Ping An Insurance Group: the Chinese giant’s story

It is the first Chinese insurance company owned by private legal entities. From insurance to new technologies, the conglomerate has been able to meet the needs of a modern population over the years.

Today, Ping An is one of the world's 20 largest groups with 227 million customers and nearly 647 million Internet users.

Ping An Insurance: the historical context of the group’s creation

Ping An's history is closely linked to the political and socio-economic changes in China over the last decades.

At the end of the 1970s, China moved from a centralized economic model based on Marxism-Leninism since 1949, to a liberal market system under the control of the Communist Party.

In 1978, a program of "reform and opening up" was launched by the progressive movement of the Communist Party, headed by Deng Xiaoping. The country then embarked on a policy of gradual modernization which led to an era of "market socialism", described as "Chinese-style capitalism".

This policy of opening up the market from the beginning of the 1980s advocates:

• the establishment of large foreign companies in the country,
• the flow of foreign capital to China,
• the industrial boom,
• the growth of the GDP to more than 10% annual average.

It is in this context of opening, reforms and economic buoyancy that the insurance company saw the light of day in 1988 in Shekou, a small fishing village south of Shenzhen ⁽¹⁾, nicknamed a few years later “China's Silicon Valley”.

⁽¹⁾ Coastal region in the southern tip of Guangdong province.

Peter Ma Mingzhe, the group’s founder and Chairman

Born in 1955, Peter Ma holds a PhD in finance from Zhongnan University of Law and Economics (formerly Zhongnan University of Economics). He served as Deputy Director of China Merchants Shekou Industrial Zone Social Insurance Company before founding Ping An.

Peter Ma was fully involved in the establishment, management and development of his company. He had successively held the positions of Chairman, Director and CEO. In June 2020, he decided to give up his activities as CEO and retain his position as Chairman of the Board of Directors.

The birth of Ping An

The idea of establishing a private insurance entity dates back to 1986 when Peter Ma submitted his project to Yuan Geng, mayor of Shenzhen and founder of the Shekou industrial zone. The same year, he applied for a license for a 100% private non-life insurance company.

Two years later, on 27 May 1988, Ping An was officially born with an initial registered capital of 42 million CNY (6 million USD), divided between the two first shareholders, the Shekou Social Insurance Company (51%) and China Merchants Bank Shenzhen Trust Company (49%). Etymologically, this name means "peace" and "security".

The sprawling empire we know today, which occupies the tallest skyscraper in Shenzhen, started its activities in a 200-meter square office where employees worked and spent their nights.

Ping An Insurance Group: a difficult start (1988-1989)

At the time of the sharp economic turnaround in the late 1970s, the state-owned People's Insurance Company of China (PICC), which had a market monopoly in China, had a limited range of products that stopped short of meeting the new needs of both Chinese and foreign companies.

As a result, the companies, newly established in the new industrial zone of Shekou, did not have sufficient insurance guarantees to cover goods and people. Consequently, when a disaster occurred, the damage to property and bodily injuries were very often taken care of by the companies and the workers themselves.

To meet this pressing need for coverage, Peter Ma, founder and Chairman of Ping An, seized the opportunity to create a private insurance company. The new entity was to provide local and foreign companies in Shekou with more sophisticated and better solutions and coverage than that offered by the national insurer PICC.

The arrival of a private company in a centrally planned economy was not easy. With the concept of private insurance and investment in its infancy in the late 1980s, the company quickly bumped into customer reluctance and contestation of its products. At the time of its establishment, the turnover target was set at CNY 5 million (1.3 million USD), which was one thousandth of the premiums achieved by PICC at that time.

This was the backdrop against which the company made its debut.

Step by step, the direct approach to customers allowed the firm to develop and expand its activities beyond the city of Shenzhen.

Between 1988 and 1992, the shareholders increased from two to five. China Ocean Shipping (Group) Company, Shenzhen Finance Bureau and Ping An's employee shareholders joined the two original shareholders. With these new capital injections, the business is embarking on a phase of rapid development.

