中国太平(00966) - 2023 - 中期业绩

Management Discussion and Analysis Overall Performance Highlights In H1 2023, the Group's profit attributable to shareholders grew 20.5% to HK$5.22 billion, with total assets up 7.7% to HK$1.423 trillion Key Financial Indicators for H1 2023 | Indicator | Amount | Change vs. Year-End/Prior Period | | :--- | :--- | :--- | | Profit Attributable to Shareholders | HK$5.22 billion | +20.5% | | Contractual Service Margin | HK$217.79 billion | -1.6% | | Equity Attributable to Ordinary Shareholders | HK$82.03 billion | -2.3% | | Total Assets | HK$1,423.0 billion | +7.7% | - The Group implemented a high-quality development strategy, seizing opportunities in inclusive finance, pension finance, and green finance, and promoting the deep integration of "insurance + healthcare and wellness"[3] - The Group's investment business developed steadily, with total investment income increasing by 105.9% year-over-year in the first half, and equity investment performance outperforming market benchmarks[8] - The Group continued to advance its digital transformation, launching the HKFRS 17-related systems and deepening technological innovation, such as the proprietary "Auto Insurance Score" and "Health Guardian" models[13] Consolidated Financial Performance The Group's net profit attributable to shareholders rose 20.5% to HK$5.22 billion in H1 2023, driven primarily by the life insurance business Consolidated Financial Summary for H1 2023 | Indicator | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | Insurance service revenue | HK$54.13 billion | HK$56.14 billion | -3.6% | | Profit before tax | HK$7.84 billion | HK$7.07 billion | +10.9% | | Net profit attributable to shareholders | HK$5.22 billion | HK$4.33 billion | +20.5% | | Basic earnings per share | HK$1.365 | HK$1.205 | +HK$0.160 | Consolidated Balance Sheet Summary as of June 30, 2023 | Indicator | As of June 30, 2023 | As of Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets | HK$1,422.99 billion | HK$1,321.59 billion | +7.7% | | Contractual Service Margin | HK$217.79 billion | HK$221.41 billion | -1.6% | | Total Equity | HK$123.91 billion | HK$109.80 billion | +12.9% | Net Operating Profit/(Loss) by Business Segment | Business Segment | H1 2023 (HK$ million) | H1 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Life insurance | 7,477.70 | 6,512.89 | +14.8% | | Domestic property and casualty insurance | 185.36 | 576.70 | -67.9% | | Overseas property and casualty insurance | 174.28 | 158.24 | +10.1% | | Reinsurance | (285.68) | (239.46) | +19.3% | | Asset management business | 92.93 | 654.10 | -85.8% | Business Segment Analysis The Group's business segments showed varied performance, with strong new business value growth in life insurance but underwriting losses in reinsurance Life Insurance Business The life insurance segment saw a 28.5% increase in new business value, though the number of individual agents declined Life Insurance Business Financial Performance | Indicator | H1 2023 (HK$ million) | H1 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Insurance service revenue | 31,002.11 | 32,944.59 | -5.9% | | Insurance service result | 7,637.31 | 10,316.48 | -26.0% | | Profit after tax | 7,477.70 | 6,512.89 | +14.8% | - Taiping Life's new business value grew by 28.5% year-over-year to RMB 3.65 billion, with new business premiums up 42.4%; premiums from the individual agent and bancassurance channels rose by 21.8% and 82.5%, respectively[5] - The number of individual agents at Taiping Life decreased by 70,809, from 391,069 at the end of 2022 to 320,260 as of June 30, 2023[39] Solvency Adequacy Ratio of Life Insurance Subsidiaries | Subsidiary | As of June 30, 2023 | As of Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Taiping Life | 197% | 194% | +3 ppt | | Taiping Pension | 212% | 224% | -12 ppt | | Taiping Life (HK) | 231% | 204% | +27 ppt | Domestic Property and Casualty Insurance Business The domestic P&C business reported premium growth, but its combined ratio increased to 97.6% Taiping P&C Financial Performance | Indicator | H1 2023 (HK$ million) | H1 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Insurance service revenue | 16,101.57 | 16,005.86 | +0.6% | | Profit after tax | 185.36 | 576.70 | -67.9% | | Combined ratio | 97.6% | 95.2% | +2.4 ppt | - Within Taiping P&C's gross written premiums, non-motor insurance business grew by 14.1% year-over-year, indicating continuous optimization of the business structure[6][45] - Taiping P&C's comprehensive solvency adequacy ratio was 200% as of June 30, 2023, an increase of 14 percentage points from 186% at the end of 2022[46] Overseas Property and Casualty Insurance Business The overseas P&C business delivered a strong overall underwriting performance, with most subsidiaries achieving profitability Combined Ratio of Overseas P&C Businesses | Company | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | Taiping HK | 91.7% | 96.0% | -4.3 ppt | | Taiping Macau | 68.2% | 75.3% | -7.1 ppt | | Taiping UK | 93.5% | 91.4% | +2.1 ppt | | Taiping Singapore | 92.0% | 85.6% | +6.4 ppt | | Taiping Indonesia | 81.7% | 82.9% | -1.2 ppt | Gross Written Premiums of Overseas P&C Businesses | Company | H1 2023 (HK$ million) | H1 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Taiping HK | 1,372.91 | 1,267.61 | +8.3% | | Taiping Macau | 478.80 | 494.33 | -3.1% | | Taiping UK | 214.14 | 182.05 | +17.6% | | Taiping Singapore | 405.92 | 380.72 | +6.6% | | Taiping Indonesia | 299.24 | 238.36 | +25.5% | Reinsurance Business The reinsurance business experienced steady premium growth but recorded an underwriting loss with a combined ratio of 105.8% Reinsurance Business Financial Performance | Indicator | H1 2023 (HK$ million) | H1 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Insurance service revenue | 4,921.02 | 4,818.03 | +2.1% | | Loss after tax | (285.68) | (239.46) | +19.3% | | Combined ratio | 105.8% | 101.4% | +4.4 ppt | - Total premiums for the reinsurance business grew by 2.3% year-over-year to HK$10.03 billion, with life reinsurance up 9.2% and non-life reinsurance up 0.6%[57][58] - The comprehensive solvency adequacy ratios for Taiping Re and Taiping Re (China) were 326% and 220%, respectively, both showing improvement from year-end 2022[59] Asset Management Business The asset management business saw significant growth in total investment income, driven by an increased allocation to equity assets Group Investment Income Performance | Indicator | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | Total investment income | HK$23.70 billion | HK$11.51 billion | +105.9% | | Annualized net investment yield | 3.63% | 3.94% | -0.31 ppt | | Annualized total investment yield | 3.89% | 1.98% | +1.91 ppt | Assets Under Management | Item | As of June 30, 2023 (HK$ million) | As of Dec 31, 2022 (HK$ million) | Change | | :--- | :--- | :--- | :--- | | Insurance funds assets within the Group | 1,262,759.80 | 1,174,666.62 | +7.5% | | Third-party assets under management | 1,121,538.82 | 1,092,814.71 | +2.6% | - In the investment portfolio, the allocation to fixed-income investments decreased from 75.6% to 74.8%, while the allocation to equity investments increased from 17.8% to 18.8%[68] - The Group's debt securities portfolio maintained high credit quality, with 99.6% of domestic bond investments rated AAA or consisting of government and policy bank bonds[69] Liquidity and Capital Resources The Group maintained strong liquidity with HK$113.42 billion in cash and issued US$2 billion in perpetual subordinated capital securities - As of June 30, 2023, the Group's cash and bank deposits amounted to HK$113.42 billion[73] - The comprehensive financial leverage ratio (interest-bearing debt / (interest-bearing debt + ordinary shareholders' equity + after-tax contractual service margin)) was 27.4%, a slight increase from 26.0% at the end of 2022[74] - In March 2023, the Company issued US$2 billion of perpetual subordinated capital securities with an initial annual interest rate of 6.4%[75] Outlook The Group will continue its high-quality development strategy, focusing on key areas like inclusive and green finance while managing investment risks - Overall strategy: Adhere to the principle of seeking progress while maintaining stability, deepen the high-quality development strategy, and expand in "inclusive finance," "pension finance," and "green finance," while strengthening its presence in the Greater Bay Area[78] - Domestic life insurance (Taiping Life): Focus on value growth, enhance agent recruitment and productivity, and deepen the development of the healthcare and wellness ecosystem[79] - Domestic P&C insurance (Taiping P&C): Respond to the comprehensive auto insurance reform, increase market share in new energy vehicle insurance, and accelerate the development of non-auto lines such as agricultural and green insurance[80] - Investment outlook: China's economy is expected to operate smoothly in the second half of the year, with gradual improvement in capital market sentiment; the Group will focus on controlling portfolio volatility, managing credit risk, and enhancing investment returns[85] Embedded Value of Taiping Life Taiping Life's embedded value reached HK$254.86 billion, with the value of new business growing 28.5% in RMB terms Embedded Value of Taiping Life | Item | As of June 30, 2023 (HK$ million) | As of Dec 31, 2022 (HK$ million) | | :--- | :--- | :--- | | Adjusted net assets | 128,178 | 116,547 | | Value of in-force business | 126,678 | 126,081 | | Embedded Value | 254,856 | 242,627 | Value of New Business of Taiping Life | Item | H1 2023 (HK$ million) | H1 2022 (HK$ million) | | :--- | :--- | :--- | | Value of new business | 3,955 | 3,319 | - In RMB terms, the value of new business for H1 2023 was RMB 3.65 billion, an increase of 28.5% from RMB 2.84 billion in H1 2022[90] - In H1 2023, Taiping Life's overall new business value