china insurance international holdings company limited 2004 interim results presentation · 2014....

2004 INTERIM RESULTS 2004 INTERIM RESULTS PRESENTATIONPRESENTATION

14 September 200414 September 2004

China Insurance International China Insurance International Holdings Company LimitedHoldings Company Limited

AgendaAgendaCorporate StructureCorporate StructureFinancial SummaryFinancial SummaryOverview of Key Subsidiaries and AssociatesOverview of Key Subsidiaries and Associates

CIReCIReCIGAMLCIGAMLTai Ping LifeTai Ping LifeTai Ping InsuranceTai Ping Insurance

Future StrategyFuture Strategy

Corporate StructureCorporate Structure

4

Corporate Structure

14%

China Insurance (PRC)

China Insurance (HK)

100%

54.55%

The Public

9.46%35.99%

China InternationalReinsurance

Co. Ltd.

Sino-ReReinsurance Brokers Ltd.

Huatai InsuranceAgency &

Consultant Co. Ltd.

Tai Ping Life Insurance Co.

Ltd. (TPL)

The Tai Ping Insurance

Co. Ltd. (TPI)

100% 100% 25% 50.05% 30.05%

ICBC(Asia)

Fortis

24.9%

24.9%

China Insurance Group Assets

Management Ltd. (CIGAML)

100%

9%

Tai Ping Pension

4% 12%

60%

10%

Financial SummaryFinancial Summary

6

First Half Year Result 2004 First Half Year Result 2004 Group Level

Six months Six monthsIncome Statement (Extract) ended 30-Jun-04 ended 30-Jun-03 Change

HK$ Million HK$ Million

Turnover 3,375 2,358

Reinsurance underwriting result 65 32

Life insurance underwriting result 94 (24)

Investment income and other income 147 150

Non-insurance underwriting expenditure 140 87

Profit from operations 195 102

Finance costs 42 2

Share of losses of associates 16 17

Profit attributable to shareholders 104 89

Earning Per Share (Basic) 7.82 cents 6.75 cents

91%

43%

21 Times

16%

61%

17%

6%

2%

103%

5 Times

7

First Half Year Result 2004 First Half Year Result 2004 Group Level

As at As atBalance Sheet (Extract) 30-Jun-04 31-Dec-03 Change


Investments in securities 8,591 6,639

Cash and bank deposits 2,294 2,393

Insurance reserves 6,619 4,423

Provision for outstanding claims 1,427 1,395

Interest-bearing notes 1,355 1,349

29%

50%

2%

-

4%

8

First Half Year Result 2004 First Half Year Result 2004

Segment Level - Reinsurance Business



Gross premium written 962 931

Increase in insurance funds 293 179

Net claims 244 371

Net commission 198 153

Management expenses-underwriting 8 7

Underwriting profit 65 32

Investment income and other income 52 74

Non-underwriting expenditure 2 2

Profit from operation 108 103

3%

30%

-

4%

103%

64%

29%

14%

34%

9

First Half Year Result 2004 First Half Year Result 2004 Segment Level-Reinsurance Business




Cash and bank deposits 604 791

Insurance reserves 598 305

Provision for outstanding cla 1,422 1,391

15%

96%

2%

24%

10

First Half Year Result 2004 First Half Year Result 2004 Segment Level - Life Insurance Business



Gross premium written 2,385 1,395

Increase in insurance funds 1,903 1,246

Net claims 24 10

Surrenders 110 29

Net commission 131 73

Management expenses-underwriting 108 54

Underwriting profit(loss) 94 (24)

Non-underwriting expenditure 109 69

Profit (loss) from operation 34 (39)

Profit (loss) attributable to the Group 14 (22)

71%

58%

187%

164%

5 Times

53%

140%

279%

79%

100%

11

First Half Year Result 2004 First Half Year Result 2004

Segment Level - Life Insurance Business




Cash and bank deposits 979 1,380

Insurance reserves 6,021 4,118

Provision for outstanding claims 5 4

69%

46%

25%

29%

12

Change in Basis of Life Reserve EstimateChange in Basis of Life Reserve EstimateWhy we change the basis of estimate?Why we change the basis of estimate?

