1933
S
2318 82318
3,500,000,000 0.875% 2029
5131
37.39A
2024 7 22
1
2024 7 15
3,500,000,000 0.875% 2029
2024 7 23
2
IMPORTANT NOTICE
NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES. THIS OFFERING IS AVAILABLE ONLY
TO INVESTORS WHO ARE ADDRESSEES OUTSIDE OF THE UNITED STATES.
IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering
circular (the “Offering Circular”) received by e-mail or otherwise received as a result of electronic communication. You are therefore
advised to read this disclaimer carefully before accessing, reading or making any other use of the attached Offering Circular. In accessing
the attached Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them from time
to time, each time you receive any information from the Issuer (as defined in the attached Offering Circular) or from Morgan Stanley Asia
Limited, J.P. Morgan Securities (Asia Pacific) Limited and China PA Securities (Hong Kong) Company Limited (each a “Manager” and
together, the “Managers”) as a result of such access. You acknowledge that access to the attached Offering Circular is intended for use by
you only and you agree you will not forward or otherwise provide access to any other person. In order to review the attached Offering
Circular or make an investment decision with respect to the securities, you must be located outside the United States.
Confirmation of Your Representation: The attached Offering Circular is being sent to you at your request and by accepting the e-mail and
accessing the attached Offering Circular, you shall be deemed to represent to the Issuer and the Managers that (1) you are not in the United
States and, to the extent you purchase the securities described in the attached Offering Circular, you will be doing so pursuant to Regulation
S under the U.S. Securities Act of 1933, as amended (the “Securities Act”); (2) the e-mail address that you gave us and to which this e-mail
has been delivered is not located in the United States, its territories or possessions; (3) you consent to delivery of the attached Offering
Circular and any amendments or supplements thereto by electronic transmission; (4) you (and any nominee and any person on whose behalf
you are subscribing for the securities to which the attached Offering Circular relates) are not a “connected person” (as defined in the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “the Hong Kong Stock Exchange”) (the “Listing
Rules”)) of Issuer, which includes but is not limited to any director, chief executive or substantial shareholder of the Issuer or any of its
subsidiaries or any associate of any of them within the meaning of the Listing Rules; and (5) you (and any nominee and any person on whose
behalf you are subscribing for the securities to which the attached Offering Circular relates) are, and will immediately after completion of
the offering of such securities be, independent of and not acting in concert with, any of such connected persons in relation to the control
of the Issuer.
The attached Offering Circular has been made available to you in electronic form. You are reminded that documents transmitted via this
medium may be altered or changed during the process of transmission and consequently none of the Issuer, the Managers, the Trustee (as
defined in the attached Offering Circular) and the Agents (as defined in the attached Offering Circular) or any of their respective directors,
officers, employees, representatives, agents, affiliates or advisers or any person who controls any of them accepts any liability or
responsibility whatsoever in respect of any discrepancies between the document distributed to you in electronic format and the hard copy
version. The Managers will provide a hard copy version to you upon request.
Restrictions: The attached Offering Circular is being furnished in connection with an offering exempt from registration under the Securities
Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities described herein.
THE SECURITIES DESCRIBED IN THE ATTACHED OFFERING CIRCULAR HAVE NOT BEEN, AND WILL NOT BE,
REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, WITHIN THE
UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.
THIS OFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO THE SECURITIES ACT.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY
JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
Except with respect to eligible investors in jurisdictions where such offer or invitation is permitted by law, nothing in this electronic
transmission constitutes an offer or an invitation by or on behalf of the Issuer, the Managers, the Trustee or the Agents or any of their
respective directors, officers, employees, representatives, agents, affiliates or advisers or any person who controls any of them to subscribe
for or purchase any of the securities described therein, and access has been limited so that it shall not constitute in the United States or
elsewhere a general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or directed selling
efforts (within the meaning of Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker
or dealer and the Manager or any affiliate of the Manager is a licensed broker or dealer in that jurisdiction, the offering shall be deemed
to be made by such Manager or such affiliate on behalf of the Issuer in such jurisdiction.
You are reminded that you have accessed the attached Offering Circular on the basis that you are a person into whose possession the attached
Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor
are you authorised to deliver or forward this document, electronically or otherwise, to any other person. If you have gained access to this
transmission contrary to the foregoing restrictions, you are not allowed to purchase any of the securities described in the attached Offering
Circular.
Actions that You May Not Take: If you receive this document by e-mail, you should not reply by e-mail to this electronic transmission,
and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the “Reply”
function on your e-mail software, will be ignored or rejected.
YOU ACKNOWLEDGE THAT THE ATTACHED OFFERING CIRCULAR AND THE INFORMATION CONTAINED THEREIN
ARE STRICTLY CONFIDENTIAL AND INTENDED FOR YOU ONLY. YOU ARE NOT AUTHORISED TO AND YOU MAY NOT
DELIVER OR FORWARD THE ATTACHED OFFERING CIRCULAR, ELECTRONICALLY OR OTHERWISE, TO ANY OTHER
PERSON OR REPRODUCE SUCH OFFERING CIRCULAR IN ANY MANNER WHATSOEVER. ANY FORWARDING,
DISTRIBUTION OR REPRODUCTION OF THE ATTACHED OFFERING CIRCULAR IN WHOLE OR IN PART IS
UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES
ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail, your use of this
e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive
nature.
Ping An Insurance (Group) Company of China, Ltd.
(A joint stock limited company incorporated in the People’s Republic of China with limited liability)
Stock Code: 2318 (HKD counter) and 82318 (RMB counter)
US$3,500,000,000 0.875 PER CENT. CONVERTIBLE BONDS DUE 2029
Issue Price: 100.0 per cent.
The 0.875% convertible bonds due 2029 in the aggregate principal amount of US$3,500,000,000 (the “Bonds,” which term shall include, unless the context requires otherwise, any
further bonds issued in accordance with the terms and conditions of the Bonds set out in “Terms and Conditions of the Bonds” (the “Conditions” or the “Terms and Conditions”,
and each of the Conditions, a “Condition”)), will be issued by Ping An Insurance (Group) Company of China, Ltd. ( ) (the “Issuer” or the
“Company”). The issue price of the Bonds shall be 100.0 per cent. of the aggregate principal amount of the Bonds. The specified denomination of each Bond shall be US$200,000
each and integral multiples of US$100,000 in excess thereof.
The Bonds will, upon issue, constitute direct, unsubordinated, unconditional and (subject to Condition 3.1 (Negative Pledge) of the Terms and Conditions) unsecured obligations
of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Issuer under the Bonds shall, save for
such exceptions as may be provided by mandatory provisions of applicable legislation and subject to Condition 3.1 (Negative Pledge) of the Terms and Conditions, at all times rank
at least equally with all of its other present and future direct, unsubordinated, unconditional and unsecured obligations.
Each Bond will, subject to the Terms and Conditions, at the option of the holder, be convertible (unless previously redeemed, converted or purchased and canceled) at any time
on or after the 41st day after 22 July 2024 (the “Issue Date”) up to the close of business (at the place where the Certificate evidencing such Bond is deposited for conversion) on
the date falling seven working days prior to the Maturity Date (as defined herein) (both days inclusive) into fully paid ordinary H Shares (as defined in the Terms and Conditions)
with a par value of RMB1.00 each of the Company at an initial conversion price of HK$43.71 per Share (as defined in the Terms and Conditions) with a fixed exchange rate of
HK$7.8079 to US$1.00 (the “Fixed Exchange Rate”). The conversion price is subject to adjustment in the circumstances described under “Terms and Conditions of the Bonds –
Conversion”.
The Bonds bear interest from and including 22 July 2024 at the rate of 0.875 per cent. per annum payable semi-annually in arrear.
Unless previously redeemed, converted or purchased and cancelled as provided in the Terms and Conditions, the Issuer will redeem each Bond at its principal amount on 22 July
2029 (the “Maturity Date”). On giving not less than 30 nor more than 60 days’ notice, the Issuer may redeem the Bonds in whole, but not in part at their principal amount together
with accrued and unpaid interest thereon to but excluding the date fixed for redemption, (i) at any time after 5 August 2027 but prior to the Maturity Date, subject to certain conditions
as specified in the Terms and Conditions, or (ii) if at any time the aggregate principal amount of the Bonds outstanding, is less than 10 per cent. of the aggregate principal amount
originally issued (including any Bonds issued pursuant to Condition 15 (Further Issues) of the Terms and Conditions).
The Bonds may also be redeemed, at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ notice, at the principal amount,
together with interest accrued and unpaid thereon to but excluding the date fixed for redemption, in the event of certain changes or amendments relating to the People’s Republic
of China (the “PRC”) or Hong Kong taxation, as further described in the Terms and Conditions.
The holder of each Bond will have the right at such holder’s option, to require the Issuer to redeem all or some only of such holder’s Bonds on the Relevant Event Put Date (as
defined in the Terms and Conditions) at their principal amount together with interest accrued and unpaid to but excluding the Relevant Event Put Date, following the occurrence
of a Relevant Event (as defined in the Terms and Conditions). See “Terms and Conditions of the Bonds – Redemption, Purchase and Cancellation”. The holder of each Bond will
also have the right at such holder’s option, to require the Issuer to redeem all or some only of the Bonds of such holder on 22 July 2027 (the “Put Option Date”) at their principal
amount together with interest accrued and unpaid to but excluding the Put Option Date.
