The Company follows three core principles in capital allocation: 1) to
+ensure capital levels of the Group's subsidiaries meet their respective business development needs
+and regulatory requirements; 2) to support mature, high-return businesses, boost performance, and
+create value; and 3) to explore new businesses, seize new growth drivers and opportunities, and realize
+sustainable growth in the future.
+CAPITAL ALLOCATION
+(4) Total ordinary dividend per share for 2018 was RMB1.72, excluding the 30th Anniversary Special Dividend of RMB0.20 distributed
+in the first quarter. If the 30th Anniversary Special Dividend is included, the total cash dividend per share for 2018 will be
+RMB1.92, equating to a 28.0% dividend growth rate and a 32.7% payout ratio.
+(3) Except the 2018 final dividend pending approval at the 2018 Annual General Meeting, the profit distribution for other years was
+completed during the relevant years.
+Notes: (1) Cash dividends include the interim dividend and final dividend for the year.
+(2) The cash dividend paid per share is based on the then share capital.
+22.0
+30.8
+29.3
+107,404
+89,088
+62,394
+31,442
+27,420
+13,710
+41.5
+0.75
+100.0
+1.50
+14.7
+1.72
+payout ratio
+(%)
+Cash dividend
+Net profit
+attributable to
+shareholders of
+the parent
+company
+(in RMB million)
+(in RMB million)
+amount
+per share
+(%)
+(in RMB)
+Annual Report 2018
+2.1 pps
+Ping An Insurance (Group) Company of China, Ltd.
+MANAGEMENT DISCUSSION AND ANALYSIS
+CASH AND CASH EQUIVALENTS
+Net cash inflows from financing activities fell year
+on year mainly due to a year-on-year decrease
+in net cash inflows from financing activities of
+subsidiaries including Ping An Bank.
+Net cash outflows from investing activities dropped
+year on year mainly due to a year-on-year decline in
+net cash outflows from investing activities of Ping
+An Bank and Ping An Life.
+Net cash inflows from operating activities increased
+year on year mainly because Ping An Bank's
+cash outflows from operating activities declined
+significantly year on year.
+(82.5)
+31,264 178,588
+(32.2)
+(240,426) (354,767)
+70.1
+206,260 121,283
+Net cash flows from
+operating activities
+Net cash flows from
+investing activities
+Net cash flows from
+financing activities
+(%)
+2017
+2018
+Change
+(in RMB million)
+CASH FLOW ANALYSIS
+The Group and its subsidiaries have established
+liquidity reserve policies and maintained stable,
+convenient, and diverse sources of financing to
+ensure that they have adequate liquidity to tackle
+possible impacts from adverse situations. The Group
+and its subsidiaries have developed robust liquidity
+contingency plans for handling any significant
+liquidity events. The Group has set up internal
+firewalls to prevent intra-group contagion of the
+liquidity risk.
+Under the Group's principles and guidelines for
+liquidity risk management, the subsidiaries have
+developed their own liquidity risk appetites, risk
+indicators, and risk limits according to the applicable
+regulations, industry practices, and features of their
+business activities. The Group and its subsidiaries
+have established robust liquidity risk information
+systems and liquidity monitoring and reporting
+procedures for adequate identification, accurate
+measurement, continuous monitoring, and effective
+control of the liquidity risk in various business
+activities. The Group and its subsidiaries regularly
+evaluate liquid assets and maturing debts, conduct
+stress tests of cash flows, and carry out forward-
+looking analyses of the liquidity risk for a certain
+period in the future to identify the potential liquidity
+risk and take measures to control liquidity gaps.
+To meet domestic and international regulatory
+requirements including those for the Global
+Systemically Important Insurers (G-SIIs) and those
+under C-ROSS, the Group has developed and
+regularly updated the Liquidity Risk Management
+Plan of Ping An Insurance (Group) Company of
+China, Ltd. (LRMP). The Group has also established
+a robust liquidity risk management framework
+covering risk appetites and limits, risk strategies, risk
+monitoring, stress testing, emergency management,
+appraisal and accountability, and relevant policies.
+Ping An has constantly improved its management
+procedures and processes for better identification,
+evaluation, and management of the liquidity risk at
+the Group and its members.
+Liquidity risk refers to the risk of the Company
+being unable to obtain sufficient cash in time, or
+being unable to obtain sufficient cash in time at a
+reasonable cost, to repay debts that have become
+due or fulfill other payment obligations.
+LIQUIDITY RISK MANAGEMENT
+Liquidity and Capital Resources
+63
+Notes: (1) The short-term investment variance and impact of discount rate change of L&H listed above is net of tax.
+(2) The impact of one-off non-operating item in 2018 referred to the fair value revaluation gain, as required by the accounting
+standards, of the convertible bonds issued by Lufax Holding to the Group as the consideration of Puhui transaction. The fair
+value of the convertible bonds significantly increased due to Lufax Holding's Series C financing. The one-off material item
+that management considered to be non-operating income and expense in 2017 was the financial gain from Ping An Good
+Doctor's restructuring.
+Ping An Life
+1,026
+Below section contains Group Operating Profit and Source of Earning and Residual Margin Analysis of
+L&H. The Company has engaged PricewaterhouseCoopers Consultants (Shenzhen) Limited to review the
+reasonableness of the methodology and the calculation results of the Analysis of Operating Profit as at
+December 31, 2018.
+ANALYSIS OF OPERATING PROFIT
+N/A
+600,124
+985,062
+71,491
+604,227
+993,460
+5% increase in the policyholders' dividend payout ratio
+10% decrease in fair value of equity asset
+71,731
+610,212
+999,445
+10% increase in maintenance expenses
+69,376
+604,102
+Operating profit of the Group
+993,335
+Due to the long-term feature of the majority insurance business of life and health, the measure of operating
+profit has been applied to more appropriately evaluate business performance. Operating profit after tax
+is based on net profit from financial statements, excluding items that are of short-term, volatile or one-off
+nature, including:
+Impact of discount rate (1) change is the effect on insurance contract liability of L&H due to changes in
+discount rate;
+Trust business
+Asset management business
+Banking business
+Property and casualty insurance business
+Life and health insurance business
+(in RMB million)
+Operating profit after tax attributable to shareholders of the parent company
+Analysis of Embedded Value and
+Operating Profit
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd. 57
+Annual Report 2018
+The Group operating profit after tax attributable to shareholders of the parent company in 2018 was
+RMB112,573 million, which was up by 18.9% year on year. The L&H operating profit after tax attributable to
+shareholders of the parent company was RMB70,320 million, which was up by 34.9% year on year.
+Note: (1) Refer to "Significant Accounting Policies" in the Notes to Consolidated Financial Statements in the 2018 Annual Report for
+information about the discount rate.
+The operating profit after tax which excludes fluctuations of above non-operating items can provide a
+clearer and more objective representation of the Company's business performance and trend.
+Impact of one-off non-operating items are significant items that management considered to be non-
+operating income and expenses.
+Short-term investment variance, which is the variance between actual investment return of L&H and
+the EV ultimate investment return assumption, net of associated relevant impact on insurance and
+investment contract liability. The life and health insurance business operating profit is based on a 5%
+investment return assumption after excluding the short-term investment variance;
+Securities business
+10% increase in policy discontinuance rates
+592,822
+65,577
+62,383
+Sensitivity to other assumptions
+Capital supplement
+bonds
+(in RMB million)
+EV of Group
+EV of L&H
+NBV
+Central case
+1,002,456
+613,223
+72,294
+Assumptions and model used in 2017
+999,704
+52,128
+696
+68,993
+66,100
+68,727
+76,119
+982,055
+10% increase in mortality, morbidity and accident rates
+71,389
+610,471
+Sensitivity of NBV to investment return and risk discount rate
+(in RMB million)
+Investment return increased by 50bps per annum
+Central case
+Risk discount rate
+10.5%
+11.0%
+11.5%
+83,213
+78,981
+75,042
+72,294
+Others
+Investment return decreased by 50bps per annum
+Other businesses and elimination
+Impact of discount rate change of L&H
+[2]
+Short-term investment variance of L&H(1)
+Excluding:
+36,143
+58,757
+99,978
+2017
+2018
+2017
+2018
+L&H business
+Group
+120,452
+[1]
+[3]
+Net profit
+(12,853)
+265
+(12,853)
+265
+70,320
+Fintech & healthtech business
+94,708
+11,101
+112,573
+13,231
+Owners of the parent
+Non-controlling interests
+-
+Attributable to:
+Operating profit after tax
+52,824
+71,345
+10,850
+105,809
+7,236
+125,804
+[5]=[1-2-3-4]
+[4]
+4,532
+(21,213)
+4,532
+(21,213)
+(in RMB million)
+Impact of one-off material non-operating
+items (2)
+94,708
+7.0
+13,449
+14,394
+(8.2)
+13,307
+12,215
+52,128
+70,320
+(%)
+2017
+Change
+2018
+18.9
+Note: Figures may not match totals due to rounding.
+The Group
+12,871
+13,104
+34.9
+3,008
+48.0
+(2,700)
+112,573
+(1.8)
+(3,996)
+24.9
+5,420
+16.3
+6,770
+7,108
+8,264
+(21.7)
+2,043
+1,599
+(23.9)
+3,953
+Market Risk - Real Estate Price Risk
+Ping An Insurance (Group) Company of China, Ltd.