Driven by China's economic revival and the dynamism of its leaders, the company was given the name "Ping An of China" in 1992. The State Council of the People's Republic of China granted Ping An the status of a national insurance company, despite its status as a private enterprise.

Ping An Insurance Group: the rocky years (1990-1999)

In the early 1990s, the Chinese market had four major non-life insurers, namely China Pacific, PICC, Ping An and Tian An, and one life insurer, American International Assurance (AIA).

In 1992, AIA, initially a subsidiary of American International Group (AIG), obtained a license to establish a life and health insurance company in Shanghai. AIA was the first and only insurer to conduct life insurance business in China.

A non-life insurance company specialized in property damage and marine hull insurance, Ping An quickly turned to life insurance, which exhibited strong development potential.

China in the 1990s was a fertile ground for life insurance due to:

• a large and aging population,
• a rapidly rising standard of living,
• a very low life insurance penetration rate,
• a gradual disengagement from social protection at the expense of the State (health expenses, pensions),
• significant savings, mainly invested in bank deposits.

To familiarize himself with this life business, which he did not practice at the beginning, Peter Ma initially relied on partnerships with AIA and other Japanese and Hong Kong insurers, with all his attempts at rapprochement ending in failure.

Peter Ma's strategy was successful in 1993, when Ping An entered into a partnership with Guohua Life Insurance, a Taiwanese life insurer.

It was not until 1994 that Ping An's first life insurance policy was underwritten for a capital of 160 000 CNY (18 900 USD). At that time, the Chinese life insurance market [6] was confronted with the cultural taboo of death, and insurers operating in this field were finding it very difficult to develop their portfolio.

To overcome the cultural difficulties related to death, a new range of products were created. These are more focused on the concept of savings than death. In addition to savings and life products, the group's focus is also on financial services, wealth management and banking.

Between 1992 and 1994, the insurer expanded its operations to 14 new coastal cities and five special economic zones, accelerating its development.

To support its strong growth, the company not only needed funds and talent but also international best practices, which it sought from Western investors.

In 1994, two American financial giants, Morgan Stanley and Goldman Sachs, injected 50 million USD in Ping An, for a 5% stake each in the capital. The company then became the first Chinese insurer with foreign investors in its shareholding. It also becomes the first private equity investments company in the country.

The insurer immediately took advantage of the best practices in corporate management, investment and international governance brought by its foreign partners, the know-how that proved to be essential in shaping the future success of the company.

In October 1995, the company made its first headway into the financial sector by establishing Ping An Securities Company, a subsidiary specialized in securities and wealth management.

In December 1996, Peter Ma hired McKinsey to modernize the company and its operating system. A new centralized management structure was introduced and designed to improve performance and support the rapid development of the life and non-life businesses.

In the same year, the group acquired ICBC Pearl River Delta Financial Trust Joint Company, renamed Ping An Trust and Investment Company whose capital increased from 50 million CNY to 150 million CNY (6 million USD to 18 million USD).

At the end of 1997, the life business accounted for the bulk of the company’s operations.

In 1999, the life sales manpower reached 120 000 employees, operating through 1 000 branches at the local level and achieving 600 million USD in life premiums.

In the same year, thanks to a cooperation agreement with the American insurer Prudential, Ping An introduced investment-linked products on the market. This initiative, the first of its kind in the Chinese market, transformed the company, enabling it to achieve 90% of life premiums five years after its implementation.

In the late 1990s, the company succeeded in expanding its business to a multitude of non-insurance activities. This diversification strategy was consolidated in the following decade.

Ping An Insurance Group: sustained growth (2000-2009)

In 2000, after 12 years of operation, the group became one of the most profitable insurers in China. The table below illustrates the company’s staggering growth over the 1988-2000 period.

In 2001, it became the pioneer of bancassurance in China, with more than 10% of the group’s life premiums accounted for by this business only three years after its launch.

In 2002, in order to boost its financial activities, Ping An joined forces with HSBC, one of the largest banking groups based in London, with which it signed a strategic cooperation and technical assistance agreement. The multinational bank became the business’ largest shareholder in 2002 with a 10% stake and the third largest foreign shareholder after Goldman Sachs and Morgan Stanley. The net assets of the Chinese company reached CNY 120 billion (14.5 billion USD).