For a detailed description of the Bonds, see “Terms and Conditions of the Bonds”.
The Issuer undertakes that it will (i) within 15 Registration Business Days (as defined in the Terms and Conditions) after the Issue Date, register or cause to be registered with the
State Administration of Foreign Exchange or its local branch (the “SAFE”) the Bonds (the “Foreign Debt Registration”) pursuant to the Administrative Measures for Foreign Debt
Registration ( ) and its operating guidelines, effective as of 13 May 2013 as amended from time to time (the “Foreign Debt Registration Measures”) and
if applicable, the Circular of the People’s Bank of China on Issues Concerning the Overall Macro Prudential Management System for Cross-border Financing (
) (the “Cross-Border Financing Circular”), (ii) use its best endeavours to complete the Foreign Debt Registration and obtain
a registration record from SAFE on or before the Registration Deadline (being the day falling 90 Registration Business Days after the Issue Date) and (iii) comply with all applicable
PRC laws and regulations in relation to the Bonds, including but not limited to the Foreign Debt Registration Measures, the Cross-Border Financing Circular and any implementing
measures promulgated thereunder from time to time.
With reference to the Administrative Measures for the Review and Registration of Medium-and Long-Term Foreign Debts of Enterprises ( (
56 )) (the “Order 56”) issued by the PRC National Development and Reform Commission (the “NDRC”) and effective from 10 February 2023 and any
implementation rules, reports, certificates, approvals or guidelines as issued by the NDRC from time to time, the Issuer has registered the issuance of the Bonds with the NDRC
and obtained a certificate from the NDRC on 10 July 2024 evidencing such registration which remains valid and in full force and effect. The Issuer undertakes that it will within
the relevant prescribed timeframes after the Issue Date file or cause to be filed the requisite information and documents in respect of the Bonds and comply with other reporting
obligations in accordance with Order 56 and any implementation rules, reports, certificates, approvals or guidelines as issued by the NDRC from time to time (the “NDRC
Post-Issuance Filing”, which term for the avoidance of doubt, includes the Initial NDRC Post-Issuance Filing (as defined below)).
The Issuer undertakes to file or cause to be filed with the China Securities Regulatory Commission (the “CSRC”) within the relevant prescribed timeframes after the Issue Date
the requisite information and documents in respect of the Bonds in accordance with the CSRC Filing Rules (as defined in the Terms and Conditions) (the “CSRC Post-Issuance
Filings”, which term for the avoidance of doubt, includes the Initial CSRC Post-Issuance Filing (as defined below)) and comply with the continuing obligations under the CSRC
Filing Rules and any implementation rules as issued by the CSRC from time to time. The Issuer shall file or cause to be filed (a) the initial NDRC Post-Issuance Filing with the
NDRC or its competent local counterpart of the information and documents relating to the issue of the Bonds that are required to be filed in accordance with Order 56 within ten
Registration Business Days after the Issue Date (the “Initial NDRC Post-Issuance Filing”) and (b) the CSRC Filing Report (as defined in the Terms and Conditions) and other
requisite information and documents in respect of the Bonds that are required to be filed with the CSRC within three Registration Business Days after the Issue Date in accordance
with the CSRC Filing Rules (the “Initial CSRC Post-Issuance Filing”).
Application will be made to the Hong Kong Stock Exchange for the listing of the Bonds by way of debt issues to professional investors (as defined in Chapter 37 of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (the “Professional Investors”) only. This document is for distribution to professional investors
only.
Notice to Hong Kong investors: The Issuer confirms that the Bonds are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock
Exchange on that basis. Accordingly, the Issuer confirms that the Bonds are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully
consider the risks involved.
The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements,
and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Bonds on the Hong Kong Stock
Exchange is not to be taken as an indication of the commercial merits or credit quality of the Bonds or the Issuer or the Group or quality of disclosure in this document.
Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make no representation as to its accuracy
or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.
Investors should be aware that there are risks relating to the exercise of Conversion Rights of the Bonds, and there are various other risks relating to the Bonds, the Issuer
and its subsidiaries, its business and its jurisdiction of operations which investors should familiarise themselves with before making an investment in the Bonds. See ‘‘Risk
Factors’’ beginning on page 22.
The Bonds will initially be represented by a global certificate (the “Global Certificate”) in registered form, which will be registered in the name of a nominee of, and shall be
deposited on or the Issue Date with, a common depositary on behalf of Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). Beneficial interests
in the Global Certificate will be shown on, and transfer thereof will be effected only through, records maintained by Euroclear and Clearstream. Except as described in the Global
Certificate, individual certificates for Bonds will not be issued in exchange for interests in the Global Certificate.
The Bonds and the H Shares to be issued upon conversion of the Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended
(the “Securities Act”) and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act. For a description of these and certain further restrictions on offers and sales of the Bonds and the H Shares to be issued upon conversion
of the Bonds and the distribution of this Offering Circular, see “Subscription and Sale”.
The Bonds are not intended to be initially placed and may not be initially placed to “connected persons” of the Issuer as defined in the Listing Rules (“Connected Persons”). Each
holder of the Bonds (and the beneficial owners of the Bonds, if applicable) will be deemed to have represented to the Issuer and Morgan Stanley Asia Limited, J.P. Morgan Securities
(Asia Pacific) Limited and China PA Securities (Hong Kong) Company Limited (each a “Manager” and together, the “Managers”) that it is not a Connected Person of the Issuer,
and will not after completion of the subscription of the Bonds be a Connected Person (as defined in the Listing Rules) of the Issuer. Each prospective investor will be deemed to
have agreed with the Issuer and the Managers that it may, to the extent required by the Listing Rules and/or the Hong Kong Stock Exchange and/or the Hong Kong Securities and
Futures Commission (the “SFC”), disclose information about such potential investor (including but not limited to its name, company registration number and the number of Bonds
allotted to it) to certain parties.
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Morgan Stanley J.P. Morgan
Joint Lead Manager
China PA Securities (Hong Kong) Company Limited
The Offering Circular is dated 15 July 2024
NOTICE TO INVESTORS
The Issuer, having made all reasonable enquiries, confirms that (i) this Offering Circular contains all
information (including financial, business conditions and prospects information) with respect to the Issuer
and its subsidiaries taken as a whole (the “Group”), and to the Bonds and the Shares which is material in
the context of the issue and offering of the Bonds (including the information which is required by applicable
laws and the relevant rules and regulations imposed by the Hong Kong Stock Exchange and the information
which, according to the particular nature of the Issuer, the Group, the Bonds and the Shares, is necessary
to enable investors and their investment advisers to make an informed assessment of the assets and
liabilities, financial position, profits and losses and prospects of the Issuer, the Group, and the rights
attaching to the Bonds and the Shares); (ii) the statements contained this Offering Circular relating to the
Issuer, and to the Group, are true and accurate in all material respects and not misleading; (iii) the opinions
and intentions expressed in this Offering Circular with regard to the Issuer and the Group are honestly and
reasonably held, have been reached after considering all relevant circumstances and are based on reasonable
assumptions; (iv) all reasonable enquiries have been made by the Issuer to ascertain such facts in relation
to the Issuer, the Group, the Bonds and the Shares and to verify the accuracy in all material respects of all
such information and statements in relation to the Issuer, the Group, the Bonds and the Shares as contained
in this Offering Circular; and (v) this Offering Circular does not, include an untrue statement of a material
fact or omit to state a material fact or other facts in relation to the Issuer, the Group, the Shares or the Bonds,
necessary in order to make the statements therein, in the light of the circumstances under which they were
made or in the context of the issue and offering of the Bonds, not misleading.
The Issuer has prepared this Offering Circular solely for use in connection with the proposed offering of
the Bonds described in this Offering Circular. This Offering Circular does not constitute an offer of, or an
invitation by or on behalf of Morgan Stanley Asia Limited, J.P. Morgan Securities (Asia Pacific) Limited
and China PA Securities (Hong Kong) Company Limited (each a “Manager” and together, the “Managers”)
or the Issuer to subscribe for or purchase any of the Bonds. The distribution of this Offering Circular and
the offering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession
this Offering Circular comes are required by the Issuer and the Managers to inform themselves about and
to observe any such restrictions. No action is being taken to permit a public offering of the Bonds or the
distribution of this Offering Circular in any jurisdiction where action would be required for such purposes.
There are restrictions on the offer and sale of the Bonds, and the circulation of documents relating thereto,
in certain jurisdictions including the United States, the United Kingdom, the European Economic Area,
Hong Kong, the PRC, Singapore and Japan and to persons connected therewith. For a description of further
restrictions on offers and sales of the Bonds and distribution of this Offering Circular, see “Subscription and
Sale” below. By purchasing the Bonds, investors are deemed to have represented and agreed to all of those
provisions contained in that section of this Offering Circular. This Offering Circular is personal to each
offeree and does not constitute an offer to any other person or to the public generally to subscribe for, or
otherwise acquire, the Bonds. Distribution of this Offering Circular to any person other than the prospective
investor and any person retained to advise such prospective investor with respect to its purchase is
unauthorised. Each prospective investor, by accepting delivery of this Offering Circular, is deemed to have
agreed to the foregoing and to make no photocopies of this Offering Circular or any documents referred to
in this Offering Circular.