Management considers that the change in basis of Management considers that the change in basis of estimate allows the Group to conform with approaches estimate allows the Group to conform with approaches or estimates adopted by major international and PRC or estimates adopted by major international and PRC insurance companiesinsurance companies

What is the accounting treatment?What is the accounting treatment?Since such change is considered as Since such change is considered as ““change in change in accounting estimateaccounting estimate””, no retrospection or, no retrospection or restatement restatement of previous yearsof previous years’’ result is requiredresult is required

What is the impact on current periodWhat is the impact on current period’’s result?s result?Group profit increased by HK$94 millionGroup profit increased by HK$94 million

13

Change in Basis of Life Reserve Estimate Change in Basis of Life Reserve Estimate –– ConCon’’tt

What would be the result of the Group if What would be the result of the Group if retrospection or restatement is applied?retrospection or restatement is applied?

Current interim periodCurrent interim period----Profit increased by HK$31.5 Profit increased by HK$31.5 millionmillion

Year ended 31 Dec 03Year ended 31 Dec 03----Profit increased by HK$36.5 Profit increased by HK$36.5 millionmillion

Year ended 31 Dec 02Year ended 31 Dec 02----Profit increased by HK$26 Profit increased by HK$26 millionmillion

14

Further Discussion on Change in Basis of Life Further Discussion on Change in Basis of Life Reserve EstimateReserve Estimate

Net profit of the GroupNet profit of the Group

Non-retrospective vs Retrospective

0

50

100

150

200

250

2002FY 2003FY 2004 HY

Non-retrospective RetrospectiveHK$mnHK$mn

15

Net Net profit(Lossprofit(Loss) of TPL attributable to the Group) of TPL attributable to the Group

Non-retrospective vs Retrospective

-100

-80

-60

-40

-20

0

20

2002FY 2003FY 2004 HY

Non-retrospective Retrospective

Further Discussion on Change in Basis of Life Further Discussion on Change in Basis of Life Reserve EstimateReserve Estimate

HK$mnHK$mn

16

Our Conservative Investment Portfolio Our Conservative Investment Portfolio －－ Hong Kong FundHong Kong Fund

1,315

785

298 288

2,384

1,013

521

2,895

0300600900

1,2001,5001,8002,1002,4002,7003,000

Bonds & Fixed IncomeSecurities

Cash & Bank Deposits Listed Equities Others

As at 30/6/2004 As at 31/12/2003

HK$mnHK$mn

As at 30-Jun-04 As at 31-Dec-03OTHERS INCLUDE: HK$mn HK$mnListed Mutual Funds and Unit Trusts 12 18Investment Properties 117 105Interests in Associates 135 128Unlisted Equities 12 12Loan 22 25

Six months Six monthsended 30-Jun-04 ended 30-Jun-03

Annualised Investment Return Rate 3.96% 5.98%

17

Investment Portfolio Review Investment Portfolio Review –– TPLTPL

979815

24 152

4,584

1,380

330

2,863

0300600900

1,2001,5001,8002,1002,4002,7003,0003,3003,6003,9004,2004,5004,800

Bonds & Fixed IncomeSecurities

Cash & Bank Deposits Listed Mutual Fundsand Unit Trusts

Others

As at 30/6/2004 As at 31/12/2003

HK$mnHK$mn


Annualised Investment Return Rate 1.90% 4.74%

Overview of Key SubsidiariesOverview of Key Subsidiariesand Associatesand Associates

19

Overview of CIReOverview of CIReCIRe - Reinsurance Underwriting PerformanceGeneral and Life


HK$ Million HK$ MillionGross premium GPW 962 931Retained premium NPW 807 742Retained earned premium NEP 515 563Retained ratio - NPW/GPW 83.9% 79.7%Earned ratio - NEP/GPW 53.5% 60.5%

Net claims incurred NCI 245 371

Net U/W expenses 197 153Management expenses 8 7

Total expenses TE 205 160

Loss ratio - NCI/NEP 47.9% 66.3%Expense ratio - TE/NEP 39.8% 28.4%Combined ratio on earned premium 87.7% 94.7%

U/W Profit 65 32

Reinsurance combined

20

Reinsurance Operation Reinsurance Operation –– Steady Growth in Premium & ProfitSteady Growth in Premium & Profit

Operating Profit From ReinsuranceOperating Profit From Reinsurance

CIRe Reinsurance PremiumCIRe Reinsurance PremiumNo major claims reported No major claims reported during the first 6 months. during the first 6 months.

