The international expansion of Ping An
The first large-scale operation abroad took place in 2007, aimed at the acquisition of a 4.2% stake in the capital of the Belgian bank Fortis worth 2.6 billion USD, a stake later increased to 4.99%.
Ten years after its entry into the capital of Fortis, in 2017, the group sets up "Global Voyager", its first overseas fund designed to develop Ping An's activities in the fields of financial technology, insurance and healthcare. Managed from Hong Kong, the 1 billion USD fund has notably contributed to the establishment of healthcare technology startups around the world.
In 2017, Lufax, the largest Chinese platform founded in 2011 by Ping An and specialized in wealth management, inaugurated "Lu International" in Singapore.
Moreover, in 2017, Ping An enters the capital of HSBC, one of the leading British banks, with a 5.01% stake corresponding to an investment of 9.92 billion USD. At the end of 2022, the group becomes the main shareholder of the bank after taking control of 8.3% of the capital, with its stake appreciated at 10.3 billion USD.
Ping An has been listed as a "globally important systemic insurer" by the Financial Stability Board (FSB), an international economic grouping based in Basel, Switzerland, since 2013.
Read also | Ping An Group structure [4]
The current issues of Ping An
In a difficult economic and political context marked by the Covid-19 pandemic, the economic slowdown, armed conflicts particularly in Europe and the Middle East, the return of global inflation, compounded by geopolitical tensions, Ping An, which has achieved an outstanding development over the last two decades, is now up against unprecedented challenges, inherent not only to its environment but also to those generated by its own activities namely:
- aging population,
- sensitive data centralization,
- data security,
- competition from internet giants,
- the Covid-19 crisis,
- the economic uncertainty in China.
Aging population
China's aging population is weighing heavily on the development and profitability of pension and health insurance products. According to a World Bank report, Chinese citizens, aged 60, who made up 12.4% of the total population in 2010, are expected to account for nearly a quarter, or 25% of that same population in 2030 and over 33% in 2050.
With such a demographic shift, expenditures for retirement and health insurance schemes are expected to more than triple between 2010 and 2030.
In order to address such a scenario the group is now focusing on the innovation of certain services such as wealth management, family medicine, targeted healthcare and concierge services for the elderly, ...
Sensitive data centralization
Massive digitization could quickly reach its limits, resulting in certain abuses. Ping An, like all major players in the global insurance market, could face the inherent risks of platformization, that is, the excessive centralization of all sensitive data.
Sensitive data centralization
Massive digitization could quickly reach its limits, resulting in certain abuses. Ping An, like all major players in the global insurance market [5], could face the inherent risks of platformization, that is, the excessive centralization of all sensitive data.
Data security
This massive digitization exponentially increases the risks of malicious attacks. According to the Allianz 2023 Risk Barometer, cyber risks are at the top of the list of threats and concerns for companies worldwide: data theft and loss, bugs, hacking, ransomware, etc.
Competition from internet giants
The ultra-customization of insurance products features a new competitive threat to traditional insurers who have taken the digitalization turn, setting up digital platforms. GAFAM (Google, Apple, Facebook, Amazon and Microsoft) and BATX (Baidu, Alibaba, Tencent and Xiaomi), in possession of structured mega-data, important technological capabilities and a good mastery of customer relations, could have a better positioning on the personalized insurance market than traditional insurers such as Ping An, Axa, Allianz.
The Covid crisis
The pandemic has weighed on the group's results: life insurance has been strongly affected, while the motor class of business has sustained a brutal slowdown due to the various confinements. As a result, Ping An reported a 42.7% drop in its net profit in the first quarter of 2020.
However, the group has managed to contain the losses thanks to its ecosystem, which has enabled it to turn certain situations to its advantage. For example, more than 30 struggling Chinese banks have fallen back on the digital services of Ping An and its fintech OneConnect. On the medical front, the number of registered users on Ping An Good Doctors also increased during the pandemic.
Economic uncertainties
In 2022, China reported the lowest GDP growth rate in the last four decades. According to the World Bank, this rate stood at 2.7% in 2022 versus an initial target of 5.5%. Excluding the year 2020, impacted by Covid, this is the worst rate achieved since 1976.
The Chinese economy, which has entered a "new normality" of moderate growth after years of prosperity, is now facing major challenges such as the slowdown in demand and rising unemployment among young graduates.
Ping An: environmental commitments
Ping An Insurance is actively involved in the fight against the devastating impact of climate change. In compliance with the 2030 carbon neutrality targets set by the Chinese government, the group is exploring best practices in green insurance and investment.
By the end of 2022, Ping An's green financial operations, including banking, insurance and investment activities, amounted to 489.557 billion CNY (70 billion USD). As of the end of last year, Ping An has 3 821 sustainable insurance products.
By 31 December 2022, Ping An Group's responsible investment amounted to 1 790 billion CNY (258 billion USD).
Read also | Insurance status within the Ping An Group [6]