No person has been or is authorised to give any information or to make any representation concerning the
Issuer, the Group, or the Bonds other than as contained herein and, if given or made, any such other
information or representation should not be relied upon as having been authorised by the Issuer, the
Managers, the Trustee or the Agents (as defined in “Terms and Conditions of the Bonds” below) or their
respective directors, officers, employees, agents, representatives, affiliates or advisers or any person who
controls any of them. Neither the delivery of this Offering Circular nor any offering, sale or delivery made
in connection with the issue of the Bonds shall, under any circumstances, constitute a representation that
there has been no change or development reasonably likely to involve a change in the affairs of the Issuer,
or the Group since the date hereof or create any implication that the information contained herein is correct
as at any date subsequent to the date hereof. This Offering Circular does not constitute an offer of, or an
invitation by or on behalf of the Issuer, the Managers, the Trustee or the Agents or any of their respective
affiliates, officers, employees, agents, representatives, directors or advisers or any person who controls any
of them to subscribe for or purchase the Bonds and may not be used for the purpose of an offer to, or a
solicitation by, anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not
authorised or is unlawful.
i
This Offering Circular is being furnished by the Issuer in connection with the offering of the Bonds and is
exempt from registration under the Securities Act solely for the purpose of enabling a prospective investor
to consider purchasing the Bonds. Investors must not use this Offering Circular for any other purpose, make
copies of any part of this Offering Circular or give a copy of it to any other person, or disclose any
information in this Offering Circular to any other person. The information contained in this Offering
Circular has been provided by the Issuer and other sources identified in this Offering Circular. Any
reproduction or distribution of this Offering Circular, in whole or in part, and any disclosure of its contents
or use of any information herein for any purpose other than the consideration of an investment in the Bonds
offered by this Offering Circular is prohibited. By accepting delivery of this Offering Circular each investor
is deemed to have agreed to these restrictions.
None of the Managers, the Trustee or the Agents or any of their respective affiliates, officers, employees,
agents, representatives, directors or advisers or any person who controls any of them has independently
verified the information contained in this Offering Circular. Nothing contained in this Offering Circular is,
or shall be relied upon as, a promise, representation or warranty by the Managers, the Trustee or the Agents
or any of their respective affiliates, officers, employees, agents, representatives, directors or advisers or any
person who controls any of them. This Offering Circular is not intended to provide the basis of any credit
or other evaluation nor should it be considered as a recommendation by any of the Issuer, the Managers,
the Trustee or the Agents or any of the respective affiliates, officers, employees, agents, representatives,
directors or advisers or any person who controls any of them that any recipient of this Offering Circular
should purchase the Bonds.
Each person receiving this Offering Circular acknowledges that it has not relied on the Managers, the
Trustee or the Agents or any of their respective affiliates, officers, employees, agents, representatives,
directors or advisers or any person who controls any of them in connection with its investigation of the
accuracy of such information or its investment decision, and such person must rely on its own examination
of the Issuer and the Group, and the merits and risks involved in investing in the Bonds. See “Risk Factors”
below for a discussion of certain factors to be considered in connection with an investment in the Bonds.
To the fullest extent permitted by law, none of the Managers, the Trustee or the Agents or any of their
respective affiliates, officers, employees, agents, representatives, directors or advisers or any person who
controls any of them accepts any responsibility for the contents of this Offering Circular and assumes no
responsibility for the contents, accuracy, completeness or sufficiency of any such information or for any
other statement, made or purported to be made by the Managers, the Trustee or the Agents or any of their
respective affiliates, officers, employees, agents, representatives, directors or advisers or any person who
controls any of them or on their behalf in connection with the Issuer, the Group or the issue and offering
of the Bonds or the Shares. Each of the Managers, the Trustee and the Agents and their respective affiliates,
officers, employees, agents, representatives, directors and advisers or any person who controls any of them
accordingly disclaims all and any liability, whether arising in tort or contract or otherwise, which it might
otherwise have in respect of this Offering Circular or any such statement. None of the Managers, the Trustee
or the Agents or any of their respective affiliates, officers, employees, agents, representatives, directors or
advisers or any person who controls any of them undertakes to review the results of operations, financial
condition or affairs of the Issuer or the Group during the life of the arrangements contemplated by this
Offering Circular or to advise any investor or prospective investor in the Bonds of any information coming
to the attention of the Managers, the Trustee or the Agents or any of their respective affiliates, officers,
employees, agents, representatives, directors or advisers or any person who controls any of them.
In connection with the offering of the Bonds, the Managers and/or their respective affiliates, or affiliates
of the Issuer, may act as investors and place orders, receive allocations and trade the Bonds for their own
account and such orders, allocations or trading of the Bonds may be material. These entities may hold or
sell such Bonds or purchase further Bonds for their own account in the secondary market or deal in any
other securities of the Issuer, and therefore, they may offer or sell the Bonds or other securities otherwise
than in connection with the offering of the Bonds. Accordingly, references herein to the offering of the
Bonds should be read as including any offering of the Bonds to the Managers and/or their respective
affiliates, or affiliates of the Issuer as investors for their own account. Such entities are not expected to
disclose such transactions or the extent of any such investment, otherwise than in accordance with any
applicable legal or regulatory requirements. If such transactions occur, the trading price and liquidity of the
Bonds may be impacted.
ii
Prospective investors should not construe anything in this Offering Circular as legal, business or tax advice.
Each prospective investor should determine for itself the relevance of the information contained in this
Offering Circular and consult its own legal, business and tax advisers as needed to make its investment
decision and determine whether it is legally able to purchase the Bonds under applicable laws or
regulations. Prospective investors are advised to read and understand the contents of this Offering Circular
before investing. If in doubt, investors should consult his or her adviser.
This Offering Circular includes particulars given in compliance with the Listing Rules for the purpose of
giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the
accuracy of the information contained in this Offering Circular and confirms, having made all reasonable
enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would
make any statement herein misleading.
Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for
the contents of this Offering Circular, make no representation as to its accuracy or completeness and
expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the
whole or any part of the contents of this Offering Circular.
PRIIPs REGULATION/PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Bonds are
not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the EEA. For these purposes, a retail investor means a person who
is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as
amended, “MiFID II”); or (ii) a customer within the meaning of Directive 2016/97 (as amended, the
“Insurance Distribution Directive”), where that customer would not qualify as a professional client as
defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by
Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Bonds
or otherwise making them available to retail investors in the EEA has been prepared and therefore offering
or selling the Bonds or otherwise making them available to any retail investor in the EEA may be unlawful
under the PRIIPs Regulation.
UK PRIIPs REGULATION/PROHIBITION OF SALES TO UK RETAIL INVESTORS – The Bonds
are not intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the United Kingdom (the “UK”). For these purposes, a
retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article
2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union
(Withdrawal) Act 2018 (the “EUWA”); or (ii) a customer within the meaning of the provisions of the
Financial Services and Markets Act 2000 (the “FSMA”) and any rules or regulations made under the FSMA
to implement the Insurance Distribution Directive, where that customer would not qualify as a professional
client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic
law by virtue of the EUWA. Consequently, no key information document required by the PRIIPs Regulation
as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or
selling the Bonds or otherwise making them available to retail investors in the UK has been prepared and
therefore offering or selling the Bonds or otherwise making them available to any retail investor in the UK
may be unlawful under the UK PRIIPs Regulation.
Singapore SFA Product Classification – In connection with Section 309B of the Securities and Futures
Act 2001 of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations
2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined, and hereby notifies all
relevant persons (as defined in Section 309A(1) of the SFA), that the Bonds are ‘prescribed capital markets
products’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS
Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on
Recommendations on Investment Products).
iii
Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the
Hong Kong SFC Code of Conduct – Important Notice to Prospective Investors: Prospective investors
should be aware that certain intermediaries in the context of this offering of the Bonds, including certain
Managers, are “capital market intermediaries” (together, the “CMIs”) subject to Paragraph 21 of the Code
of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “SFC
Code”). This notice to prospective investors is a summary of certain obligations the SFC Code imposes on
such CMIs, which require the attention and cooperation of prospective investors.
Certain CMIs may also be acting as “overall coordinators” (together, the “OCs”) for this offering and are
subject to additional requirements under the SFC Code.
Prospective investors who are the directors, employees or major shareholders of the Issuer, a CMI or its
group companies would be considered under the SFC Code as having an association (an “Association”)
with the Issuer, the CMI or the relevant group company. Prospective investors associated with the Issuer
or any CMI (including its group companies) should specifically disclose this when placing an order for the
Bonds and should disclose, at the same time, if such orders may negatively impact the price discovery
process in relation to this offering. Prospective investors who do not disclose their Associations are hereby
deemed not to be so associated. Where prospective investors disclose their Associations but do not disclose
that such order may negatively impact the price discovery process in relation to this offering, such order
is hereby deemed not to negatively impact the price discovery process in relation to this offering.