Combined ratio improved Combined ratio improved to 87.7% at 30/6/2004 to 87.7% at 30/6/2004 compared to 94.7% at compared to 94.7% at 30/6/2003.30/6/2003.

Conservative underwriting Conservative underwriting and investment strategy and investment strategy enables reasonable steady enables reasonable steady performance in 2H/Y 2004.performance in 2H/Y 2004.

103.4 107.5

0

50

100

150

1H03 1H04

4.0%

HK$mnHK$mn

930.6 961.6

0

200

400

600

800

1,000

1H03 1H04

3.3%

HK$mnHK$mn

21

Overview of CIGAMLOverview of CIGAMLDuring the period, CIGAML produced management fee During the period, CIGAML produced management fee of HK$21.67 million and its profits attributed to the of HK$21.67 million and its profits attributed to the Group for the period was HK$15.23 millionGroup for the period was HK$15.23 million

The assets under the management of CIGAML The assets under the management of CIGAML amounted to HK$2,330.30 million. The reduction in amounted to HK$2,330.30 million. The reduction in assets under management was due to large client assets under management was due to large client withdrawals which took place during the periodwithdrawals which took place during the period

Plan to expand to China to take advantage of the rapid Plan to expand to China to take advantage of the rapid growth in premium of TPL and TPI as well as mutual growth in premium of TPL and TPI as well as mutual funds and institutional accountsfunds and institutional accounts

22

Overview of Tai Ping LifeOverview of Tai Ping LifeDuring the period, TPL continued to make strong inroad into the During the period, TPL continued to make strong inroad into the PRC PRC life insurance market, in which life insurance market, in which TPLTPL’’ss market share increased to 1.4% market share increased to 1.4% from 0.9% of last period, presented growth rates substantially hfrom 0.9% of last period, presented growth rates substantially higher igher than the rest of the industrythan the rest of the industryTPL continued its strategy of controlled expansion across the PRTPL continued its strategy of controlled expansion across the PRC. As C. As of the end of August 2004, TPL had 16 branches and 39 subof the end of August 2004, TPL had 16 branches and 39 sub--branches branches across the country in the end of 2004. TPL will have a total of across the country in the end of 2004. TPL will have a total of 22 22 branches and 47 subbranches and 47 sub--branches in the most wealthy and populous branches in the most wealthy and populous provinces in the PRCprovinces in the PRCTPL has obtained approval from CIRC to establish Tai Ping PensioTPL has obtained approval from CIRC to establish Tai Ping Pension n Company, which will engage in supplementary corporate pension Company, which will engage in supplementary corporate pension business and other related pension businesses. TPP is a strategibusiness and other related pension businesses. TPP is a strategic c priority of TPL, as the corporate retirement market holds vast ppriority of TPL, as the corporate retirement market holds vast potentialotential

TPL has undertaken significant efforts to strengthen its marketiTPL has undertaken significant efforts to strengthen its marketing and ng and distribution networks in its areas of operation, through cooperadistribution networks in its areas of operation, through cooperation tion ventures with property insurers, agencies and other intermediariventures with property insurers, agencies and other intermediarieses

23

TPL TPL -- Life Insurance Underwriting PerformanceLife Insurance Underwriting PerformanceSix months Six months

ended 30-Jun-04 ended 30-Jun-03HK$ Million HK$ Million

Gross premium GPW 2,384 1,395 Retained premium NPW 2,371 1,387 Retained earned premium NEP 468 142 Retained ratio - NPW/GPW 99.5% 99.4%Earned ratio - NEP/GPW 19.6% 10.2%

Net claims and surrenders incurred NCI 135 39

Net U/W expenses 131 73 Management expenses 108 54

Total expenses TE 239 127

Loss ratio - NCI/NEP 28.8% 27.5%Expense ratio - TE/NEP 51.1% 89.4%Combined ratio on earned premium 79.9% 116.9%

U/W Profit (Loss) 94 (24)

24

545

20419477

1,635

1,124

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Bancassurance Group Individual

1H2004 1H2003

TPL First Year Premium in First Half of 2003 and 2004TPL First Year Premium in First Half of 2003 and 2004

During the period, TPL During the period, TPL generated premium income of generated premium income of HK$2,384.71 million, HK$2,384.71 million, representing an increase of representing an increase of 70.9% over last period.70.9% over last period.

