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Peter Ma Mingzhe, chairman and chief executive officer of Ping An Insurance (Group) Co. of China, sleeps as little as three or four hours a night, focusing his waking hours on expanding the huge financial supermarket he’s built — and on keeping it intact.

Ping An, which means “peace and safety,” is already China’s second-­biggest life insurer, a platform that founder Ma is using to aggressively expand the firm’s offerings beyond insurance. He’s forging ahead despite some investors’ concern that branching out in so many different directions may become unwieldy and create operational risks.

“Not only must we be the insurance expert for every one of our customers, we must be their expert financial consultant and their assistant in every aspect of their lives,” Ma tells Institutional Investor during an interview over lunch in Hong Kong. “The biggest advantage of Ping An’s business model is our wider range of expertise.”

Almost 30 years after founding Ping An, Ma is ambitiously broadening his supermarket of financial products, much like U.S. financier Sandy Weill did as chief executive officer of Citigroup from 1998 to 2003. Weill took the helm of Citigroup when the bank merged with Travelers Group — the insurance giant he led before the deal was completed — creating what was then the world’s biggest financial services company. Citi was bailed out by the U.S. government after being deemed too big to fail during the 2008–’09 financial crisis, and to regain stable footing it eventually dismantled the assets that Weill had pieced together.

So far, China’s Ma is succeeding in his financial supermarket approach, carefully monitoring and adapting Ping An’s expertise to changing markets, technology, and client needs.

Ma founded Ping An in 1988 in Shenzhen, the financial hub of southern China, which lies just north of Hong Kong’s border with the mainland. Over the past five years, the company has climbed onto the list of the world’s ten largest insurers, now ranking No. 4 behind France’s AXA, Germany’s Allianz, and U.S.-based MetLife in terms of assets, according to Relbanks.com. Though Ping An’s insurance assets rose 17 percent in 2016, to $802 billion, the company’s double-digit profit growth is benefiting in part from a diverse group of revenue streams, including banking, securities, asset management, wealth management, private equity, and, more recently, China’s booming arena of Internet finance.

Paul Schulte, chief executive officer of Hong Kong–based Schulte Research, is a fan of Ma’s plan to build out Ping An.

“Sandy Weill’s approach failed because it was a bunch of disconnected entities that were ostensibly under one roof,” says Schulte, who specializes in China’s finance sector and has 27 years of experience as an analyst. He was a National Security Council officer in the Reagan administration before becoming an Asia strategist at Lehman Brothers Holdings and Nomura Securities Co.

“Ping An is actually one platform that receives data on the same people in multiple forms and therefore is capable of allowing people to use the social network to cross-buy,” Schulte explains. “It allows Ping An to use multiple data points to differentiate the good guys from the bad guys.”

The financial services firm showed its strength in its landmark 2016 results.

Ping An saw 11.7 percent revenue growth, with gross earnings reaching a record high of 774 billion yuan ($112 billion), and a 15 percent growth in profits; net earnings rose to 62 billion yuan. About 56 percent of the group’s profits were derived from insurance, down from more than 80 percent a decade ago. The rest came from banking (20.6 percent), asset management (15.5 percent), and Internet finance (8.3 percent).



Despite the impressive financial results, some observers are not convinced that Ma’s supermarket-style expansion will pay off over the long term. Victoria Mio, the chief investment officer overseeing China for Robeco, a Dutch asset manager owned by Japan’s ORIX Corp., notes there are dangers when Chinese insurers branch into other financial services to seek higher growth.

“The key concern for investors is that the financial statements of insurance companies, which have never been easy to understand, will become even more opaque and complex, not so easy to comprehend,” Mio says. She adds that risks include potential regulatory changes imposing firewalls among the different asset classes, as well as liquidity risks brought on by certain financial products.

Ma, 62, hasn’t always enjoyed success. His achievement is the result of carefully calibrated moves in the past decade that refocused the company on its core strength: China’s domestic markets. This reorientation followed a disastrous foray into foreign markets that cost the group a great deal of money nearly a decade ago. Ping An was embarking on a global acquisition spree in 2008 when a company in which it had acquired a 5 percent stake ­—­ Brussels-­based financial conglomerate Fortis — collapsed. Fortis had to be bailed out and was broken up by the governments of Belgium, the Netherlands, and Luxembourg. The Benelux union eventually sold parts of Fortis to a number of buyers, including BNP Paribas, and Ping An had no choice but to return to China to lick its wounds, eventually writing off $2.3 billion.

“Being burned by Fortis — that was quite unexpected and significant,” Jessica Tan, Ping An’s chief operating officer, tells II at the firm’s opulent Shanghai offices, in a 40-story building girded by granite columns that resemble ancient Roman architecture. “But we learned from that,” she adds.

Since 2008, Ping An has bounced back with ferocity thanks to acquisitions and organic growth focused on its home markets. The firm aggressively diversified beyond life and property/casualty insurance with three acquisitions that created Ping An Bank, now China’s 12th largest by assets.Ping An also ramped up investments in securities, asset and wealth management, real estate, venture capital, and private equity, and more recently entered Internet finance.

Among the company’s most touted technology successes is the 2011 founding of peer-to-peer lender Shanghai Lujiazui International Financial Asset Exchange Co. Lufax, as the company is known, has become an e-commerce giant for finance in China, the world’s second-largest economy. It’s the country’s biggest online marketplace for wealth management products: Last year more than 7.4 million individual and corporate investors used Lufax to purchase 6 trillion yuan worth of investment products from Ping An and thousands of other Chinese financial institutions.

Lufax, a venture ­capital–backed company that already has achieved a market valuation of $19 billion, is preparing for an initial public offering later this year or next year. The online lender is well known for using the latest encryption technology, including blockchain.

“Ping An has been a first mover and innovator in the blockchain space,” says Philip McMaster, founder of the Hong Kong–based McMaster Institute for Sustainable Development in Commerce, and an expert on the adoption of blockchain technology in China. “Maybe the IPO will give even more credibility and profile to the blockchain and heat up the global competition for solutions.”

At the core of Ping An’s success is the application of technology across all its business units, according to COO Tan, who helped set up the firm’s tech strategy. She studied electrical engineering, computer science, and economics at the Massachusetts Institute of Technology before joining McKinsey & Co. She worked at the consulting firm until she took a position with Ping An in 2013.

Tan describes Ping An as “one brand with many products and services targeting one mass-market base of clients” through the use of technology. The financial services group has 131 million insurance customers, who purchased an average of 2.2 products each from the company last year. The offerings include insurance — such as life, health, p/c, auto, and accident — and funds, bonds, certificates of deposits, and other types of investments. Customers can buy the products from Ping An Bank, Ping An Securities, Ping An Asset Management, or Ping An Trust.



The group uses both online and offline approaches to reach customers. Offline the company has 300,000 employees and 1.1 million sales agents, independent contractors who work exclusively for Ping An. These agents solely recommend Ping An insurance and investment products, and also may offer real estate, such as high-end condominiums, developed by the group across China.

Online, Ping An reaches out via a database of more than 340 million registered users, including tens of thousands of high-net-worth individuals and many of China’s middle-class consumers. The firm connects with customers via Lufax, as well as through Ping An Puhui, which caters to lower-middle-class consumers who might not be eligible for bank credit cards. Puhui has a fast-growing database of active customers that now stands at 3.8 million. They’ve borrrowed 272 billion yuan from the business.

Another major success is Ping An’s O2O, an online health care service that employs more than 1,000 doctors offering initial medical consulting and referrals to thousands of clinics accredited by Ping An. So far, more than 130 million Chinese have signed up for the service, known as Good Doctor.

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