Three years later, HSBC doubled its stake in the Chinese insurer. By acquiring all the shares of Goldman Sachs and Morgan Stanley for 1.1 billion USD, HSBC became the holder of 19.9% of the capital.

In February 2003, 15 years after the start of its activities, Ping An of China Insurance Company changed its name and became Ping An Insurance (Group) Company of China. The latter was set up as a holding company, a legal entity including an integrated financial platform.

In the same year, the group obtained license to develop banking activities. In December 2003, it acquired Fujian Asia Bank, renamed Ping An Bank, the transaction that marked the beginning of its banking activities.

In 2004, in order to further strengthen its capital, the group was listed on the Hong Kong stock exchange, a move that enabled it to raise 14.3 billion HKD (1.8 billion USD).

In 2007, it was listed on the Shanghai stock exchange, a move regarded as the most important listing of an insurance company in the world.

During the same period, the Chinese giant continued its acquisitions in the banking field with the takeover of Shenzhen Commercial Bank which it merges with Ping An Bank to create a new bank called Shenzhen Ping An.

At the same time, it began its expansion abroad with the acquisition of a 4.2% stake in the Belgian bank Fortis.

Ping An Insurance Group: the advent of new technologies (2010-2021)

The 2010s and beyond mark the advent of digital activities within the group. From then on, Ping An focused the holding's development on technological innovation, establishing financial and healthcare technology companies such as Lufax Holding, OneConnect, Ping An Good Doctor and Ping An HealthKonnect.

In 2011, the group acquired stakes in Shenzhen Development Bank, becoming its majority shareholder before merging it with Ping An Bank to form a large banking group with a nationwide presence.

In 2012, Lujiazui International Financial Asset Exchange (Lufax Holding) was established, an advanced technology platform dedicated to personalized financial services.

On December 5 of the same year, HSBC sold 15.6% of its shares in Ping An to Thai conglomerate Charoen Pokphand (CP Group) for 9.4 billion USD.

In 2013, the group acquired the Lloyd's Building, a skyscraper that has housed the headquarters of Lloyd's of London for 260 million GBP (430 million USD).

The year 2014 saw the establishment of Ping An Good Doctor, a healthcare platform also known as Ping An Healthcare and Technology.

In 2016, Ping An Life's written premiums exceeded 300 billion CNY (43 billion USD) for the first time.

In 2017, the group's market capitalization reached a record level at over 1 trillion CNY (154 billion USD). Its financial performance allowed it to acquire a 5.01% stake in HSBC on 17 December 2017 for 9.92 billion USD.

In 2018, the Ping An Rural Communities Support project came as a response to the government's call to fight poverty and encourage social inclusion. This program, inaugurated on the occasion of the group's 30^th anniversary, is being developed in nine provinces and autonomous regions of China. With this initiative, the group has exhibited its commitment to support the development of healthcare and education in rural areas.

In 2018, Ping An Good Doctor was listed on the Hong Kong stock exchange. It then became the largest online healthcare platform in the country, with more than 190 million users, nearly 1 000 healthcare professionals and a network of 3 100 hospitals.

In June 2019, Ping An One Connect Bank, a subsidiary of OneConnect Financial Technology officially began operations after receiving a virtual license from the Hong Kong Monetary Authority.

The bank is building a virtual ecosystem, optimizing banking services through technology innovation.

In December 2019, OneConnect Financial Technology lists on the New York Stock Exchange, becoming the first listed technology company in the United States incubated by Ping An.

In October 2020, Shanghai Lujiazui International Financial Asset Exchange (Lufax), one of the leading online wealth management platforms in China, was listed on the New York Stock Exchange.

In 2021, the group's net assets reached 10 trillion CNY (1 569 billion USD).

Ping An Insurance Group in 2022

In 2022, the Insurance Asia News magazine awarded Ping An Property and Casualty Insurance the CSR Initiative of the Year.

In the same year, Ping An Bank was ranked as the best national bank for digital solutions (China's best Bank for digital solutions).