What does the company do?
Ping An Insurance is a Chinese financial powerhouse, with one of the best domestic life insurance franchises. Through its collection and use of data for over 30 years since its founding, Ping An has become one of the most valuable insurers and data owners in the world. It spends 1% of its annual revenue on innovation, and has filed over 20,200 patent applications. As a result of the use of artificial intelligence, it has shaved average underwriting time per policy from five days to 15 minutes. Insurance penetration remains low in China, and Ping An has an efficient distribution strategy with its combined agency force and online platforms, which keeps its cost ratios low compared to domestic peers.
Why do we like the investment?
New technologies in the five areas of finance, health care, auto, real estate, and smart city services promote cross-selling and deeper relationships with its customers. For instance, the group has an app called “Ping An Good Doctor”, which provides appointments for outpatients and help with admissions of patients at a network of state-run hospitals. The Manager believes that Ping An is the ideal candidate to tap China’s middle-class growth, and that the market has not fully appreciated the full potential of its businesses. These new growth areas will help to partially mitigate a weaker consumer environment and the regulator’s latest policy move to guide insurers away from short-term savings products. While more competition is moving into Ping An’s core protection-products market, its management has shown over time its focus on returns and profitability, which supports the overall quality of the business franchise in the long term.
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