Prospective investors should ensure, and by placing an order prospective investors are deemed to confirm,
that orders placed are bona fide, are not inflated and do not constitute duplicated orders (i.e. two or more
corresponding or identical orders placed via two or more CMIs). If a prospective investor is an asset
management arm affiliated with any Manager, such prospective investor should indicate when placing an
order if it is for a fund or portfolio where the Manager or its group company has more than 50% interest,
in which case it will be classified as a “proprietary order” and subject to appropriate handling by CMIs in
accordance with the SFC Code and should disclose, at the same time, if such “proprietary order” may
negatively impact the price discovery process in relation to this offering. Prospective investors who do not
indicate this information when placing an order are hereby deemed to confirm that their order is not a
“proprietary order”. If a prospective investor is otherwise affiliated with any Manager, such that its order
may be considered to be a “proprietary order” (pursuant to the SFC Code), such prospective investor should
indicate to the relevant Manager when placing such order. Prospective investors who do not indicate this
information when placing an order are hereby deemed to confirm that their order is not a “proprietary
order”. Where prospective investors disclose such information but do not disclose that such “proprietary
order” may negatively impact the price discovery process in relation to this offering, such “proprietary
order” is hereby deemed not to negatively impact the price discovery process in relation to this offering.
Prospective investors should be aware that certain information may be disclosed by CMIs (including private
banks) which is personal and/or confidential in nature to the prospective investor. By placing an order,
prospective investors are deemed to have understood and consented to the collection, disclosure, use and
transfer of such information by the Managers and/or any other third parties as may be required by the SFC
Code, including to the Issuer, any OCs, relevant regulators and/or any other third parties as may be required
by the SFC Code, it being understood and agreed that such information shall only be used for the purpose
of complying with the SFC Code, during the bookbuilding process for this offering. Failure to provide such
information may result in that order being rejected.
iv
Industry and Market Data
Market data and certain information and statistics included in this Offering Circular have been obtained
from both public and private sources, including market research, publicly available information and
industry publications. Although the Issuer believes the information to be reliable, it has not been
independently verified by the Issuer, the Managers, the Trustee or the Agents or their respective affiliates,
directors, officers, employees, agents, advisers or representatives or any person who controls any of them
and none of the Issuer, the Managers, the Trustee or the Agents or their respective affiliates, directors,
officers, employees, agents, advisers or representatives or any person who controls any of them makes any
representation as to the accuracy or completeness of such information. In addition, third party information
providers may have obtained information from market participants and such information may not have been
independently verified. In making an investment decision, each investor must rely on its own examination
of the Issuer, the Group and the terms of the offering and the Bonds, including the merits and risks involved.
Where information has been sourced from a third party, the Issuer confirms that this information has been
accurately reproduced and that, as far as the Issuer is aware and is able to ascertain from information
published by third parties, no facts have been omitted which would render the reproduced information to
be inaccurate or misleading.
The contents of this Offering Circular have not been reviewed by any regulatory authority in any
jurisdiction. Investors are advised to exercise caution in relation to the offer. If investors are in any doubt
about any of the contents of this Offering Circular, investors should obtain independent professional advice.
v
CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION
All references to the “Issuer” or the “Company” are to Ping An Insurance (Group) Company of China, Ltd.
( ) .
All references to the “PRC” or “China” are to the People’s Republic of China. All references to “Mainland
China” are to the People’s Republic of China, excluding Hong Kong, Macau and Taiwan for the purposes
of this Offering Circular. All references to “Hong Kong” are to the Hong Kong Special Administrative
Region of the People’s Republic of China.
Unless otherwise indicated or required by the context, all references in this Offering Circular to “RMB” or
“Renminbi” are to the Renminbi, the lawful currency of the PRC; “HKD” or “HK$” are to Hong Kong
dollars, the lawful currency of Hong Kong; and “U.S. dollars”, “USD” or “US$” are to United States
dollars, the lawful currency of the United States.
References to “NDRC” are to the National Development and Reform Commission of the PRC.
References to “PBOC” are to the People’s Bank of China, the central bank of the PRC.
References to “NFRA” are to the National Financial Regulatory Administration of the PRC.
This Offering Circular contains translations of certain U.S. dollars to Renminbi at specified rates solely for
the convenience of the reader. Such translation should not be construed as representations that the U.S.
dollars amounts actually represent such Renminbi amounts or could have been or could be converted into
Renminbi at any particular rate, or at all. Unless otherwise specified, all conversions were made at an
exchange rate of USD1.00 = RMB7.0827 (being the exchange rate published by the People’s Bank of China
on 29 December 2023.
vi
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION . . . . . . . . . . . vi
PRESENTATION AND INCORPORATION OF FINANCIAL INFORMATION . . . . . . . . . . . . . . viii
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SUMMARY CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
RECENT DEVELOPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
PRC LAWS AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 91
SUBSTANTIAL SHAREHOLDERS AND DIRECTORS’ INTERESTS . . . . . . . . . . . . . . . . . . . . 99
CORPORATE STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
TERMS AND CONDITIONS OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
DESCRIPTION OF THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM . . . . . . . . . . . . . . . . . . . . . . 149
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
vii
PRESENTATION AND INCORPORATION OF FINANCIAL INFORMATION
This Offering Circular contains consolidated financial information of the Issuer as at and for the years
ended 2021, 2022 and 2023, which has been extracted from the audited consolidated financial statements
of the Issuer as at and for the years ended 2022 and 2023. Such audited consolidated financial statements
of the Issuer were prepared and presented in accordance with International Financial Reporting Standards
(“IFRS”) and have been audited by Ernst & Young, the Issuer’s independent auditors.
The Issuer has implemented IFRS 17 Insurance Contracts and its amendments (together, the “New
Insurance Contract Standard”) on 1 January 2023 and made retrospective adjustments to the financial
statements figures for comparative periods in accordance with the transition requirements. The Issuer has
reassessed the business model for managing its relevant financial assets, reclassified and remeasured certain
financial assets and restated the financial statement line items for comparative periods in accordance with
the requirements. As a result, certain comparative financial information as at and for the year ended 31
December 2022 included in the consolidated financial statements of the Issuer for the year ended 31
December 2023 has been restated. Please refer to “Note 2 – Material Accounting Policies” in the
consolidated financial statements of the Issuer for the year ended 31 December 2023 for details. However,
as the financial information as at and for the years ended 31 December 2021 and 2022 included in the
consolidated financial statements of the Issuer for the year ended 31 December 2022 has not been restated
to reflect the adoption of the New Insurance Contract Standard, such financial information is not directly
comparable with the financial information as at and for the years ended 31 December 2022 and 2023
included in the consolidated financial statements of the Issuer for the year ended 31 December 2023.
This Offering Circular also contains consolidated financial information for the three months ended 31
March 2023 and as at and for the three months ended 31 March 2024, which has been extracted from the
unaudited consolidated financial statements of the Issuer as at and for the three months ended 31 March
2024. Such unaudited consolidated financial statements of the Issuer were prepared and presented in
accordance with IFRS. On 23 April 2024, the Issuer announced its unaudited and unreviewed consolidated
financial results as at and for the three months ended 31 March 2024 (the “2024 First Quarterly Results”).
The 2024 First Quarterly Results are not audited or reviewed by an independent auditor, and should not be
relied upon by investors to provide the same quality of information associated with information that has
been subject to an audit or review. None of the Managers or any Agent or any director, officer, employee,
agent or affiliate of any such person makes any representation or warranty, express or implied, regarding
the sufficiency of the 2024 First Quarterly Results for an assessment of, and potential investors must
exercise caution when using such data to evaluate the financial condition and results of operations of the
Issuer. In addition, the 2024 First Quarterly Results should not be taken as an indication of the expected
financial condition or results of operations of the Issuer for the full financial year ending 31 December
2024.
Unless specified as “original” numbers, financial information as at and for the year ended 31 December
2022 used in this Offering Circular derives from the consolidated financial statements of the Issuer for the
year ended 31 December 2023 (which has been restated).
Certain monetary amounts included in this Offering Circular have been subject to rounding adjustments.
Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the individual
items and actual numbers may differ from those contained herein due to rounding.
viii
FORWARD-LOOKING STATEMENTS
This Offering Circular includes “forward-looking statements”. All statements other than statements of
historical facts contained in this Offering Circular constitute “forward-looking statements”. Some of these
statements can be identified by forward-looking terms, such as “anticipate”, “target”, “believe”, “can”,
“would”, “could”, “estimate”, “expect”, “aim”, “intend”, “may”, “plan”, “will” “would” or similar words.
However, these words are not the exclusive means of identifying forward-looking statements. All statements
regarding expected financial condition, results of operations, business plans and prospects are forward-
looking statements. These forward-looking statements include, but are not limited to, statements as to the
business strategy, revenue, profitability, planned projects and other matters as they relate to the Issuer
and/or the Group discussed in this Offering Circular regarding matters that are not historical facts.