+The Group is exposed to real estate price risk
+associated with its holding of investment properties.
+The Group tracks its exposure to property
+investment, monitors the movement of real estate
+prices in relevant regions, analyzes the impact of
+macro policies and regional economic development
+on real estate prices, and conducts stress tests on
+a regular basis. Moreover, the Group has engaged
+independent valuers for the fair value assessment.
+As at December 31, 2018, the fair value of the
+Group's holding of buildings under investment
+properties stood at RMB68,136 million.
+72
+Annual Report 2018
+Market Risk Foreign Exchange Risk
+Foreign currency-denominated assets held by the
+Group are exposed to foreign exchange risks. These
+assets include monetary assets such as deposits and
+bonds held in foreign currencies and non-monetary
+assets measured at fair value such as stocks and
+funds held in foreign currencies. The Group's foreign
+currency-denominated liabilities are also exposed
+to risks as a result of fluctuations in exchange rates.
+These liabilities include monetary liabilities such as
+borrowings, customers' deposits and claim reserves
+denominated in foreign currencies, as well as non-
+monetary liabilities measured at fair value.
+If the above currencies appreciate by the same
+proportion, the appreciation will have an inverse
+effect of the same amount on equity in the table.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Setting credit risk limits in multiple dimensions
+for investments and credit portfolios;
+Credit risk is the risk of unexpected losses resulting
+from the default of any debtors or counterparties
+because of their failure of timely performance
+of their obligations or adverse changes in their
+credit profiles. The Group is exposed to credit risk
+primarily associated with its deposit arrangements
+with other commercial banks, loans and advances
+to third parties, bond investments, reinsurance
+arrangements with reinsurance companies, policy
+loans, margin trading and off-balance-sheet related
+activities.
+The Group manages credit risk through various
+measures, including:
+Establishing a credit risk management
+mechanism with risk rating as its core
+methodology;
+Developing standardized policies, rules and
+procedures for credit risk management;
+Monitoring credit risk through a risk
+management system.
+The Group is in strict compliance with the credit
+risk management guidelines issued by regulators.
+Under the guidance of the Board of Directors and
+the management, the Group carries out analysis,
+monitoring and management of the credit risk
+exposures of lending and investment businesses at
+the group level. On this basis, the Group establishes
+and refines credit risk limits for different members
+and business lines to manage high risk exposures
+and the concentration of risk after consolidating
+the Group's financial statements. The Group also
+provides forward-looking insights and analysis
+of potential credit risks and their impacts on the
+Group.
+The Group carries out targeted measures to
+control specific credit risks and concentration
+risks in light of different characteristics and risk
+profiles of businesses such as insurance, banking
+and investment. In order to manage credit risks
+December 31, 2018
+-
+associated with the banking business, the Group
+adopted advanced capital management methods,
+continuously improved credit structure and set
+credit risk limits on portfolios from multiple
+dimensions in line with changes in the financial
+and economic situation, macroeconomic policies
+and the requirements of regulatory authorities. The
+Group conducted thorough and stringent credit
+assessments on potential borrowers before granting
+credit facilities and reviewed outstanding loans on
+a regular basis. Risk mitigations were strengthened
+in key areas to prevent the accumulation of credit
+risk from large exposures. Credit risk management
+measures also included obtaining collateral and
+guarantees. In the case of off-balance sheet credit
+commitments, the Group referred to the principles
+and methods applied to on-balance sheet credit
+asset management to set up standard approval
+and management procedures, and normally
+collected performance deposits to mitigate credit
+risk. The Group stepped up its efforts in credit
+risk monitoring and precautions, enhancing its
+capability to provide early warning of risks and
+make prompt responses. We also actively dealt with
+changes in the market environment and regularly
+analyzed trends and changes of credit risk so as
+to take precautionary measures to control risk.
+Furthermore, for credit risk associated with the
+investment business, the Group assesses the credit
+of potential investment instruments in line with
+internal risk rating policies and procedures, chooses
+a counterparty that has a relatively high credit
+standing and adopts a multi-dimensional approach
+for setting risk limits on investment portfolios
+in order to manage credit risks. For reinsurance
+credit risk associated with insurance business,
+namely, credit risk which occurs when a reinsurance
+company is unable to fulfill its obligations, the
+Group evaluates the credit of the reinsurers before
+entering into a reinsurance contract, and seeks to
+reinsure with companies that have higher credit
+standing to mitigate such risks.
+1.3 Credit Risk
+2,756
+Annual Report 2018
+a simultaneous and uniform
+depreciation of 5% of all foreign
+currency denominated monetary
+assets and liabilities and non-monetary
+assets and liabilities measured at
+fair value against the Renminbi
+Change in
+interest rate
+Low-risk financial assets measured
+at amortized cost held by the
+Group
+Decrease in
+profit
+Decrease in
+equity
++50 bps
+1,739
+8,356
+The impacts of interest rate re-pricing and duration
+mismatch of assets and liabilities on yields are
+assessed through gap analysis. We analyze the
+re-pricing characteristics of assets and liabilities
+on a regular basis, and carry out a scenario-based
+analysis of the interest rate risk through the asset-
+liability management system. On the basis of the
+existing gap, we adjust the re-pricing frequency
+and set limits on the maturity of corporate
+deposits to reduce duration mismatch in re-pricing.
+Meanwhile, the Assets and Liabilities Management
+Committee holds regular meetings to make timely
+and appropriate adjustments to the asset-liability
+structure and manage the interest rate risk in
+response to macro-economic trends and the PBC's
+policies on benchmark interest rates.
+Ping An Insurance (Group) Company of China, Ltd. 71
+Risk Management
+Market Risk - Equity Risk
+Listed equity investments held by the Group are
+exposed to market price risks. These investments
+are primarily listed equity securities and securities
+investment funds.
+The Group adopts the 10-day market price value-at-
+risk ("VaR") technique to estimate its risk exposure.
+The market price VaR measures a maximum loss
+in the value of our portfolios of equity investment
+due to normal market fluctuation within a given
+confidence level (99%) and a specified timeframe (10
+days).
+As at December 31, 2018, the VaR for listed equity
+securities and securities investment funds is as
+follows:
+December 31, 2018
+(in RMB million)
+Listed equity securities and
+securities investment funds
+classified as financial assets
+carried at fair value through
+profit or loss and carried
+at fair value through other
+comprehensive income
+Impact on equity
+15,799
+The sensitivity to foreign exchange risk is
+calculated by assuming a simultaneous and uniform
+depreciation of 5% against the Renminbi of all
+foreign currency denominated monetary assets
+and liabilities, as well as non-monetary assets and
+liabilities measured at fair value as illustrated in the
+table below:
+December 31, 2018
+(in RMB million)
+Net exposure to fluctuations in
+exchange rates assuming
+Decrease in
+equity
+Percentage of
+carrying value
+Risk Management
+Annual Report 2018
+Risk contagion refers to a situation where the
+risk created by a member of the Group spreads
+to another member of the Group by means of
+intercompany transactions or other activities,
+causing losses to such other member.
+As the Group promotes synergies in integrated
+finance, in order to prevent intra-group risk
+contagion, the Group has strengthened management
+and coordination across the Group by building
+firewalls, managing connected-party transactions
+("CPTS"), outsourcing and cross-selling, and
+coordinating the Group's branding, communication,
+and information security functions.
+The Group has built robust firewalls between
+the Group and its subsidiaries and among its
+subsidiaries, including legal-entity firewalls, finance
+firewalls, information firewalls, and personnel
+management firewalls to prevent risk contagion.
+First, the legal-entity firewalls. The Group and its
+subsidiaries have complete governance structures.
+The Group itself engages in no specific business
+activity. The Group manages the subsidiaries
+through shareholding, but neither participates
+in nor intervenes in the subsidiaries' routine
+business. The subsidiaries carry out business
+activities independently, and are supervised by
+their respective regulators. Second, the finance
+firewalls. The Group and its subsidiaries have finance
+functions respectively; senior finance managers
+may not take concurrent offices at different entities
+within the Group. Each entity has clear accounts,
+with independent accounting, assets, and liabilities.
+Third, the information firewalls. The Group has
+established the governance structure with three
+lines of defense for information security. Member
+companies have established information security
+departments to strictly implement the Group's
+information security management rules for effective
+information segregation. Attaching great importance
+to customer information management and security
+of products and businesses on the internet, the
+Group has set up and effectively implemented
+the mechanism for comprehensive in-the-process
+monitoring. Moreover, the Group adopted cutting-
+edge technologies, including artificial intelligence
+(AI) and cloud computing, and security measures
+in terms of infrastructures, terminals, business
+and people to effectively protect customer
+information security. Meanwhile, the Group has been
+increasing awareness of information security and
+building a culture where everyone is responsible
+for information security. The Group is committed
+to building safe, innovative financial ecosystems.
+Fourth, the personnel management firewalls.