The sales of individual life The sales of individual life policies and group life policies policies and group life policies amounted to HK$204 million amounted to HK$204 million and HK$547 million and HK$547 million respectively, and the sales of respectively, and the sales of individual life policies through individual life policies through bancassurancebancassurance was HK$1,634 was HK$1,634 million.million.

These three life insurance These three life insurance product lines registered growth product lines registered growth rates of 162%, 181% and 46% rates of 162%, 181% and 46% respectively.respectively.

HK$mnHK$mn

25

TPL Market ShareTPL Market Share

Market Share Analysis

China Life57.5%

TPL1.4%AIA

1.2%

Others3.0%

Taikang5.2%

New China Life5.0%

China Pacific10.5%

Ping An16.2%

In first half of 2004, the market share In first half of 2004, the market share of TPL rose by 0.3% from 1.1% by of TPL rose by 0.3% from 1.1% by the end of 2003 to 1.4%the end of 2003 to 1.4%

26

Overview of Tai Ping InsuranceOverview of Tai Ping InsuranceDuring the period, TPI achieved remarkable growth in its generalDuring the period, TPI achieved remarkable growth in its generalinsurance business in the PRC. insurance business in the PRC. TPITPI’’ss premium income increased premium income increased by 100% to HK$430.75 millionby 100% to HK$430.75 million

TPI continued executing its plan to expand into the most wealthyTPI continued executing its plan to expand into the most wealthyand populous provinces of the PRC. As of the end of 2003, TPI hand populous provinces of the PRC. As of the end of 2003, TPI had ad 12 branches offices. In 2004, TPI will set up branches in Hunan12 branches offices. In 2004, TPI will set up branches in Hunan, , QingdaoQingdao and and ChongqingChongqing

TPI continued to refine its product offerings with an emphasis oTPI continued to refine its product offerings with an emphasis on n lowering costs and increasing profitabilitylowering costs and increasing profitability

TPI intends to strengthen and diversify its distribution channelTPI intends to strengthen and diversify its distribution channels, s, with developing the bank channel and the use of their intermediawith developing the bank channel and the use of their intermediary ry agencies. It will also pursue crossagencies. It will also pursue cross--selling opportunities with other selling opportunities with other financial intermediariesfinancial intermediaries

27

Non-Marine31.6%

Marine9.1%

Motor57.0%

Accident &Health2.3%

Total Premium for 1H2004: HK$430.75 million

TPI Business CompositionTPI Business Composition

TPITPI’’ss combined ratio of cost to net premium written improved from combined ratio of cost to net premium written improved from 153.4% of last period to 128.0% this period153.4% of last period to 128.0% this periodThe net claims of motor insurance to premium earned ratio fell fThe net claims of motor insurance to premium earned ratio fell from last rom last periodperiod’’s 68.9% to 62.7% this periods 68.9% to 62.7% this period

As with other insurers, motor business has been a large share of TPI’s business mix…

Future StrategyFuture Strategy

29

Future StrategyFuture StrategyCIIH will continue its strong expansion into high growth CIIH will continue its strong expansion into high growth Mainland China market, with emphasis on building a leading Mainland China market, with emphasis on building a leading franchises in PRCfranchises in PRCIn executing our strategy, we will also focus on creating In executing our strategy, we will also focus on creating longlong--term value for our shareholderterm value for our shareholderWe will further strengthen our strategic alliance with ICBC We will further strengthen our strategic alliance with ICBC and Fortisand Fortis

Capitalize on unique strengths of CIIHCapitalize on unique strengths of CIIHProfessional managementProfessional managementInternational expertiseInternational expertiseAccess to international capital marketAccess to international capital marketPRC creditability and home market advantagePRC creditability and home market advantage

CIIH will continue to maintain highest standard of CIIH will continue to maintain highest standard of transparency and integrity in financial reporting and transparency and integrity in financial reporting and operational managementoperational management

china insurance international holdings company limited 2004 interim results presentation · 2014....

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