Such statements are subject to certain risks and uncertainties because they relate to and depend on events
and circumstances that may or may not occur. The Issuer cautions potential investors that forward-looking
statements are not guarantees of future performance and that the actual financial condition, results of
operations and cash flows, and prospects of the Issuer may differ materially from those made in or
suggested by the forward-looking statements included in this Offering Circular. In addition, even if the
financial condition, results of operations and cash flows and prospects of the Issuer are consistent with such
statements, those results or developments may not be indicative of results or prospects in subsequent
periods. Actual results may differ materially from information contained in such forward-looking
statements as a result of a number of factors. The factors that could cause the actual results, performances
and achievements of the Issuer or the Group or any member of the Group to be materially different include,
among others:
general economic, political and business conditions and competitive environment, including those
related to the PRC and globally;
ability to successfully implement business plans and strategies;
capital expenditure plans and ability to carry out those plans;
the continued availability of capital and financing;
interest rates and foreign exchange rates, taxes and duties;
financial condition and performance;
any changes in the laws, rules and regulations of the central and local governments in the PRC and
other relevant jurisdictions in which the Group operates and the rules, regulations and policies of the
relevant governmental authorities relating to all aspects of the Group’s business;
changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices,
including those pertaining to the PRC and the industry and markets in which the Group operates;
macroeconomic measures taken by the PRC government to manage economic growth;
natural disasters, terrorist attacks and other events beyond the Group’s control;
other risks associated with industries in which the Group operates; and
other factors, including those discussed in “Risk Factors” below.
Additional factors that could cause actual results, performance or achievements to differ materially include,
but are not limited to, those discussed in “Risk Factors” below and elsewhere in this Offering Circular.
Although the Issuer believes that management’s expectations as reflected in such forward-looking
statements are reasonable based on information currently available to the Issuer, it cannot be assured that
such expectations will be realised. The Issuer cautions investors not to place undue reliance on these
forward-looking statements which reflect their managements’ view only as at the date of this Offering
Circular. The Issuer does not undertake any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this Offering Circular might not occur.
ix
SUMMARY
This summary highlights information contained elsewhere in this Offering Circular. This summary is
qualified by, and must be read in conjunction with, the more detailed information and financial statements
appearing elsewhere in this Offering Circular. Terms defined elsewhere in this Offering Circular shall have
the same meanings when used in this summary. You should read the entire Offering Circular carefully,
including the Group’s consolidated financial statements and related notes and “Risk Factors”, to determine
whether an investment in the Bonds is appropriate.
Overview
We are a leading integrated financial services group in the PRC and have grown significantly since our
inception in 1988 as a regional property and casualty insurance business. Through our single brand and
multi-channel distribution networks, we provide a wide range of financial and other products. Our business
includes insurance, banking, asset management, and technology business. We are dually listed on The
Shanghai Stock Exchange and the Hong Kong Stock Exchange with total issued share capital of
RMB18,210,234,607 (as of the date of this Offering Circular).
We serve our range of products and services to our extensive customer base, which consists of
approximately 232 million retail customers in PRC. Our Group offers insurance products to our clients
across various offices in PRC and our banking services are offered to retail and corporate across over 100
branches across PRC.
Competitive Strengths
We believe the following competitive strengths contribute to our success and differentiate us from our
competitors:
we are well positioned in a growing market with massive opportunities to fill the demand for financial
services, healthcare and elderlycare;
we are an integrated financial services group with a full suite of financial business licenses, including
insurance, banking, and asset management;
we have a unique business model of integrated finance, healthcare and elderlycare services, securing
our market leadership position;
we have a trustworthy brand name in PRC, coupled with an extensive customer base which generates
value continuously;
we operate a well-established distribution channel enforced by a strong “online + offline” network
covering the whole of China;
we provide unparalleled customer experience through world-leading technological capability across
financial technology, digital healthcare and artificial intelligence; and
we have a visionary and experienced management team with a wealth of industry knowledge.
Strategies
Our key strategies to further grow our business are:
to advance our integrated finance, healthcare and elderlycare strategy; and
to integrate ESG philosophy into company values and business operations.
1
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary consolidated statement of income and cash flows data for the years ended 31 December 2021
and 2022 (original) and the summary consolidated statement of financial position data as at 31 December
2021 and 2022 (original) set forth below are extracted or derived from the Group’s audited consolidated
financial statements as of and for the year ended 31 December 2022 (the “FY2022 Financial Statements”)
included elsewhere in this Offering Circular. The summary consolidated statement of income and cash flows
data for the years ended 31 December 2022 (restated) and 2023 and the summary consolidated statement
of financial position data as at 31 December 2022 (restated) and 2023 set forth below are extracted or
derived from the Group’s audited consolidated financial statements as of and for the year ended 31
December 2023 (the “FY2023 Financial Statements”) included elsewhere in this Offering Circular.
The Group has implemented New Insurance Contract Standard on 1 January 2023 and made retrospective
adjustments to the financial statements figures for comparative periods in accordance with the transition
requirements. To facilitate smooth transition to the New Insurance Contract Standard, the Group has
reassessed the business model for managing its relevant financial assets, reclassified and remeasured certain
financial assets and restated the financial statement line items for comparative periods in accordance with
the requirements. As a result, certain comparative financial information as at and for the year ended 31
December 2022 included in the Group’s 2023 Financial Statements has been restated. Please refer to “Note
2 – Material Accounting Policies” in the Group’s FY2023 Financial Statements for more details. However,
as the financial information as at and for the years ended 31 December 2021 and 2022 included in the
Group’s FY2022 Financial Statements has not been restated to reflect the adoption of the New Insurance
Contract Standard, such financial information is not directly comparable with the financial information as
at and for the years ended 31 December 2022 and 2023 included in the Group’s FY2023 Financial
Statements.
The audited consolidated FY2022 Financial Statements and FY2023 Financial Statements were audited by
Ernst & Young, the independent auditors of the Issuer, and have been prepared and presented in accordance
with IFRS.
2
Summary Consolidated Statement of Income
Summary of consolidated statement of income for the financial year ended 31 December 2022 (restated)
and the financial year ended 31 December 2023
For the year ended 31 December
2022 (Restated)(1) 2023
(RMB million) (RMB million)
REVENUE
Insurance revenue............................................................................ 525,981 536,440
Interest revenue from banking operations........................................ 228,784 227,552
Interest revenue from non-banking operations................................. 115,933 118,503
Fees and commission revenue from non-insurance operations ........ 45,982 45,806
Investment income........................................................................... (2,311) 33,324
Share of profits and losses of associates and joint ventures............ 10,165 1,434
Other revenues and other gains ....................................................... 60,652 68,804
Total revenue.................................................................................. 985,186 1,031,863
EXPENSES
Insurance service expenses .............................................................. (422,221) (440,178)
Allocation of reinsurance premiums paid ........................................ (14,919) (14,179)
Less: Amount recovered from reinsurer .......................................... 10,605 10,448
Net insurance finance expenses for insurance contracts issued ....... (99,933) (123,959)
Less: Net reinsurance finance income for reinsurance
contracts held............................................................................... 564 542
Interest expenses on banking operations ......................................... (97,688) (108,605)
Fees and commission expenses on non-insurance operations .......... (9,928) (8,773)
Net impairment losses on financial assets ....................................... (80,553) (77,744)
Net impairment losses on other assets............................................. (1,367) (1,327)
Foreign exchange gains/(losses) ...................................................... 3,144 120
General and administrative expenses ............................................... (79,815) (83,877)
Changes in insurance premium reserves .......................................... (78) (230)
Interest expenses on non-banking operations .................................. (22,698) (24,346)
Other expenses ................................................................................ (27,964) (39,638)
Total expenses ................................................................................ (842,851) (911,746)
PROFIT BEFORE TAX ................................................................ 142,335 120,117
Income tax....................................................................................... (7,518) (10,843)
PROFIT FOR THE YEAR ............................................................ 134,817 109,274
Attributable to:
Owners of the parent ....................................................................... 111,008 85,665
Non-controlling interests ................................................................. 23,809 23,609
Earnings per share attributable to
ordinary equity holders of the parent:
– Basic (in RMB) ............................................................................ 6.36 4.84
– Diluted (in RMB) ......................................................................... 6.27 4.74
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss .......... (17,768) (25,356)
Items that will not be reclassified to profit or loss ......................... 1,900 6,497
OTHER COMPREHENSIVE INCOME FOR THE YEAR,
NET OF TAX.............................................................................. (15,868) (18,859)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR .......... 118,949 90,415
Attributable to:
– Owners of the parent.................................................................... 94,484 66,819
– Non-controlling interests .............................................................. 24,465 23,596
Note:
(1) The Issuer has implemented the New Insurance Contract Standard on 1 January 2023 and made retrospective adjustments to
the financial statements figures for comparative periods in accordance with the transition requirements. The Issuer has
reassessed the business model for managing its relevant financial assets, reclassified and remeasured certain financial assets and
restated the financial statement line items for comparative periods in accordance with the requirements. As a result, certain
comparative financial information as at and for the year ended 31 December 2022 included in the consolidated financial
statements of the Issuer for the year ended 31 December 2023 has been restated. Please refer to “Note 2 – Material Accounting
Policies” in the FY2023 Financial Statements for details. However, as the financial information as at and for the years ended
31 December 2021 and 2022 included in the consolidated financial statements of the Issuer for the year ended 31 December
2022 has not been restated to reflect the adoption of the New Insurance Contract Standard, such financial information is not
directly comparable with the financial information as at and for the years ended 31 December 2022 and 2023 included in
FY2023 Financial Statements.