+The Group and its subsidiaries have separate
+management structures, with clear roles and
+responsibilities so that personnel do not perform
+roles with potential conflict of interests. Meanwhile,
+an insurance subsidiary's senior management
+may not serve as the senior management of non-
+insurance subsidiaries (unless otherwise stipulated
+by laws, regulations and the CBIRC).
+The Group has constantly improved the
+management of CPTs. In 2018, domestic regulators
+kept focusing on CPTs. The Group and its
+subsidiaries such as the insurance companies,
+bank, trust company, securities company, fund
+management company, and asset management
+company constantly enhanced management of CPTS
+in strict accordance with laws and regulations. The
+Group's Connected-Party Transaction Committee
+functioned effectively, coordinated Group-wide CPT
+management, constantly optimized management
+policies and procedures, and enhanced CPT
+identification, review and fair value-based pricing to
+ensure fair pricing for CPTs. The Group continued to
+increase transparency by disclosing and reporting
+CPTs in strict accordance with rules. The Group
+has developed a culture of strong compliance
+awareness for CPTs. The Group's CPT management
+systems and mechanisms have been improved and
+effectively operated.
+The Group has improved its approach to
+outsourcing. Currently, the Group's four centers
+(Administration, Internal Control, HR, and Finance)
+outsource IT services to Ping An Technology,
+including IT advisory services, development,
+application system operations, call center services,
+office support, and information security. The four
+centers outsource financial operations to Ping An
+Financial Services, including financial review and
+accounting, financial system configuration, cash
+collection and payment, financial voucher filing, tax
+processing, sale/purchase and payment of foreign
+exchanges, and personal income tax declaration.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 75
+The Group has enhanced the management of
+cross-selling. Retail cross-selling business is mainly
+distribution of insurance products by sideline
+agents. Such agents distribute products in an
+orderly manner under sideline agency agreements
+with Ping An in accordance with laws and
+regulations. If customers need products beyond
+agents' offerings, customers may use specific apps
+or visit platforms of other Ping An subsidiaries for
+information and purchase. The Group Integrated
+Finance Committee coordinates and promotes
+cross-selling of group products within Ping An
+Group. The business is done through distribution
+by insurance agents and business recommendation.
+Distribution by agents is subject to the rules
+on sales agents; business recommendation only
+involves matching both parties' intentions of
+cooperation in strict accordance with market rules.
+All businesses are reviewed independently by each
+subsidiary's risk function in line with the firewall
+policies.
+The Group has centralized the management
+of branding, communication, and information
+disclosure. The Group has developed robust rules
+and procedures for brand asset management and
+information disclosure, and strictly implemented
+them to ensure centralized management and
+consistency of branding.
+2.2 Organizational Structure Non-transparency Risk
+The organizational structure non-transparency risk
+refers to the risk of losses in the Group caused
+by the complexity or opaqueness of the Group's
+shareholding structure, management structure,
+operational processes, and business types.
+The Group has a clear shareholding structure.
+The shareholding structure of the Group is clear,
+balanced, and scattered. There is no controlling
+shareholder, nor de facto controller. The Group's
+subsidiaries engage in businesses such as insurance,
+banking, investment, and technology. All the
+subsidiaries have clear shareholding structures;
+none of them have cross-shareholding or illegal
+subscription for capital instruments.
+The Group has a transparent governance structure.
+The Group has established a clear corporate
+governance structure in accordance with laws
+and regulations such as the Company Law of
+the PRC and the Securities Law of the PRC, with
+the Group's situations taken into account. The
+General Meeting of Shareholders, the Board of
+Directors, the Supervisory Committee, and the
+senior management have exercised their rights and
+performed their obligations in accordance with
+the Articles of Association. The Group engages in
+no specific business activity. The Group manages
+the subsidiaries through shareholding, but neither
+participates in nor intervenes in the subsidiaries'
+routine business. The Company and its subsidiaries
+have clearly defined roles and responsibilities of
+their respective functions, which are independently
+operated and well coordinated subject to checks
+and balances. There is no overlap, absence, or over-
+concentration of powers and responsibilities.
+2.3 Concentration Risk
+The concentration risk refers to the risk that
+members' single or combined risks, when
+aggregated at the Group level, may be enough
+to directly or indirectly threaten the Group's
+solvency position. The Group manages the
+concentration risk through business counterparty
+management, investment management, insurance
+business management, and non-insurance business
+management.
+In order to manage the concentration risk from the
+perspective of business counterparties, the Group
+has specified a set of single risk limits for major
+counterparties based on the counterparties' risk
+tolerance as well as the Group's risk appetite and
+risk tolerance. The Group's set of single risk limits
+covers major non-retail, non-trading counterparties
+in its investment and financing businesses.
+In order to manage the concentration risk in
+investment assets, the Group has classified
+investment assets and specified a set of
+concentration risk limits for asset classes according
+to their respective risk-return profiles. Moreover, the
+Group has regularly reviewed the concentration risk
+posed by investment assets at the subsidiary level
+to prevent any solvency risk and liquidity risk arising
+from over-concentration of the Group's investment
+assets in a certain asset class, counterparty, or
+sector.
+76
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+at fair value through profit
+or loss and carried at
+fair value through other
+comprehensive income
+2.1 Risk Contagion
+92.2%
+MANAGEMENT DISCUSSION AND ANALYSIS
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 73
+Risk Management
+1.4 Operational Risk
+Operational risk refers to the risk of losses resulting
+from inadequate or flawed internal procedures,
+employees, information technology systems and
+external events.
+The Group strictly follows applicable regulations
+and its operational risk management strategies.
+We use existing compliance management and
+internal control framework as the basis to integrate
+the advanced standards, methods and tools for
+operational risk management of domestic and
+foreign regulators. We optimize the structure
+and policies for operational risk management,
+and strengthen collaboration and cooperation
+between departments. We also established
+daily monitoring and reporting mechanisms to
+provide regular reports to the management on
+the overall operational risk situation. Moreover,
+we developed a set of rules and standards for
+operational risk management and strengthened
+the system development to constantly improve the
+effectiveness of operational risk management.
+The Group manages operational risk primarily
+through the following mechanisms and measures:
+Establishing a robust and comprehensive
+management approach covering the whole
+Group to identify, evaluate, monitor, control/
+mitigate, and report operational risks;
+Constantly optimizing the operational risk
+policies, frameworks, workflows, systems
+and tools to enhance overall operational risk
+management;
+Stepping up the use of operational risk
+management tools among member companies,
+such as the Risk and Control Self-Assessment
+(RCSA), Key Risk Indicator (KRI) and Loss Data
+Collection (LDC);
+Pushing forward the operational risk capital
+measurement according to regulatory
+requirements and management requirements;
+and
+Promoting a culture of operational risk
+management through targeted training.
+1.5 Strategic Risk
+Strategic risks refer to the risks of mismatch
+of strategies and market environment with the
+Company's capacity due to ineffective processes for
+drafting or implementing strategies or changes in
+the operation environment.
+By establishing a sound strategic risk management
+framework and procedures, the Group fully studied
+the macroeconomic conditions both at home and
+abroad, impact of regulatory landscape and market
+movement. We developed high-level strategic plans
+to ensure consistency between the strategic goals
+of members and the strategic plans of the Group
+and synergies between strategic goals of members.
+The Group also formulated medium- and long-
+term strategic plans and annual business plans,
+clarifying strategic priorities of the Group and its
+members. Furthermore, we oversaw and evaluated
+members' implementation of strategic plans to
+ensure effective execution of the Group's high-level
+strategic plans.
+1.6 Reputation Risk
+Reputation risk is the risk of the Company's brand or
+reputation being damaged and other relevant losses
+caused by negative comments from stakeholders
+on the Company due to a defect in the Company's
+operation or an external event.
+The Group constantly improves its reputation
+risk management approach as per regulations.
+By building and improving the pre-warning,
+monitoring, remediation, review and reputation
+repair procedures for reputation risk management,
+the Group closely monitors the business lines with
+potential risks and external factors to identify risk
+events and give warnings in time, follows up on the
+risk warnings, and minimizes the risk and chance
+of reputation crisis through effective control and
+remediation.
+2. Group-level Risk
+The Group proactively strengthens risk control of
+its subsidiaries, implements relevant regulatory
+requirements, and constantly enhances management
+of group-level risks such as risk contagion, the
+risk due to an opaque organization structure, the
+concentration risk, and risks in non-insurance areas.
+74
+Ping An Insurance (Group) Company of China, Ltd.
+as financial assets carried
+December 31, 2018
+(in RMB million)
+RISK ANALYSIS
+The Group has categorized all risks to ensure they
+are well defined and managed. Below are major risks
+and their definitions.
+1. General Risks
+2. Group-level Risks
+Bond investments classified
+2.1 Risk Contagion
+1.2 Market Risk
+1.3 Credit Risk
+2.2 Organizational Structure
+Non-transparency Risk
+2.3 Concentration Risk
+1.4 Operational Risk
+2.4 Non-insurance Risk
+1.5 Strategic Risk
+The Group conducts holistic management of
+subsidiaries' risks, carries out comprehensive
+assessment of risk management capabilities,
+and constantly improves risk monitoring
+indicators and measurement methods.
