Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

Ping An’s life insurance business recorded strong premium year-on-year growth at 38.7% in January, versus 31.2% growth for 2016. The higher-than-industry growth was attributable to a single-digit improvement in productivity per agent and over 30% growth in agent headcount. Looking forward, we expect agent headcount growth will slow to around 10% in 2017. However, growth in new business value should remain industry-leading at above 40%, thanks to continued improvement in agent productivity once these new agents are ramped up and higher sales contribution comes from higher-margin medium and long-term protection products. These products include traditional life insurance products, and critical illness and accident insurance products, which contributed about 70% of Ping An Life’s new business value for the first half of 2016. Ping An’s P&amp;C insurance business is another bright spot, with premium growth surging to 26% in January, versus 13% for 2016 and 6% in January 2016.We are sticking to our HKD 50 per share fair value estimate, implying 1.1 times forward price/embedded value when assuming 15% growth in embedded value in 2017. This represents an attractive opportunity for long-term investors, as rebound in bond yield and the regulator’s stricter control on sales of high cash value products should greatly ease reserve provisioning pressure and industry competition in 2017. We are convinced of our no-moat and positive moat trend ratings for Ping An Insurance, as we believe the group remains on track with improving customer switching costs and fast growing customer base.Analyst: Iris Tan, CFA

Ping An’s life insurance business recorded strong premium year-on-year growth at 38.7% in January, versus 31.2% growth for 2016. The higher-than-industry growth was attributable to a single-digit improvement in productivity per agent and over 30% growth in agent headcount. Looking forward, we expect agent headcount growth will slow to around 10% in 2017. However, growth in new business value should remain industry-leading at above 40%, thanks to continued improvement in agent productivity once these new agents are ramped up and higher sales contribution comes from higher-margin medium and long-term protection products. These products include traditional life insurance products, and critical illness and accident insurance products, which contributed about 70% of Ping An Life’s new business value for the first half of 2016. Ping An’s P&amp;C insurance business is another bright spot, with premium growth surging to 26% in January, versus 13% for 2016 and 6% in January 2016.We are sticking to our HKD 50 per share fair value estimate, implying 1.1 times forward price/embedded value when assuming 15% growth in embedded value in 2017. This represents an attractive opportunity for long-term investors, as rebound in bond yield and the regulator’s stricter control on sales of high cash value products should greatly ease reserve provisioning pressure and industry competition in 2017. We are convinced of our no-moat and positive moat trend ratings for Ping An Insurance, as we believe the group remains on track with improving customer switching costs and fast growing customer base.Analyst: Iris Tan, CFA

Life and P&C Premium Growth Remain Strong at Ping An

Ping An Insurance (H)

Life and P&C Premium Growth Remain Strong at Ping An