3
Summary of consolidated statement of income for the financial year ended 31 December 2021 and the
financial year ended 31 December 2022 (before restatement)
For the year ended 31 December
2021 2022
(Original)
(RMB million) (RMB million)
REVENUE
Gross written premiums .................................................................. 760,843 769,633
Less: Premiums ceded to reinsurers ................................................ (30,208) (21,967)
Change in unearned premium reserves ............................................ 9,298 (5,248)
Net earned premiums .................................................................... 739,933 742,418
Reinsurance commission revenue .................................................... 5,908 6,150
Interest revenue from banking operations........................................ 213,439 228,784
Interest revenue from non-banking operations................................. 125,474 124,276
Fees and commission revenue from non-insurance operations ........ 51,524 45,982
Investment income........................................................................... 78,039 2,781
Share of profits and losses of associates and joint ventures............ 7,346 10,165
Other revenues and other gains ....................................................... 66,012 60,795
Total revenue.................................................................................. 1,287,675 1,221,351
EXPENSES
Gross claims and policyholders’ benefits ........................................ (638,866) (645,263)
Less: Reinsurers’ share of claims and policyholders’ benefits......... 20,204 14,125
Claims and policyholders’ benefits .................................................. (618,662) (631,138)
Commission expenses on insurance operations................................ (80,711) (70,380)
Interest expenses on banking operations ......................................... (92,071) (97,688)
Fees and commission expenses on non-insurance operations .......... (9,940) (9,928)
Net impairment losses on financial assets ....................................... (90,494) (80,553)
Net impairment losses on other assets............................................. (14,548) (3,096)
Foreign exchange gains/(losses) ...................................................... 1,267 3,342
General and administrative expenses ............................................... (177,061) (169,840)
Interest expenses on non-banking operations .................................. (28,082) (22,888)
Other expenses ................................................................................ (37,793) (33,367)
Total expenses ................................................................................ (1,148,095) (1,115,536)
PROFIT BEFORE TAX ................................................................ 139,580 105,815
Income tax....................................................................................... (17,778) 1,617
PROFIT FOR THE YEAR ............................................................ 121,802 107,432
Attributable to:
Owners of the parent ....................................................................... 101,618 83,774
Non-controlling interests ................................................................. 20,184 23,658
Earnings per share attributable to ordinary equity holders of
the parent:
– Basic (in RMB) ............................................................................ 5.77 4.80
– Diluted (in RMB) ......................................................................... 5.72 4.73
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss .......... 1,068 3,651
Items that will not be reclassified to profit or loss ......................... (3,144) 1,428
OTHER COMPREHENSIVE INCOME FOR THE YEAR,
NET OF TAX.............................................................................. (2,076) 5,079
TOTAL COMPREHENSIVE INCOME FOR THE YEAR .......... 119,726 112,511
Attributable to:
– Owners of the parent.................................................................... 99,281 88,097
– Non-controlling interests .............................................................. 20,445 24,414
4
Summary Consolidated Statement of Financial Position
As at As at 31 As at
1 January 2022 December 2022 31 December
(Restated)(1) (Restated)(1) 2023
(RMB million) (RMB million) (RMB million)
ASSETS
Cash and amounts due from banks and other
financial institutions....................................................... 592,151 774,841 804,077
Balances with the Central Bank ........................................ 308,348 281,115 270,976
Financial assets purchased under reverse
repurchase agreements ................................................... 61,583 91,514 167,660
Accounts receivable........................................................... 26,628 36,118 35,636
Derivative financial assets ................................................. 30,957 29,278 44,978
Insurance contract assets ................................................... – – 3
Reinsurance contract assets ............................................... 19,926 20,615 22,215
Finance lease receivable .................................................... 200,701 186,858 180,674
Loans and advances to customers...................................... 2,980,975 3,238,054 3,318,122
Financial assets at fair value through profit or loss .......... 1,445,641 1,640,519 1,803,047
Financial assets at amortized cost ..................................... 1,064,246 1,124,035 1,243,353
Debt financial assets at fair value through other
comprehensive income ................................................... 2,265,326 2,500,790 2,637,008
Equity financial assets at fair value through other
comprehensive income ................................................... 277,883 264,771 264,877
Investments in associates and joint ventures ..................... 284,061 280,793 258,877
Statutory deposits for insurance operations ....................... 12,606 14,444 14,903
Investment properties ........................................................ 86,041 114,763 121,406
Property and equipment..................................................... 49,758 53,657 50,401
Intangible assets ................................................................ 68,462 99,411 99,078
Right-of-use assets ............................................................ 14,185 12,580 9,794
Deferred tax assets ............................................................ 64,289 89,321 101,337
Other assets ....................................................................... 140,312 156,463 134,995
TOTAL ASSETS .............................................................. 9,994,079 11,009,940 11,583,417
EQUITY
Share capital ...................................................................... 18,280 18,280 18,210
Reserves ............................................................................ 267,475 268,724 263,752
Treasury shares.................................................................. (9,895) (10,996) (5,001)
Retained profits ................................................................. 540,629 593,183 622,050
Equity attributable to owners of the parent ....................... 816,489 869,191 899,011
Non-controlling interests ................................................... 265,449 316,805 329,953
TOTAL EQUITY ............................................................. 1,081,938 1,185,996 1,228,964
LIABILITIES
Due to banks and other financial institutions .................... 797,646 923,088 963,718
Financial liabilities at fair value through profit or loss ..... 57,376 84,659 48,619
Derivative financial liabilities ........................................... 35,049 39,738 44,531
Assets sold under agreements to repurchase...................... 127,718 271,737 241,803
Accounts payable............................................................... 6,663 10,349 8,858
Income tax payable............................................................ 16,247 16,076 7,117
Insurance contract liabilities.............................................. 3,340,870 3,671,177 4,159,801
Reinsurance contract liabilities .......................................... – 105 53
Customer deposits and payables to brokerage customers .. 3,002,049 3,431,999 3,534,539
Bonds payable ................................................................... 1,097,523 931,098 964,007
Lease liabilities ................................................................. 14,208 13,013 10,234
Deferred tax liabilities....................................................... 13,605 14,217 14,148
Other liabilities.................................................................. 403,187 416,688 357,025
TOTAL LIABILITIES ..................................................... 8,912,141 9,823,944 10,354,453
TOTAL EQUITY AND LIABILITIES ............................ 9,994,079 11,009,940 11,583,417
5
Summary Consolidated Statement of Cash Flows
For the year ended 31 December
2021 2022 2022 2023
(Original) (Restated)(1)
(RMB million) (RMB million) (RMB million) (RMB million)
CASH FLOW FROM OPERATING
ACTIVITIES
Cash generated from operations ...................... 117,077 514,552 505,423 387,061
Less: Current income tax charged for the year ... (26,816) (27,643) (27,643) (17,699)
Changes in income tax payable .......................... (145) (1,004) (1,004) (8,959)
Net cash flows from operating activities ......... 90,116 485,905 476,776 360,403
CASH FLOW FROM INVESTING
ACTIVITIES
Purchases of property and equipment,
intangibles and other long-term assets ............ (12,186) (8,871) (8,871) (7,810)
Proceeds from disposal of property and
equipment, intangibles and other long-term
assets, net ........................................................ 679 568 568 1,068
Proceeds from disposal of investments ............... 2,016,480 1,967,313 2,012,393 1,756,672
Purchases of investments .................................... (2,198,579) (2,367,474) (2,406,664) (2,066,919)
Acquisition of subsidiaries, net........................... (366) (37,620) (37,620) –
Disposal of subsidiaries, net ............................... 5,234 507 507 65
Interest received.................................................. 168,173 148,496 146,953 139,390
Dividends received ............................................. 60,234 76,974 76,974 73,533
Rentals received.................................................. 4,620 6,178 – –
Increase in policy loans, net ............................... (16,356) (10,120) – –
Net cash flows from/(used in)
investing activities ......................................... 27,933 (224,049) (215,760) (104,001)
CASH FLOW FROM FINANCING
ACTIVITIES
Capital injected into subsidiaries by
non-controlling interests .................................. 14,383 3,104 3,104 2,999
Proceeds from bonds issued................................ 1,252,176 773,258 773,258 1,064,814
(Decrease)/increase in assets sold under
agreements to repurchase of insurance
operations, net ................................................. (169,860) 118,446 118,241 (81,822)
Proceeds from borrowings .................................. 197,965 186,022 186,022 107,295
Repayment of borrowings ................................... (1,335,187) (1,206,226) (1,206,226) (1,202,227)
Interest paid ........................................................ (45,887) (28,209) (28,218) (22,380)
Dividends paid .................................................... (46,942) (49,582) (49,582) (50,707)
Increase/(decrease) in insurance placements
from banks and other financial
institutions, net................................................ 4,300 2,266 2,266 (5,166)
Payment of acquisition of shares ........................ (3,900) (1,101) (1,101) –
Payment of shares purchased for Long-term
Service Plan .................................................... (4,184) (4,439) (4,439) (4,451)
Repayment of lease liabilities ............................. (7,634) (6,533) (6,533) (5,522)
Payment of redemption for other equity
instruments by subsidiaries ............................. (3,051) (10,100) (10,100) (5,650)
Others ................................................................. 11,409 (7,565) (7,565) (19,239)
Net cash flows used in financing activities ...... (136,412) (230,659) (230,873) (222,056)
Net (decrease)/increase in cash and
cash equivalents ............................................. (18,363) 31,197 30,143 34,346
Net foreign exchange differences........................ (3,260) 8,569 8,580 1,924
Cash and cash equivalents at the beginning of
the year ........................................................... 424,748 403,125 405,479 444,202
Cash and cash equivalents at the end
of the year ...................................................... 403,125 442,891 444,202 480,472
6
Note:
(1) The Issuer has implemented the New Insurance Contract Standard on 1 January 2023 and made retrospective adjustments to
the financial statements figures for comparative periods in accordance with the transition requirements. The Issuer has
reassessed the business model for managing its relevant financial assets, reclassified and remeasured certain financial assets and
restated the financial statement line items for comparative periods in accordance with the requirements. As a result, certain
comparative financial information as at and for the year ended 31 December 2022 included in the consolidated financial
statements of the Issuer for the year ended 31 December 2023 has been restated. Please refer to “Note 2 – Material Accounting
Policies” in the FY2023 Financial Statements for details. However, as the financial information as at and for the years ended
31 December 2021 and 2022 included in the consolidated financial statements of the Issuer for the year ended 31 December
2022 has not been restated to reflect the adoption of the New Insurance Contract Standard, such financial information is not
directly comparable with the financial information as at and for the years ended 31 December 2022 and 2023 included in
FY2023 Financial Statements.
