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 hes built
and on keeping it intact.
Ping An, which means peace and safety, is
already Chinas second-biggest life insurer, a
platform that founder Ma is using to aggressively expand the
firms offerings beyond insurance. Hes forging ahead
despite some investors concern that branching out in so
many different directions may become unwieldy and create
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
Ans business model is our wider range of
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 worlds biggest financial services company.
Citi was bailed out by the U.S. government after being deemed
too big to fail during the 200809 financial crisis,
and to regain stable footing it eventually dismantled the
assets that Weill had pieced together.
So far, Chinas Ma is succeeding in his financial supermarket
approach, carefully monitoring and adapting Ping Ans
expertise to changing markets, technology, and client
Ma founded Ping An in 1988 in Shenzhen, the financial hub of
southern China, which lies just north of Hong Kongs
border with the mainland. Over the past five years, the company
has climbed onto the list of the worlds ten largest
insurers, now ranking No. 4 behind Frances AXA,
Germanys Allianz, and U.S.-based MetLife in terms of
assets, according to Relbanks.com. Though Ping
Ans insurance assets rose 17 percent in 2016, to $802
billion, the companys 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, Chinas
booming arena of Internet finance.
Paul Schulte, chief executive officer of Hong
Kongbased Schulte Research, is a fan of Mas plan to
build out Ping An.
Sandy Weills approach failed because it was a
bunch of disconnected entities that were ostensibly under one
roof, says Schulte, who specializes in Chinas
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
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 groups 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 Mas
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 Japans 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, hasnt always enjoyed success. His achievement
is the result of carefully calibrated moves in the past decade
that refocused the company on its core strength: Chinas
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 Ans
chief operating officer, tells II at the firms
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 Chinas 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 companys 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
worlds second-largest economy. Its the
countrys 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 capitalbacked 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 Kongbased 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 Ans success is the application of
technology across all its business units, according to COO Tan,
who helped set up the firms 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 Chinas
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. Theyve borrrowed 272 billion yuan from the
Another major success is Ping Ans 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.