+Subsidiaries were instructed to apply
+technologies such as artificial intelligence
+to build up their smart risk management. By
+improving the risk management platform of the
+Group, we have enhanced the efficiency of risk
+management.
+1.6 Reputation Risk
+The Group attaches importance to effective
+management of subsidiaries' general risks. Following
+the requirements of internal management and
+external regulation, the Group has strengthened
+active management of the insurance risk, market
+risk, credit risk, operational risk, strategic risk and
+reputation risk.
+1.1 Insurance Risk
+Insurance risk refers to the risk of adverse deviation
+of the actual mortality rate, morbidity rate,
+loss ratio, expense ratio or surrender rate from
+expectations, which may cause losses to the Group.
+The Group assesses and monitors insurance risks
+with sensitivity analysis, stress testing and so
+on. We mainly evaluate the impacts of actuarial
+assumptions, such as the discount rate, investment
+yield, mortality rate, morbidity rate, surrender rate,
+and expense ratio, on our insurance liability reserve,
+solvency and profit in different scenarios.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 69
+70
+Risk Management
+December 31, 2018
+(in RMB million)
+Sensitivity analysis of long-term life insurance
+contracts' insurance liability reserve
+Change in
+assumptions
+1. General Risks
+Impact on insurance
+liability reserve (after
+reinsurance) increase/
+(decrease)
+The Group has carried out studies and
+practice of asset-liability risk management,
+and consolidated risk monitoring. Artificial
+intelligence was effectively applied to the
+entire risk management cycle to enhance risk
+management capabilities and support the
+Company's "finance + technology" and "finance
++ ecosystem" strategy.
+mechanism.
+MANAGEMENT DISCUSSION AND ANALYSIS
+The Board of Directors is the highest decision-
+making authority for the Company's risk
+management and takes responsibility for the
+effectiveness of the enterprise risk management
+function. The Audit and Risk Management
+Committee under the Board of Directors is
+responsible for having a thorough understanding of
+major risks and the Group's management situation,
+monitoring effectiveness of the risk management
+framework, and making recommendations to
+the Board of Directors after deliberations on the
+following matters:
+Overall objectives of risk management, risk
+appetites and tolerance, and risk management
+policies and procedures;
+The organizational structure and responsibilities
+of risk management;
+Risk assessments for major decisions and
+solutions to significant risks;
+Annual risk assessment reports.
+The Group Executive Committee leads all aspects
+of the Group's risk management, comprising nine
+committees, including the Group Risk Management
+Executive Committee (RMEC), the Investment
+Management Committee, the Budget Management
+Committee, the Investor Relations Management
+Committee, the Connected-party Transaction
+Management Committee, the Global Systemically
+Important Insurer Management Committee, and
+the Technology Development Committee. The
+RMEC as a specialized committee reports to the
+Group Executive Committee and holds the supreme
+leadership in the Group's risk management. The
+RMEC makes major decisions on risk management
+and is fully responsible for the Group's risk
+management results. Main duties of the RMEC
+include deliberating on the overall risk management
+goal, risk appetites, risk limits, policies and operating
+procedures, giving instructions on developing
+risk management frameworks, monitoring the
+Company's risk exposure and available capital,
+deliberating on risk management reports and
+financial management initiatives, overseeing
+establishment of risk management organizations
+in subsidiaries and monitoring their performance,
+supervising implementation of the risk management
+system in each member company or business line,
+and promoting a culture of comprehensive risk
+management across the Group.
+The Group's Chief Risk Officer acts as the RMEC's
+Chairman, while the Group's President, Chief
+Financial Officer, Chief Information Officer/Chief
+Operating Officer/Co-CEOs, Brand Director and
+Chief Investment Officer as vice chairpersons.
+Members of the RMEC are heads of the Group's
+risk management departments, each of whom has
+clearly-defined responsibilities of managing the
+asset quality risk, liquidity risk, information security
+risk, operational compliance risk, brand reputation
+risk and so on.
+In 2018, the Group closely followed domestic
+and foreign regulatory trends such as G-Slls,
+the New Basel Capital Accord, and the China
+Risk Oriented Solvency System (C-ROSS).
+We continued to strengthen the enterprise
+risk management framework, upgrade the risk
+governance and risk management policies of the
+Group and its members, and improve the Group-
+member risk management structure covering all
+risks and a centralized management platform to
+create synergies for enhanced risk management
+capabilities of the Group. The Group also improved
+its risk appetite system, developed risk management
+guidelines, evaluated enterprise risk management
+capabilities, improved monitoring indicators for
+enterprise risk management, standardized risk
+management requirements, reviewed business
+progress, and optimized capital utilization, to
+strike a balance between business development
+and risk management. The Group fulfilled risk
+management responsibilities and continued to
+optimize risk monitoring and reporting. Through
+the Risk Dashboard, the Group and its members
+have identified, classified and evaluated risks
+in a systematic manner, and applied smart risk
+management approaches to ensure that all risks are
+effectively managed on a timely basis.
+To meet regulatory requirements and support the
+Company's strategy and business development
+in a healthy and effective manner, the Group
+implemented a top-down and performance-linked
+risk evaluation indication system. The evaluation
+criteria for personnel, entities and procedures were
+developed on the principle of "accountability at
+every level with evaluation at each stage." The
+Group aims to closely link risk compliance with
+performance appraisal, and raise the awareness of
+risk management.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 67
+The Group utilized tools and methods such as
+the risk dashboard, scenario analysis, stress
+tests and risk limits to continuously develop
+and optimize quantitative techniques and
+models of risk management, analyze risk
+exposures and evaluate their quantitative and
+qualitative impacts on our risk bottom lines.
+Such measures enable us to plan ahead and
+take necessary precautions in a timely manner
+to prevent and mitigate risks.
+Risk Management
+RISK MANAGEMENT CULTURE
+As the risk governance system becomes more
+sophisticated, a risk culture has permeated the
+Group's ranks, from the Board of Directors to senior
+management and from committees to employees.
+This culture has facilitated an effective and efficient
+approach that is both top-down and bottom-up,
+which lays a solid foundation for the effective
+integration of risk management into the Group's
+daily operations. This in turn helps to protect
+shareholder equity, improves capital efficiency,
+supports management decisions, and ultimately
+creates value for the Group.
+RISK APPETITE SYSTEM
+A risk appetite system is central to Ping An's
+overall strategy and enterprise risk management.
+Considering the Group's overall strategy and
+members' development needs, the Group has built
+a risk appetite system that matches its business
+strategies, and combined risk appetites with
+management decisions and business development to
+promote healthy growth of the Group and members.
+MAJOR MEASURES OF RISK MANAGEMENT
+The Group continues to strengthen its enterprise
+risk management system, improve its organizational
+structure, formulate risk management policy
+and guidelines, standardize procedures for
+risk management, and fulfill risk management
+responsibilities. The Group adopts qualitative
+and quantitative risk management approaches
+to identify, evaluate and mitigate risks, so as to
+effectively prevent systemic risks associated with
+integrated finance, and enhance the overall risk
+management capabilities under an integrated model
+of various businesses.
+The Group has established an optimal risk
+governance framework and risk management
+reporting mechanism, and included risk
+indicators in the performance appraisal which
+integrates risk management culture into its
+corporate culture. In this way, we have laid the
+foundation for healthy, sustainable and stable
+development of the Group's business.
+The Group is proactively exploring and
+formulating a risk appetite framework in
+line with its business development strategy.
+The Group also formulates risk management
+guidelines and standardizes risk management
+requirements for members.
+68
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+MANAGEMENT DISCUSSION AND ANALYSIS
+The Group has improved the risk management
+system on risk concentration and strengthened
+its ability to manage concentrated risks,
+ranging from policy formulation to risk
+limit management, system building and risk
+reporting, so as to improve the Group's overall
+capability of risk management for its integrated
+financial service business.
+The Group has improved its risk warning
+mechanism, providing timely and effective
+alerts on industry developments, regulatory
+information or risk events, and effectively
+guarding against potential risks. The Group has
+also enhanced its risk emergency management
+Ping An has been designated by the Financial
+Stability Board (FSB) and the International
+Association of Insurance Supervisors (IAIS) as
+one of the Global Systemically Important Insurers
+(G-SIIs) for many years. We have proactively
+participated in development of international
+insurance regulations by keeping regulators
+informed of the realities in the Chinese insurance
+and financial markets, so as to create a more
+favorable international regulatory environment for
+developing countries and China's insurance industry.
+Our efforts have yielded good results. In 2018, as
+required by the FSB and the IAIS, Ping An reviewed
+and updated its Systemic Risk Management Plan
+(SRMP), and Recovery and Resolution Plan (RRP)
+including the Liquidity Risk Management Plan
+(LRMP). Based on the changes of the systemic
+risk assessment indicators, Ping An reviewed the
+changes in its business and risk profile. According
+to the comprehensive review and assessment, Ping
+An has effectively kept risks under control with its
+specialized enterprise risk management framework,
+and the Group's potential systemic impact on the
+financial market was very limited. The RRP including
+LRMP for 2018 has been approved by executive
+directors authorized by the Board of Directors, and
+has been approved by the CBIRC. While meeting
+the G-SII and the C-ROSS regulatory requirements,
+Ping An takes the G-SII projects as an opportunity
+to incorporate global best practices into its
+risk management and business procedures. We
+effectively prevent risks and risk contagion, provide
+our integrated financial business with strong risk
+protection, and safeguard the rapid development of
+our innovative business. Ping An acts as a stabilizer
+of financial markets to make greater contributions
+to China's financial innovation and development.