7
THE OFFERING
The following summary contains some basic information about the Bonds and is qualified in its entirety by
the remainder of this Offering Circular. Some of the terms described below are subject to important
limitations and exceptions. Words and expressions defined in “Terms and Conditions” and “Provisions
relating to the Bonds in Global Form” shall have the same meanings in this summary. For a complete
description of the terms and conditions of the Securities, see “Terms and Conditions” in this Offering
Circular.
Issuer ............................................. Ping An Insurance (Group) Company of China, Ltd.
( ) .
Bonds ............................................. U.S. dollar-denominated 0.875% convertible bonds due 2029 in an
aggregate principal amount of US$3,500,000,000, convertible into
fully-paid ordinary H shares of the Company with a par value
RMB1.00 each at the initial conversion price of HK$43.71 per Share
(the “Shares”).
A Share(s) ...................................... Ordinary domestic share(s) with a par value of RMB1.00 each in the
share capital of the Issuer, which are listed for trading on The
Shanghai Stock Exchange and traded in Renminbi (Stock Code:
601318).
H Share(s)...................................... Ordinary foreign share(s) with a par value of RMB1.00 each issued
by the Issuer which are listed on the Hong Kong Stock Exchange
and traded in Hong Kong dollars (Stock Code: 2318 (HKD counter)
and 82318 (RMB counter)).
Interest........................................... The Bonds bear interest from and including 22 July 2024 at the rate
of 0.875 per cent. per annum payable semi-annually in arrear in
equal instalments of US$437.5 per Calculation Amount (as defined
in the Terms and Conditions) on 22 January and 22 July in each year.
See “Terms and Conditions of the Bonds – Interest.”
Issue Price ..................................... 100.0 per cent. of the principal amount of the Bonds.
Issue Date ...................................... 22 July 2024
Maturity Date ................................ 22 July 2029
Form and Denomination ............... The Bonds will be issued in registered form in the specified
denomination of US$200,000 each and integral multiples of
US$100,000 in excess thereof.
Status of the Bonds ....................... The Bonds will constitute direct, unsubordinated, unconditional and
(subject to Condition 3.1 (Negative Pledge) of the Terms and
Conditions) unsecured obligations of the Issuer and shall rank pari
passu and without any preference or priority among themselves. The
payment obligations of the Issuer under the Bonds shall, save for
such exceptions as may be provided by mandatory provisions of
applicable legislation and subject to Condition 3.1 (Negative
Pledge) of the Terms and Conditions, at all times rank at least
equally with all of its other present and future direct,
unsubordinated, unconditional and unsecured obligations. See
“Terms and Conditions of the Bonds – Status”.
8
Negative Pledge ............................. So long as any Bond remains outstanding, the Issuer will not create
or permit to subsist, and the Issuer will procure that no Principal
Subsidiary, other than a Listed Subsidiary and Subsidiaries of a
Listed Subsidiary, will create, or have outstanding, any mortgage,
charge, pledge, lien or other form of encumbrance or security
interest upon the whole or any part of its undertaking, assets or
revenues (including any uncalled capital), present or future, to
secure any Relevant Indebtedness or to secure any guarantee of or
indemnity in respect of any Relevant Indebtedness unless, at the
same time or prior thereto according to the Bonds the same security
as is created or subsisting to secure any such Relevant Indebtedness,
guarantee or indemnity or such other security as either (i) the
Trustee shall in its absolute discretion deem not materially less
beneficial to the interests of the Bondholders or (ii) shall be
approved by an Extraordinary Resolution of the Bondholders. See
“Terms and Conditions of the Bonds – Negative Pledge”.
Taxation ......................................... All payments made by or on behalf of the Issuer in respect of the
Bonds will be made free from any restriction or condition and will
be made without deduction or withholding for or on account of any
present or future taxes, duties, assessments or governmental charges
of whatever nature imposed, levied, collected, withheld or assessed
by or on behalf of the PRC or Hong Kong or, in each case, any
authority thereof or therein having power to tax, unless deduction or
withholding of such taxes, duties, assessments or governmental
charges is compelled by law. If the Issuer is required to make a
deduction or withholding in respect of PRC tax in excess of the
aggregate rate applicable on 15 July 2024, or any Hong Kong
deduction or withholding is required, in such event the Issuer shall
pay such additional amounts as will result in receipt by the
Bondholders of such amounts as would have been received by them
had no such withholding or deduction been required, except in
circumstances specified in Condition 8 (Taxation) of the Terms and
Conditions. See “Terms and Conditions of the Bonds – Taxation”.
9
Conversion Right and Period ....... Subject as provided in the Terms and Conditions, each Bond shall
entitle the holder to convert such Bond into H Shares (the
“Conversion Right”). Subject to and upon compliance with the
Terms and Conditions, the Conversion Right attaching to any Bond
may be exercised, at the option of the Bondholder, at any time on or
after the 41st day after the Issue Date up to the close of business (at
the place where the Certificate evidencing such Bond is deposited
for conversion) on the date falling seven working days prior to the
Maturity Date (both days inclusive), or if such Bond shall have been
called for redemption by the Issuer before the Maturity Date, then
up to and including the close of business (at the place aforesaid) on
a date no later than seven working days (at the place aforesaid) prior
to the date fixed for redemption thereof; provided that no
Conversion Right may be exercised in respect of a Bond where the
holder shall have exercised its right to require the Issuer to redeem
or repurchase such Bond pursuant to Condition 7.4 (Redemption at
the Option of the Bondholders) or Condition 7.5 (Redemption for
Relevant Events) of the Terms and Conditions or during a Restricted
Conversion Period (both dates inclusive); provided further that the
Conversion Right is exercised subject to any applicable fiscal or
other laws or regulations or as hereafter provided in the Terms and
Conditions (the “Conversion Period”). See “Terms and Conditions
of the Bonds – Conversion Right”.
Conversion Price ........................... The price at which H Shares will be issued upon conversion will
initially be HK$43.71 per H Share but will be subject to adjustments
for, among other things, consolidation, subdivision or re-
classification, capitalisation of profits or reserves, capital
distributions, rights issues of Shares or options over Shares, rights
issues of other securities, issues at less than current market price and
certain other dilutive events. See “Terms and Conditions of the
Bonds – Conversion – Adjustments to Conversion Price”.
Redemption at Maturity ............... Unless previously redeemed, converted or purchased and cancelled
as provided in the Terms and Conditions, the Issuer will redeem each
Bond at its principal amount together with accrued and unpaid
interest thereon on the Maturity Date. See “Terms and Conditions of
the Bonds – Redemption, Purchase and Cancellation – Maturity”.
10
Redemption for Taxation The Bonds may be redeemed, at the option of the Issuer in whole,
Reasons....................................... but not in part, at any time, on giving not less than 30 nor more than
60 days’ notice to the Trustee, the Principal Agent and the
Bondholders (which notice shall be irrevocable) at their principal
amount as at the relevant redemption date, together with interest
accrued and unpaid thereon to but excluding the date fixed for
redemption, if the Issuer satisfies the Trustee immediately prior to
the giving of such notice that (i) the Issuer has or will become
obliged to pay Additional Tax Amounts as provided or referred to in
Condition 8 (Taxation) of the Terms and Conditions as a result of
any change in, or amendment to, the laws or regulations of the PRC
or Hong Kong or, in each case, any political subdivision or any
authority thereof or therein having power to tax, or any change in
the general application or official interpretation of such laws or
regulations, which change or amendment becomes effective on or
after 15 July 2024, and (ii) such obligation cannot be avoided by the
Issuer taking reasonable measures available to it, provided that no
such notice of redemption shall be given earlier than 90 days prior
to the earliest date on which the Issuer would be obliged to pay such
Additional Tax Amounts were a payment in respect of the Bonds
then due.
If the Issuer gives a notice of redemption pursuant to the Condition
7.3 (Redemption for Taxation Reasons) of the Terms and Conditions,
each Bondholder will have the right to elect that its Bonds shall not
be redeemed. Upon a Bondholder electing not to have its Bonds
redeemed in such circumstances, any payment of principal or
interest to be made in respect of such Bond(s) which falls due after
the relevant date of redemption shall be made subject to any
deduction or withholding of the taxation required to be withheld or
deducted by the government of the PRC or Hong Kong or, in each
case, any political subdivision or any authority thereof or therein
having power to tax. See “Terms and Conditions of the Bonds –
Redemption, Purchase and Cancellation – Redemption for Taxation
Reasons”.