margin was 12.2%, with the margin for the individual agent channel at 18.6% and the bancassurance channel at 3.6%[90] Condensed Consolidated Financial Statements Condensed Consolidated Income Statement The Group's profit attributable to shareholders increased by 20.5% to HK$5.22 billion, despite a 3.6% decline in insurance service revenue Condensed Consolidated Income Statement Summary | Item (HK$ thousand) | Six months ended June 30, 2023 | Six months ended June 30, 2022 (Restated) | | :--- | :--- | :--- | | Insurance service revenue | 54,128,830 | 56,135,352 | | Insurance service result | 8,149,854 | 10,943,285 | | Investment return | 23,704,554 | 11,510,289 | | Profit before tax | 7,844,453 | 7,071,026 | | Profit after tax | 7,521,241 | 6,904,343 | | Profit attributable to shareholders of the Company | 5,220,365 | 4,332,441 | Condensed Consolidated Balance Sheet As of June 30, 2023, the Group's total assets grew by 7.7% to HK$1.423 trillion, with total equity up 12.9% Condensed Consolidated Balance Sheet Summary | Item (HK$ thousand) | As of June 30, 2023 | As of Dec 31, 2022 (Restated) | | :--- | :--- | :--- | | Assets | | | | Total assets | 1,422,988,843 | 1,321,590,064 | | Liabilities | | | | Insurance contract liabilities | 1,111,997,417 | 1,041,941,305 | | Total liabilities | 1,299,074,406 | 1,211,792,628 | | Equity | | | | Equity attributable to shareholders of the Company | 82,029,932 | 83,937,369 | | Total equity | 123,914,437 | 109,797,436 | Condensed Consolidated Cash Flow Statement The Group generated HK$78.17 billion in net cash from operating activities, resulting in a net increase in cash and cash equivalents Condensed Consolidated Cash Flow Statement Summary | Item (HK$ thousand) | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash generated from operating activities | 78,171,202 | 58,045,908 | | Net cash used in investing activities | (75,255,300) | (49,458,489) | | Net cash generated from financing activities | 14,645,616 | 3,291,130 | | Net increase in cash and cash equivalents | 14,264,115 | 10,329,791 | | Cash and cash equivalents at June 30 | 56,736,544 | 50,467,580 | Notes to the Financial Statements Basis of Preparation and Accounting Policies The financial statements were prepared under HKAS 34, with the first-time adoption of HKFRS 17 and HKFRS 9 from January 1, 2023 - The Group implemented HKFRS 17 Insurance Contracts and HKFRS 9 Financial Instruments (the new standards) effective January 1, 2023[2][109] - Under the new standards, insurance contracts are classified as either having or not having direct participation features and are measured using the general measurement model or the premium allocation approach[112][125][135] - For financial instruments accounting, the Group applied the classification overlay approach for comparative information and classified financial assets as measured at amortized cost, fair value through other comprehensive income (FVTOCI), or fair value through profit or loss (FVTPL)[156][159] Segment Information The life insurance segment was the primary profit contributor, while operations in Mainland China accounted for approximately 92% of total revenue Profit After Tax by Segment for H1 2023 | Segment | Profit after tax (HK$ thousand) | | :--- | :--- | | Life insurance | 7,477,704 | | Domestic property and casualty insurance | 185,356 | | Overseas property and casualty insurance | 174,284 | | Reinsurance | (285,679) | | Other businesses | (4,778) | Segment Assets as of June 30, 2023 | Segment | Segment assets (HK$ thousand) | | :--- | :--- | | Life insurance | 1,186,695,413 | | Domestic property and casualty insurance | 42,013,888 | | Overseas property and casualty insurance | 18,071,238 | | Reinsurance | 48,521,067 | | Other businesses | 130,658,097 | - Approximately 92% of the Group's total revenue was derived from operations in China (excluding Hong Kong and Macau)[194] Risk Management The Group manages insurance and financial risks through strict underwriting, reinsurance, and active asset-liability management - Underwriting strategy: The Group has established strict underwriting and claims handling procedures for its life, property & casualty, and reinsurance businesses to control risks[255][256][257] - Asset-liability management: The objective is to match assets and liabilities on a duration basis; however, a duration mismatch exists in the life insurance business, which the Group mitigates by investing in longer-term fixed-income debt and long-term equity investments[260] - Credit risk management: The Group enforces strict credit rating requirements for its debt security investments, with the majority of domestic debt securities rated BBB or above, and prioritizes investment-grade reinsurers for its reinsurance arrangements[266] - Liquidity risk management: The Group maintains a liquidity management policy to ensure it can meet its financial obligations and holds sufficient reserves of high-quality liquid assets[271]