+The mechanisms and procedures adopted by the
+Group to manage insurance risks are as follows:
+1.1 Insurance Risk
+Discount rate/
+Short-term life
+insurance
++5%
+336
+4,037
+Implement effective product development
+policies to develop products with proper
+insurance coverage and fair pricing, and control
+product pricing risks;
+Implement prudent underwriting policies,
+establish guidelines for policy contracting
+and underwriting, and effectively prevent and
+reduce adverse selection risks;
+With strict claim investigation and settlement
+procedures, identify and prevent questionable
+or fraudulent claims;
+With effective product management
+procedures, analyze the experience and trends
+with the latest and the most accurate and
+reliable data, and well manage the product mix
+to control insurance risks;
+Evaluate unearned premium reserves and
+outstanding claims reserves using effective
+reserve assessment procedures and methods,
+and assess the reserve adequacy on a regular
+basis;
+With effective reinsurance management
+procedures, properly set self-retained risk
+limits, and use reinsurance as an effective
+risk transfer tool to transfer the excess risks
+to reinsurers with a high level of solvency to
+control insurance risks.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
++5%
+MANAGEMENT DISCUSSION AND ANALYSIS
+Market risks refer to the risks that cause the Group
+unexpected loss due to unfavorable changes in
+interest rate, equity price, exchange rate, and real
+estate price.
+The Group has continuously strengthened its market
+risk management approach, and strengthened the
+ability to identify, evaluate, measure, analyze and
+report on market risks from multiple dimensions.
+We further strengthened our investment risk
+management system to reinforce the foundation
+of risk management and improve risk management
+efficiency. We improved the risk management
+reporting mechanism, and consolidated risk
+monitoring and management. Stress testing was
+optimized to realize its decisional role in adherence
+to the bottom line of risk control. A risk limit
+framework was launched to monitor risks in the
+Group, subsidiaries and business lines. The Group
+also enhanced the risk early warning mechanism,
+which led to more targeted, forward-looking and
+thorough risk management.
+The mechanisms and procedures adopted by the
+Group to manage market risks are as follows:
+Market risks are managed in a top-
+down manner by the RMEC, the Group's
+Investment Management Committee and the
+risk management committees of member
+companies;
+Investment and asset risk management
+guidelines are developed to manage market
+risks in a forward-looking manner while
+ensuring safety, comprehensiveness and
+effectiveness, and matching up assets and
+liabilities;
+A multi-layered risk limit framework is
+established on the basis of risk bottom lines
+and asset-liability management strategies to
+keep market risks under control. While setting
+risk limits, the Group takes risk management
+strategies and the impacts on financial strength
+into account;
+Methods such as value at risk (VaR), sensitivity
+analysis and stress tests are applied based on
+the characteristics of investment and market
+risk management, for scientific and effective
+assessment and management of market risks;
+The risk monitoring and reporting mechanism is
+standardized. Risk reports are issued regularly
+to provide suggestions on risk management
+and ensure market risks are within the Group's
+tolerance.
+Develop insurance risk management policies
+and a scientific and consistent insurance risk
+management framework within the Group;
+Market Risk - Interest Rate Risk
+Fixed maturity investments held by the Group are
+exposed to the interest rate risk. These investments
+are substantially represented by bond investments
+booked at fair value on the balance sheet. The
+Group uses various methods such as sensitivity
+analysis and stress tests to evaluate the interest rate
+risk of such investments.
+The sensitivity of interest risk is assessed by
+assuming a 50 basis-point parallel shift of the
+government bond yield curve.
+December 31, 2018
+1.2 Market Risk
+casualty insurance
+The main market risks to which the Group is
+exposed are interest rate risk, equity risk, foreign
+exchange risk and real estate price risk.
+(in RMB million)
+Property and
+investment yield
++10bps
+(6,446)
+Discount rate/
+investment yield
+-10bps
+6,622
+Develop a set of key insurance risk indicators,
+closely monitor them, analyze abnormal
+changes and take management measures;
+Mortality, morbidity,
+and accident rates (1)
++10%
+44,436
+Establish model management policies,
+The Group's risk appetite system has four core
+dimensions: capital adequacy, liquidity adequacy,
+a good reputation, and compliance. The Group
+has used these dimensions to guide members in
+specifying their unique risk appetite dimensions
+according to their business features and demand.
+We have broken down risk appetites and tolerance
+into risk limits under different categories, and
+applied the risk limits to routine risk monitoring
+and early warning, so as to support business
+decision-making and strike a balance between risk.
+management and business development.
++10%
+Surrender rate
+outstanding claims reserves
+Sensitivity analysis of property and casualty
+insurance and short-term life insurance contracts'
+(2) For long term life and health insurance contracts
+where future insurance benefits are not affected by the
+investment yield of the underlying asset portfolio, with
+consideration of the Cai Kuai [2017] No.637 issued by the
+former CIRC and other related regulatory requirements,
+the corresponding sensitivity results are prepared based
+on the benchmarking yield curve for the measurement
+of insurance contract reserve increased or decreased
+by 10 basis points.
+refers to a 10% increase in the morbidity rates, mortality
+rates, accident rate and other rates of life insurance
+policies (a 10% increase in mortality rate of annuity
+policies before the payment period, and a 10% decrease
+after the payment period).
+Notes: (1) Change in mortality, morbidity, and accident rates
+Change in
+average claim
+costs
++5%
+13,870
+3,066
+Impact on net
+claim reserves
+increase/(decrease)
+standardize actuarial models of the Group and
+strictly control model risks;
+expense ratio
+Policy maintenance
+Corporate Governance Report
+For putting forward any enquiries as set out in Article 58(5) of the Articles of Association, shareholders
+may send their enquiries or requests in exercise of such rights as mentioned above to the Company's IR
+Team or via email to IR@pingan.com.cn. Shareholders who put forward such enquiries shall provide the
+Company with the written identification documents pursuant to Article 59 of the Articles of Association.
+The Company shall provide the relevant information after having verified the identity of the shareholder.
+Information Disclosure and Investor Relations
+During the Reporting Period, the Company disclosed the relevant information in a truthful, accurate,
+complete, timely and impartial manner in accordance with the laws and regulations and the Articles of
+Association, making sure that every shareholder had equal chances to obtain the information, and there
+was no breach of information disclosure regulations.
+The Company maintains a website at www.pingan.cn, which serves as a communication platform with
+the shareholders and investors and where the Group's business developments and operations, financial
+information, corporate governance practices and other information are available for public access.
+Shareholders and investors may also write directly to the Company's IR Team or email to IR@pingan.com.cn
+for any inquiries. Inquiries are dealt with in an appropriate manner by the Company.
+The Company improves communication effectiveness with the investors and promotes their understandings
+of the Company's value by means of public presentations, video and telephone conferences, and
+onsite roadshows, etc. The Company resorts to telephone conferences, roadshows, gatherings of stock
+market analysts, Investor Days and so on, to actively promote itself to the market, and to improve the
+understanding of the market about the Company and its communication with the Company. While
+maintaining good communication with the institutional investors, the Company also established different
+channels for communication with minority investors, including but not limited to corporate websites, e-mail
+and telephone calls, so as to provide better services to them and protect the interests of the investors.
+Moreover, the Company is committed to collecting capital market analysis reports and shareholders'
+information, and pays special attention to the investors' concerns and advice, aiming at further enhancing
+the operation and management of the Company as well as its corporate governance. The Company also
+made great efforts in improving its internal workflow and policy formulation so as to provide investors with
+better services in a more efficient way.
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 83
+CORPORATE GOVERNANCE
+The Company adheres to the principles of compliance, objectiveness, consistency, timeliness, interactivity
+and fairness in providing services proactively, passionately and efficiently to institutional and individual
+investors domestically and abroad, aiming at improving the understanding between the Company and its
+investors, enhancing corporate governance and realizing the fair corporate value of the Company.
+The Board is responsible for the management of the Company and accountable to the shareholders
+for their entrusted assets and resources. They represent and owe a duty to act in the interests of the
+shareholders as a whole. The Board recognises its responsibility to prepare the Company's financial
+statements. The principal responsibilities of the Board and the types of decisions that can be made by the
+Board include:
+Independence of the Company from the Controlling Shareholders on Business, Staff, Assets,
+Organization and Finance
+The shareholding structure of the Company is scattered and there are no controlling shareholders or de
+facto controllers. As an integrated financial services group, the Company maintains full independence in
+terms of business, staff, assets, organization and finance under the supervision of the CBIRC. The Company
+is an independent legal person responsible for its own profits and losses, runs independent and complete
+business and is capable of independent business operation. During the Reporting Period, no controlling
+shareholders or other connected parties had misappropriated the Company's funds, as specified by
+PricewaterhouseCoopers Zhong Tian LLP's special-purpose explanation in this respect and the Company
+has not given any undisclosed information to any controlling shareholder or de facto controller.
