Chinas second-biggest life insurer has turned to
technology and venture capital to drive sales in the
worlds second-largest economy.
Ping An Insurance (Group) Co. of China has invested in many
venture capital-backed firms in and outside the country, Alex
Ren, the companys president, said in an interview at a
suite in Hong Kongs Shanghai-La Hotel, during a recent
visit to the city. Some of the firms are engaged in the latest
financial, pharmaceutical and health-related technologies,
which are helping Shenzhen-based Ping An increase sales and
improve its offering of products and services, he said.
Ping An has paid between $5 million and $50 million for each
of the stakes it purchased in the venture capital-backed firms,
according to Ren, who declined to provide further details about
the deals. Our goal is to provide more and better service
for our customers and nothing else, he said. At the end
of June, he added, researchers and software engineers working
for Ping An had filed a total 1,458 patent applications tied to
innovative technology that will help drive sales and manage
Chief among the innovations is Ping Ans face
recognition technology, which has a 99.8 percent accuracy
reading and can identify each of its 140 million customers. Ren
said that Ping An has pioneered an image-based verification
system that uses facial recognition and machine deep learning
to provide faster payouts on insurance claims for losses. The
firm began using the technology last year, speeding up the loss
verification process by 4,000 times compared with the
traditional method, he said, noting that processing times may
be cut to hours from days.
One of Ping Ans most successful investments is its
controlling stake in Shanghai Lujiazui International Financial
Asset Exchange Co., which operates an online financial products
business at Lu.com. The company, known as Lufax, uses
artificial intelligence to manage its online marketplace,
matching buyers with sellers of investment products. Last year,
about 6 trillion yuan worth of investment and wealth management
products were sold to more than 7.4 million investors on
Ping Ans technology investments have paid off in
earnings while aiding the expansion of its financial
supermarket. Our performance data is the strongest
ever, said Ren, 48. He joined Ping An in 1992, rising up
the ranks to become president in 2010.
In the first six months of 2017, the firms net profit
attributable to shareholders rose 6.5 percent from the same
period last year to 43.4 billion yuan ($6.5 billion), according
to Ping Ans midyear earnings report released this month. The
company plans to hand out a dividend of 0.5 yuan per share, a
150 percent increase from a year earlier.
[II Deep Dive: Inside Ping Ans Massive
Ren said Ping Ans 140 million customers buy an average
2.3 financial products or services each, the highest in
Chinas financial marketplace. He added that each of its
customers contributes an average 241 yuan in net profits
Beyond providing a plethora of insurance products, including
life, auto, property and casualty and health, Ping An offers
its customers banking services and investments in securities
and mutual funds. The firm reaches its customers through an
army of 1.3 million sales agents, as well as online sales
channels that it owns and operates. For example, the firm owns
Puhui.com, a micro-finance website that caters to individuals
and small and medium-sized businesses.
Unlike some of its rivals, Ping An solely focuses on
investing in technology to strengthen its China-based
businesses, Ren said, while avoiding investments in non-core
assets. We dont buy or invest in firms not related
to our main businesses, like hotels, or sports teams, and focus
on things that add value to Ping An Insurance, he
Buying into sports teams or high-end hotels has gotten some
of Ping Ans rivals in trouble lately with Chinese
authorities, who are cracking down on financial sector risk.
Most notable is an ongoing investigation into Anbang Insurance
Group, which sold high-yield wealth management products in
China to help fund acquisitions offshore that were not related
to its core business, according to sources close to regulators.
Anbang is well-known for its $1.95 billion acquisition of New
Yorks Waldorf Astoria hotel in 2014.
Anbang declined to comment.
Ever wary of rising financial sector risk, Chinese
government officials want to see insurers investing in core
businesses or assets that directly help the performance of
their insurance assets. That along with the latest
technology may well be the way to survive in
Chinas insurance sector.