+BOARD AND DIRECTORS
+Corporate Governance Functions of the Board
+In addition, shareholder(s) individually or collectively holding 3% or more of the Company's issued and
+outstanding shares carrying voting rights may submit a written interim proposal to the convener 10 days
+before the date of the general meeting pursuant to Article 75 of the Articles of Association.
+formulating the Group's overall direction, objectives and strategies, business plans and investment
+proposals as well as monitoring and supervising the management's performance;
+formulating the Company's annual budgets, financial statements and monitoring the Company's
+performance;
+• formulating the Company's profit distribution and loss recovery proposals;
+formulating plans for mergers or disposals and deciding on major investments, pledging of assets and
+other forms of security (in accordance with the mandate at the general meetings);
+formulating proposals for the increase or decrease in the Company's registered capital, the issuance of
+corporate bonds or other securities and listing plans;
+appointing or dismissing the senior management of the Company, and determining their remuneration
+and award and punishment; and
+In 2018, the Company held 2 Investor Days with an audience of over 1,600, on which the Company paid
+special attention to communication with the market in respect of its core finance businesses and
+technologies. The Company provided webcasts and teleconferences for investors to participate in the
+Investor Days, which further broadened the approaches for participation and better protected the interests
+of minority investors.
+Extraordinary general meetings may be convened on written requisition of shareholder(s) individually or
+jointly holding 10% or more of the Company's issued and outstanding shares carrying voting rights pursuant
+to Article 72(3) of the Articles of Association. Such requisition shall state clearly the matters required to be
+considered and approved at the general meetings and must be signed by the requisitionists and submitted
+to the Board in writing. Shareholders should follow the requirements and procedures as set out in the
+Articles of Association for convening an extraordinary general meeting.
+China Securities Journal,
+Shanghai Securities News,
+Securities Times and
+Securities Daily
+Shareholders' Rights
+Remuneration
+Committee
+Board of
+Directors
+Supervisory
+Committee
+Executive
+Committee
+GENERAL MEETINGS AND SHAREHOLDERS
+General Meetings
+During the Reporting Period, the Company convened 5 general meetings. The notice, convocation and
+procedures for convening and voting at the general meetings have complied with the requirements of the
+Company Law of the PRC and the Articles of Association. The general meetings established and expanded
+effective channels for communication between the Company and the shareholders, and through listening to
+their opinions and advice, their information rights, participation rights and voting rights on the significant
+events of the Company can be ensured. The detailed information of the general meetings is as follows:
+General meeting
+Date of the meeting
+2018 First Extraordinary General Meeting
+2018 First A Shareholders' Class Meeting
+As one of the measures to safeguard shareholders' interests and rights, separate resolutions are proposed
+at the general meetings on each substantial issue, including the election of individual directors, for
+shareholders' consideration and voting. All resolutions put forward at the general meetings will be voted by
+poll and the poll results will be posted on the websites of HKEX, SSE and the Company after the relevant
+general meetings.
+March 19, 2018
+March 19, 2018
+May 23, 2018
+2018 Second Extraordinary General Meeting
+December 14, 2018
+Date of publication of
+resolutions
+March 20, 2018
+March 20, 2018
+March 20, 2018
+May 24, 2018
+December 15, 2018
+Designated media for
+information disclosure of
+A share
+The resolutions of the above general meetings have also been published on the websites of SSE
+(www.sse.com.cn) and HKEX (www.hkexnews.hk).
+82
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd.
+2018 First H Shareholders' Class Meeting
+2017 Annual General Meeting
+March 19, 2018
+Corporate Sustainability
+Investment Committee Management Committee
+Executive Directors
+Committee
+Nomination
+Management Remuneration
+Committee Committee
+Investment
+Committee
+Board
+General
+Meeting
+as Directors
+Date of Appointment
+Risk
+Strategy and
+Audit and
+Meetings attended in person (6) /Meetings required to attend
+Members
+During the Reporting Period, the Directors did their best to participate in the general meetings and the
+meetings of the Board and specialized committees under the Board in person, as well as to make right
+decisions on the basis of in-depth knowledge of circumstances. All the Directors have strictly observed
+their duties and are committed to protecting the interests of the Company and its shareholders as a whole.
+The attendance records of each Director at the meetings are as follows:
+Attendance Record of Directors
+Corporate Governance Report
+MA Mingzhe (Chairman)
+March 21, 1988
+5/5
+7/7
+5/5
+June 9, 2009
+YAO Jason Bo
+3/4
+6/7
+5/5
+July 17, 2012
+REN Huichuan
+CORPORATE GOVERNANCE
+7/7
+June 17, 2013
+LEE Yuansiong
+7/7
+5/5
+March 29, 1995
+SUN Jianyi
+4/4
+2/2
+5/5
+7/7
+Ping An Insurance (Group) Company of China, Ltd. 85
+The Board consists of 15 members, namely 6 Executive Directors, 4 Non-executive Directors and 5
+Independent Non-executive Directors, and the profile of each Director has been included in the section.
+headed "Directors, Supervisors, Senior Management and Employees" of this Annual Report. The number of
+Directors and composition of the Board are in compliance with the regulatory requirements and provisions
+of the Articles of Association. As provided in the Articles of Association, Directors should be elected at the
+general meeting with a term of 3 years, and are eligible for re-election upon expiry of the term. However,
+the Independent Non-executive Directors should not hold office for more than 6 consecutive years.
+4 Directors
+Board diversity provides professional support for
+effective decision-making of the Board
+Board Diversity
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+84
+the day-to-day management of the Company's business.
+implementation of the Company's overall direction, objectives and strategies, business plans and
+investment proposals as determined by the Board from time to time; and
+The Group also manages the concentration risk
+in insurance and non-insurance businesses. The
+Group evaluates, analyzes, monitors and reports
+the concentration of its businesses in accordance
+with the CBIRC's rules for concentration risk
+management of the Group's insurance and non-
+insurance businesses. Regarding the concentration
+of insurance business, the Group has enhanced
+the framework of concentration risk limits for
+reinsurance counterparties, risk monitoring, risk
+analysis, and risk warning by implementing the
+reinsurer credit and concentration management
+procedures. Regarding the concentration of non-
+insurance businesses, the Group has analyzed
+the structures and risk profiles of non-insurance
+businesses, specified the concentration risk
+indicators to be monitored, and included such
+indicators in the routine risk management
+framework. The Group has effectively prevented
+the concentration risk through regular evaluation,
+monitoring, and warning of the concentration risk in
+insurance and non-insurance businesses.
+2.4 Non-insurance Risk
+As an integrated financial service group
+authorized by the State Council to engage in
+separate operations under a listed holding group
+subject to separate regulation, the Group has
+established independent legal entities that engage
+in insurance, banking, investment, and fintech &
+healthtech businesses respectively. Regarding
+corporate governance, all the subsidiaries in non-
+insurance areas carry out specialized operations
+independently, and are supervised by their
+respective regulators; the Group ensures that
+all the non-insurance subsidiaries are effectively
+segregated from the insurance subsidiaries in terms
+of assets and liquidity.
+For equity investments in non-insurance areas, the
+Group has developed rules, standards and limits,
+established processes for investment decision
+making, risk management, investment review,
+evaluation and reporting, and specified mechanisms
+for management before, during and after investment
+deals. Moreover, the non-insurance subsidiaries
+strictly follow the Company's strategic planning
+process to analyze the feasibility of business
+strategies, regularly review the ROICS, investment
+payback periods, business and financial performance
+as well as valuations, and evaluate the risk-return
+profiles of various businesses.
+Annual Report 2018
+SOLVENCY MANAGEMENT
+Solvency refers to the Group's ability to settle
+its liabilities. An insurance group's solvency is
+the consolidated solvency calculated by taking
+the parent company, subsidiaries, joint ventures,
+and associates as a single reporting entity. An
+insurance group's solvency margin ratio is a key
+regulatory indicator for evaluating an insurance
+group's capital adequacy. The key objective of
+solvency management is to meet statutory capital
+requirements and maintain a healthy capital ratio to
+support business growth and maximize shareholder
+value. A stable solvency margin ratio can ensure
+that the Company meets capital requirements
+specified by external institutions such as regulators
+and rating agencies, and support the Company's
+business development and shareholder value
+creation.
+Since the former CIRC began to implement the
+China Risk Oriented Solvency System (C-ROSS)
+three years ago, China's insurance industry
+has realized a smooth, substantive transition
+towards comprehensive risk management.
+C-ROSS has significantly helped to modernize
+insurance regulation, strengthen the industry's risk
+management, promote the industry's transformation
+and upgrading, and increase the global influence
+of China's insurance market. C-ROSS consists of
+three pillars, which are quantitative regulatory
+requirements, qualitative regulatory requirements,
+and market disciplinary mechanisms. C-ROSS
+enables insurers to strike a balance between risk
+prevention and value growth by embedding the
+philosophy of risk management in all dimensions of
+business development.
+Qualitative regulatory requirements, as the second
+pillar of C-ROSS, are mainly based on the CBIRC's
+Solvency Aligned Risk Management Requirements
+and Assessment (SARMRA). The SARMRA results
+are linked with an insurer's minimum capital for
+risk control, so as to adjust the minimum capital
+requirement based on the first pillar. According to
+the circular of the CBIRC on SARMRA of insurers
+for 2018, Ping An's insurance member companies
+were not measured in the SARMRA assessment for
+2018 based on spot checks. Therefore, the SARMRA
+results remain unchanged. Ping An Life scored 85.58
+for 2017, allowing its minimum capital requirement
+under C-ROSS to reduce by RMB10,031 million as
+at December 31, 2018. Ping An Property & Casualty
+scored 84.10 for 2017, allowing its minimum capital
+requirement under C-ROSS to reduce by RMB800
+million as at December 31, 2018.
+51-55
+3 Directors
+56-60
+Age Group
+Directors
+In insurance, actuarial science, banking, investment, accounting, law, management, medicine, engineering etc.
+We will continually bring in directors with experience in science and technology.
+Expertise
+Executive Directors
+2 Directors
+More than
+10 years
+(inclusive)
+6 Directors
+2 Directors
+6-9 years
+Above 60
+Annual Report 2018
+5 Directors
+4 Directors
+3-5 years
+8 Directors
+5 Directors
+Categories
+3 Directors
+Less than 3 years
+Directorship
+with Ping An
+(Number of
+Years)
+3 Directors
+Under 50 (inclusive)
+Independent Non-executive Directors Non-executive Directors
+Ping An Insurance (Group) Company of China, Ltd. 77
+CAI Fangfang
+5/5
+August 6, 2017
+OUYANG Hui(4)
+3/3
+4/4
+2/2
+7/7
+5/5
+June 30, 2015
+GE Ming
+4/4
+3/3
+4/4
+7/7
+5/5
+June 17, 2013
+SUN Dongdong
+4/4
+5/5
+7/7
+2/2
+3/3
+On the other hand, responsibilities, functions and types of decisions delegated to the management include:
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+86
+98
+(6) Some Directors did not attend certain meetings due to business schedules.
+(5) Mr. Stephen Thomas MELDRUM ceased to be the Director of the Company on May 23, 2018, and ceased to be the member of
+the Audit and Risk Management Committee on the same date.
+(4) Mr. OUYANG Hui was appointed as the member of the Audit and Risk Management Committee on May 23, 2018.
+2/2
+(3) Mr. XIONG Peijin ceased to be the Director of the Company on May 23, 2018.
+Notes: (1) Mr. WANG Yongjian has served as a Director of the Company since July 13, 2018, and was appointed as the member of the
+Strategy and Investment Committee on the same date.
+2/2
+3/3
+3/4
+July 17, 2012
+(Retired)(5)
+Stephen Thomas MELDRUM
+4/4
+(2) Ms. LIN Lijun ceased to be the Director of the Company on May 23, 2018.
+July 2, 2014
+7/7
+June 17, 2013
+0/4
+May 16, 2003
+LIN Lijun (Retired)(2)
+0/1
+July 13, 2018
+WANG Yongjian(1)
+1/5
+January 8, 2016
+LIU Chong
+5/5
+June 17, 2013
+YANG Xiaoping
+2/5
+June 17, 2013
+Soopakij CHEARAVANONT
+Non-executive Directors
+7/7
+XIONG Peijin (Retired) (3)
+January 8, 2016
+0/4
+515222
+WONG Oscar Sai Hung
+3/3
+4/4
+2/2
+7/7
+5/5
+June 17, 2013
+YIP Dicky Peter
+5/5
+Independent Non-executive
+Directors
+2/3
+2/3
+6/7
+3/4
+2/2
+6/7
+3/3
+6/7
+2/3
+Nomination
+Committee
+MANAGEMENT DISCUSSION AND ANALYSIS
+Management
+Annual centralized
+procurement
+7,441
+RMB
+million
+Ping An Property &
+Casualty's auto claims
+approval rate
+99.93%
+1,467 suppliers
+Notes: (1) Greenhouse gas emissions include Scope 1, Scope 2 and Scope 3.
+(2) Above is an excerpt only. For complete data, refer to the 2018 Sustainability Report.
+Annual Report 2018
+Face-to-face/online training per
+employee per year
+9.21
+hours
+Communities and environment
+Ping An Bank's proportion of loans
+to small and micro-businesses
+15.24%
+with OneConnect
+3.289 partners
+Partners
+95.3%
+village schools
+4,819
+village teachers
+690,000
+registered volunteers of the
+Ping An Volunteers Association
+Total corporate
+annuities
+RMB 643
+Puhui's proportion of loans to
+small and micro-businesses
+million
+Total
+remunerations
+RMB 49,902
+million
+We adopted the net promoter score (NPS) to
+gauge customer experiences.
+Group NPS rose to
+41%
+Ping An Life's customer
+satisfaction degree
+Customer experience
+Trained
+50%
+61,552.3
+In an ever-changing environment, we will seize
+growth opportunities and avoid market risks by
+gaining insights into macroeconomic dynamics,
+revise operational objectives as appropriate, and
+increase our competitive advantages.
+MAJOR INDUSTRY TRENDS AND THE MARKET
+LANDSCAPE
+In 2018, the insurance industry was guided by the
+Thought on Socialism with Chinese Characteristics
+for a New Era. Insurers implemented the strategy
+adopted by the 19th CPC National Congress,
+focusing on long-term risk management and
+protection as their original aspirations. Insurance
+market rules were strengthened as the reform
+of commercial auto insurance premium rates
+continued. Insurers strengthened capabilities of
+serving people's livelihood as new social security
+policies for old-age care and health care were
+implemented. Cutting-edge technologies such as
+Al and cloud computing enabled the insurance
+industry to upgrade itself. As regulations tighten
+and reforms continue, the insurance industry will
+realize sustainable growth by playing its role in risk
+management and social security.
+In 2018, China's economic growth remained stable
+while new momentums emerged. Banks face
+new requirements put forward by the industrial
+development and the market landscape. First, risk
+management remains a top priority. Banks must
+strictly comply with regulatory requirements, and
+improve risk management and asset quality. Second,
+banks should be committed to serving the real
+economy through in-depth industrial research and
+integration into the industrial ecosystems. Third,
+technological innovation will be a core driver of
+development. Banks should utilize technologies to
+cut costs, manage risks and enhance management
+as advanced technologies including Al, blockchain
+and cloud computing mature. Only by doing so can
+banks optimize and upgrade themselves to support
+non-SOEs, financial inclusion, small and micro-
+businesses, agriculture, rural areas and farmers, and
+targeted poverty alleviation.
+In 2018, China's financial industry continued to
+develop and carried out reforms, effectively
+preventing and mitigating systemic risks and
+stabilizing the financial system. Asset managers
+switched the focus back onto managing wealth on
+behalf of customers due to a series of regulatory
+policies including new regulations for asset
+management. Financial institutions became more
+aware of compliance, and investors became more
+aware of risks. We will continue to strengthen our
+investment capabilities and risk management in line
+with national policies and strategies. We will build
+a leading asset management platform in China to
+serve the real economy, upgrade the industry, and
+facilitate the economic transformation.
+In 2018, new technologies such as Al, blockchain
+and cloud computing had significant impacts on
+social development and business models. Traditional
+industries, including financial services, health care,
+automobiles, real estate and urban construction,
+now face huge opportunities and challenges. We
+will continue to increase operational efficiency,
+make better use of resources, and improve user
+experiences by developing and applying new
+technologies. We will closely follow the technology
+tide, invest heavily in technological R&D, diversify
+use cases, and build a world-leading fintech
+company.
+Amid domestic and international complexities, we
+will make contributions to China's development by
+closely following national policies, effectively serving
+the real economy, and strictly managing financial
+risks. We will further "finance + technology" and
+pursue "finance + ecosystem," empowering financial
+services with technologies, empowering ecosystems
+with technologies, and empowering financial
+services with ecosystems. We will create value for
+customers and shareholders under an integrated
+financial business model of "one customer, multiple
+products, and one-stop services."
+Annual Report 2018
+Ping An Insurance (Group) Company of China, Ltd. 81
+Corporate Governance Report
+Ping An has established and kept improving its corporate governance structure
+which is based on both local advantages and international standards, and
+continues to perform global best practice in corporate governance. The board of
+directors of the Company (the "Board" or "Board of Directors") hereby reports
+to the shareholders on the corporate governance of the Company for the year
+ended December 31, 2018 (the “Reporting Period”).
+CORPORATE GOVERNANCE STRUCTURE
+During the Reporting Period, the Company conducted corporate governance activities in line with realities
+and in strict accordance with applicable laws including the Company Law of the People's Republic of
+China, the Securities Law of the People's Republic of China, applicable regulations, and principles set out
+in the Corporate Governance Code. The general meetings ("General Meetings"), Board of Directors, the
+supervisory committee ("Supervisory Committee") and the executive committee ("Executive Committee")
+of the Company exercised their rights and performed their responsibilities conferred by the Articles of
+Association respectively.
+Strategy and
+The Corporate Governance Structure of Ping An
+General Meetings
+Audit and Risk
+MANAGEMENT DISCUSSION AND ANALYSIS
+Ping An Insurance (Group) Company of China, Ltd.
+Annual Report 2018
+50
+metric tons
+Greenhouse gas emissions(1)
+197,904 Coze
+Ping An Insurance (Group) Company of China, Ltd.
+79
+MANAGEMENT DISCUSSION AND ANALYSIS
+Prospects of Future Development
+BUSINESS PLAN FOR 2019
+Carbon emissions reduced with
+technologies in 2018
+As we are committed to steady, sustainable business
+development, no major change has been made to
+our long-term operational objectives compared with
+those announced last year.
+In 2019, we will remain committed to sustainable
+development and carry out the plans formulated
+by the Board of Directors. We will provide better
+offerings for customers and create value for
+shareholders. We will continue to focus on the
+two major industries of pan financial assets and
+pan health care. We will develop five ecosystems:
+financial services, health care, auto services, real
+estate services, and smart city services. We strive to
+become a world-leading technology-powered retail
+financial services group.
+Being customer-centric, we will apply
+technological innovations to the development
+of retail financial products and the
+improvement of customer services. We will
+continue to optimize customer experiences
+and satisfy customer demands. We will boost
+the value of retail customers by promoting
+cross-selling and customer migrations.
+Our insurance businesses will continue to
+seek stable growth and enhance operational
+results. Ping An Life will continue to pursue
+balanced business growth, aiming for
+long-term sustainable development and stable
+agent force expansion. Ping An Property &
+Casualty will upgrade its online platform to
+offer better services and build differentiated
+advantages. Ping An Annuity will provide
+corporate employees with one-stop insurance,
+annuity and value-added health management
+services, making contributions to old-age care,
+health care and poverty alleviation. Ping An
+Health will carry out its technology-powered
+transformation and mobile strategy to pursue
+product innovations, increase operational
+efficiency, and improve customer experiences.
+Our banking business will follow national
+strategies and adapt to domestic and
+international situations. Ping An Bank
+will continue to pursue "technology-
+driven breakthroughs in retail banking and
+enhancement of corporate banking." First, Ping
+An Bank will transform itself into an industry-
+oriented bank and build capabilities of serving
+the real economy. The Bank will provide
+customers with diverse financial services under
+an industry-specific "commercial banking +
+investment banking + investment" model.
+Second, Ping An Bank will use technologies
+to empower private companies and micro-
+businesses by offering more convenient and
+secure smart financial services. Third, Ping An
+Bank will embrace changes, exploit "ecosystem-
+based" momentums, and seek new business
+drivers by developing ecosystems. Fourth,
+Ping An Bank will ensure compliance and apply
+technologies to risk management.
+Our asset management business will remain
+committed to improving customers' investment
+returns and trading experiences by building a
+leading investment management platform. We
+will pursue product innovations and enhance
+our capabilities of serving the real economy. In
+insurance asset management, we will continue
+to prioritize risk prevention, match assets
+and liabilities, and enhance risk management
+mechanisms.
+We will continue to further "finance +
+technology" and pursue "finance + ecosystem."
+We will utilize our three core technologies,
+namely Al, blockchain and cloud computing, to
+satisfy demands and increase efficiency. We will
+build five ecosystems, namely financial services,
+health care, auto services, real estate services,
+and smart city services. By doing so, we will
+provide customers with better offerings and
+empower the whole industry with technologies.
+80
+In 2018, we were committed to delivering on our
+operational objectives. We furthered "finance +
+technology" and pursued "finance + ecosystem" to
+promote technology-driven reforms, empowering
+financial services with technologies, empowering
+ecosystems with technologies, and empowering
+financial services with ecosystems. We enhanced
+retail customer development and boosted the
+value of retail businesses. We maintained healthy,
+sustainable growth of our insurance, banking, asset
+management and fintech & healthtech businesses.
+Our profitability continued to increase. We delivered
+on all our operational objectives for 2018.
+Risk
+391
+5,702 village doctors
+596,238
+533,775
+11.7
+Core solvency margin
+ratio (regulatory
+requirement ≥50%)
+211.1%
+209.0%
+2.1 pps
+Comprehensive
+solvency margin
+ratio (regulatory
+requirement ≥100%)
+216.4%
+214.9%
+1.5 pps
+Notes: (1) Core solvency margin ratio = core capital/minimum
+capital; comprehensive solvency margin ratio = actual
+capital/minimum capital.
+(2) Figures may not match the calculation due to rounding
+Minimum capital
+12.5
+1,146,865
+1,290,268
+The Group manages its solvency through the
+following mechanisms and processes:
+The impacts on solvency must be evaluated
+when we develop key initiatives including
+strategies, business plans, investment decisions,
+and dividend distribution plans;
+The solvency target is a key indicator for
+the Company's risk management, and an
+emergency reporting and response mechanism
+is in place for significant changes in the
+solvency to ensure the solvency is maintained
+at an appropriate level;
+The solvency indicator has been included as a
+KPI in performance appraisal at the Company
+level to be implemented in a top-down manner;
+We adopt a prudent asset and liability
+management policy, constantly enhance asset
+quality and business operations, strengthen
+capital management, and focus on capital
+requirements arising from rapid business
+growth;
+We conduct solvency assessments and dynamic
+solvency tests on a regular basis, and closely
+monitor changes in solvency;
+We conduct sensitivity and scenario stress
+testing to generate warnings about potential
+changes in solvency.
+As at December 31, 2018, the Group's solvency
+margin ratio met regulatory requirements under
+C-ROSS. Below are the details:
+We have estimated the impacts of declines in
+interest rates and equity value on the solvency
+margin ratios of Ping An Group, Ping An Life, and
+Ping An Property & Casualty as at December 31,
+2018. Below are the results:
+(in RMB million)
+Core capital
+December 31,
+December 31,
+2018
+2017
+Change (%)
+1,258,768
+1,115,365
+12.9
+Actual capital
+Built or upgraded
+Comprehensive solvency margin ratio
+Ping An
+Ping An
+Ping An
+Group
+P&C
+Central case
+Employee development
+376,900 employees
+Total training budget
+B 1,046
+million
+RMB
+Total input in public welfare
+BMB 450 million
+Covering
+330,000
+people in poverty
+Over
+15,000
+registered poor residents
+Built or upgraded over
+400 village clinics
+Trained
+million
+RMB 5,394
+Annual input of poverty alleviation funds
+Poverty alleviation
+216.4%
+218.8%
+223.8%
+A decline of 50 bps in
+interest rates
+208.7%
+204.6%
+224.2%
+A decrease of 30% in
+Life
+fair value of equity asset
+204.4%
+219.8%
+78
+Annual Report 2018
+As one of the G-SIIs, Ping An is required to follow
+a series of international solvency regulations in
+addition to C-ROSS. These regulations are being
+developed by the IAIS and will come into force
+in 2024. With the encouragement and support
+from the CBIRC, Ping An has proactively worked
+with the IAIS to develop solvency regulations
+for G-SIIs. In this way, the IAIS is able to reflect
+its better understanding of China's insurance
+industry and Ping An's situations in the regulations.
+Positive progress has been made with Ping An's
+participation.
+Ping An Insurance (Group) Company of China, Ltd.
+We influence our society with finance and technology, use our expertise to create
+value for the shareholders, customers, employees, communities, environment and
+partners, and pursue sustainable development together with the stakeholders.
+The year 2018 marked the 40th anniversary of China's reform and opening-up. Also in 2018, Ping An
+celebrated its 30th birthday and embarked on a new journey. We continued to reward stakeholders, and
+serve the country, society and people through concrete actions. We implemented the Ping An Rural
+Communities Support for smart poverty alleviation across China, supporting rural economic growth,
+health care and education by empowering local officers, doctors and teachers. Embracing technological
+advancements, we leveraged innovations and technologies to gain deep insights into customers and
+facilitate industry upgrades. These efforts enabled us to better serve our society, people and country. We
+provide financial services for small and micro-businesses to bolster the real economy. In inclusive finance,
+we have granted over RMB100 billion in loans to small and micro-businesses. By building a health care
+ecosystem, we are committed to addressing issues in China's health care system, including high medical
+costs and difficulties in obtaining medical services. We are concerned about global climate change and
+environmental risks. By integrating risk research with product design, we constantly strengthen our ability
+to manage environmental risks. Committed to responsible investing, we have built a presence in industries
+including high and new technologies and environmental protection in response to the government's call for
+"industry upgrades." We have been widely recognized for our unremitting efforts. We have been honored
+as the "Most Respected Enterprise in China" for 17 consecutive years, and the "Most Respected Enterprise
+in Asia" five times. We have won the "International Carbon-Value Award" for six consecutive years, and
+received the "Award for Poverty Alleviation of the Year" at the 2018 People's Corporate Social Responsibility
+Summit.
+Going forward, we will continue to increase investment in technological R&D and pursue "finance
++ ecosystem" while steadily expanding core financial businesses. We will further the Ping An Rural
+Communities Support to give back to society. We will maximize value for stakeholders in a sustainable way
+with our financial strengths, technologies, and smart capabilities.
+205.9%
+performing the corporate governance function, monitoring, evaluating and ensuring the effectiveness
+of the Company's internal control systems and compliance with relevant laws and regulations.