Redemption at the Option of On giving not less than 30 nor more than 60 days’ notice to the
the Issuer ................................... Bondholders, the Trustee and the Principal Agent (which notice will
be irrevocable), the Bonds may be redeemed by the Issuer in whole,
but not in part, on the date specified in the Optional Redemption
Notice, together with accrued and unpaid interest thereon to but
excluding the date fixed for redemption, (i) at any time after
5 August 2027 but prior to the Maturity Date, subject to certain
conditions as specified in the Terms and Conditions, or (ii) at any
time if, the aggregate principal amount of the Bonds outstanding is
less than 10 per cent. of the aggregate principal amount originally
issued (which shall for this purpose include any further bonds issued
in accordance with Condition 15 (Further Issues) of the Terms and
Conditions and consolidated and forming a single series therewith).
See “Terms and Conditions of the Bonds – Redemption, Purchase
and Cancellation – Redemption at the Option of the Issuer”.
11
Redemption at the Option The Issuer will, at the option of the holder of any Bond, redeem all
of the Bondholders .................... or some only of that holder’s Bonds on 22 July 2027 (the “Put
Option Date”) at their principal amount together with interest
accrued and unpaid to but excluding the Put Option Date. See
“Terms and Conditions of the Bonds – Redemption, Purchase and
Cancellation – Redemption at the Option of the Bondholders”.
Redemption for Relevant Events.. Following the occurrence of a Relevant Event, the holder of each
Bond will have the right at such holder’s option, to require the Issuer
to redeem all or some only of such holder’s Bonds on the Relevant
Event Put Date at their principal amount together with interest
accrued and unpaid to but excluding the Relevant Event Put Date.
A “Relevant Event” means the occurrence of either (a) a Change of
Control (as defined in the Terms and Conditions) in the Issuer; (b)
a Delisting (as defined in the Terms and Conditions) or (c) an H
Share Suspension in Trading (as defined in the Terms and
Conditions). See “Terms and Conditions of the Bonds – Redemption,
Purchase and Cancellation – Redemption for Relevant Events”.
Company and The Issuer has agreed in the Subscription Agreement that neither the
Shareholder’s Lock-up .............. Issuer nor any person acting on its behalf will (a) issue, offer, sell,
pledge, encumber, contract to sell or otherwise dispose of or grant
options, issue warrants or offer rights entitling persons to subscribe
or purchase any interest in any Shares or securities of the same class
as the Bonds or the Shares or any securities convertible into,
exchangeable for or which carry rights to subscribe or purchase the
Bonds, the Shares or securities of the same class as the Bonds, the
Shares or other instruments representing interests in the Bonds, the
Shares or other securities of the same class as them, (b) enter into
any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of the ownership of the Shares, (c)
enter into any transaction with the same economic effect as, or
which is designed to, or which may reasonably be expected to result
in, or agree to do, any of the foregoing, whether any such transaction
of the kind described in (a), (b) or (c) is to be settled by delivery of
Shares or other securities, in cash or otherwise or (d) announce or
otherwise make public an intention to do any of the foregoing, in
any such case without the prior written consent of the Managers
between the date hereof and the date which is 90 days after the Issue
Date (both dates inclusive); except for (i) the Bonds and the New
Shares issued on conversion of the Bonds, or (ii) any Shares or other
securities (including rights or options) which are issued, offered,
exercised, allotted, appropriated, modified or granted to, or for the
benefit of employees (including directors) of the Issuer or any of its
subsidiaries pursuant to any employee share scheme or plan.
12
Events of Default........................... The Trustee may give notice to the Issuer that the Bonds are, and
they shall accordingly thereby become, immediately due and
repayable at their principal amount together with any accrued and
unpaid interest up to but excluding the date of payment without
prejudice to the right of Bondholders to exercise the Conversion
Right in respect of their Bonds in accordance with Condition 5 of
the Terms and Conditions if any of the events listed under Condition
9 of the Terms and Conditions has occurred. See “Terms and
Conditions of the Bonds – Events of Default”.
Further Issues................................ The Issuer may from time to time, without the consent of the
Bondholders, create and issue further bonds having the same terms
and conditions as the Bonds in all respects (or in all respects except
for the issue date and the timing for complying with the
requirements set out in the Terms and Conditions in relation to the
Initial NDRC Post-Issuance Filing, the CSRC Post-Issuance Filings
and the Foreign Debt Registration) and so that such further issue
shall be consolidated and form a single series with the Bonds. See
“Terms and Conditions of the Bonds – Further Issues”.
Clearing Systems ........................... The Bonds will be represented initially by beneficial interests in the
Global Certificate, which will be registered in the name of a
nominee of, and deposited on the Issue Date with, a common
depositary for Euroclear and Clearstream. Beneficial interests in the
Global Certificate will be shown on, and transfers thereof will be
effected only through records maintained by Euroclear and
Clearstream. Except as described in the Global Certificate,
certificates for the Bonds will not be issued in exchange for
beneficial interests in the Global Certificate.
Governing Law .............................. The Bonds, the Trust Deed and the Agency Agreement and any
non-contractual obligations arising out of or in connection with
them will be governed by, and shall be construed in accordance with,
English law.
Trustee ........................................... The Bank of New York Mellon, London Branch
Principal Paying Agent and The Bank of New York Mellon, London Branch
Principal Conversion Agent ......
Registrar and Transfer Agent....... The Bank of New York Mellon SA/NV, Dublin Branch
Listing and Trading Application will be made to the Hong Kong Stock Exchange for the
of the Bonds ............................... listing of, and permission to deal in, the Bonds on the Hong Kong
Stock Exchange by way of debt issues to Professional Investors only
and it is expected that dealing in, and listing of, the Bonds on the
Hong Kong Stock Exchange will commence on 23 July 2024.
Listing of Shares ........................... The Shares are listed on the Hong Kong Stock Exchange.
Application has been made to the Hong Kong Stock Exchange for
the listing of the Shares issuable upon conversion of the Bonds (the
“New Shares”).
13
Concurrent Delta Placement ........ Concurrent with the offering of the Bonds, the Managers may
facilitate sales of existing H shares notionally underlying the Bonds
by buyers of the Bonds who wish to sell such H shares in short sales
to purchasers procured by the Managers in order to hedge the market
risk to which buyers of the Bonds are exposed with respect to the
Bonds that they may acquire in the offering of the Bonds.
Use of Proceeds ............................. See “Use of Proceeds”.
Risk Factors .................................. For a discussion of certain factors that should be considered in
evaluating an investment in the Bonds, see “Risk Factors”.
Selling Restrictions ....................... There are restrictions on the offer, sale and transfer of the Bonds in,
among others, the United States, the United Kingdom, EEA, the
PRC, Hong Kong, Singapore and Japan. For a description of the
selling restrictions on offers, sales and deliveries of the Bonds, see
“Subscription and Sale”.
Legal Entity Identifier .................. 529900M9MC28JLN35U89
ISIN................................................ XS2859746237
Common Code ............................... 285974623
14
RECENT DEVELOPMENT
Announcement of the Group’s unaudited and unreviewed consolidated financial results as at and for
the three months ended 31 March 2024
On 23 April 2024, the Group announced its 2024 First Quarterly Results. The unaudited and unreviewed
consolidated financial results as at and for the three months ended 31 March 2024 and comparative financial
results for the three months ended 31 March 2023 are not audited or reviewed by an independent auditor.
Consequently, such financial information should not be relied upon by investors as providing the same
quality of information associated with information that has been subject to an audit or review. Potential
investors must exercise caution when using such data to evaluate our financial condition, results of
operations and results. Such financial information should not be taken as an indication of the Group’s
expected financial condition, results of operations and results for the full financial year ending 31 December
2024. See also “Risk Factors – Risks Relating to our Overall Business – Potential investors should not place
undue reliance on financial information which is not audited or reviewed.”
The following table sets forth, for the periods indicated, the Group’s unaudited consolidated statement of
income prepared in accordance with IFRSs for the three months ended 31 March 2024.
For the three months ended 31 March
2024 2023
(Unaudited) (Unaudited)
(RMB million) (RMB million)
Insurance revenue............................................................................ 136,852 133,106
Interest revenue from banking operations........................................ 53,299 58,670
Interest revenue from non-banking operations................................. 29,196 29,781
Fees and commission revenue from non-insurance operations ........ 11,197 11,919
Investment income........................................................................... 29,862 29,715
Share of profits and losses of associates and joint ventures............ (531) 748
Other revenues and other gains ....................................................... 16,018 17,661
Total revenue.................................................................................. 275,893 281,600
Insurance service expenses .............................................................. (109,996) (105,955)
Allocation of reinsurance premiums paid ........................................ (3,788) (3,458)
Less: Amount recovered from reinsurer .......................................... 2,775 2,395
Net insurance finance expenses for insurance contracts issued ....... (39,244) (40,271)
Less: Net reinsurance finance income for reinsurance
contracts held............................................................................... 265 99
Interest expenses on banking operations ......................................... (27,994) (26,347)
Fees and commission expenses on non-insurance operations .......... (1,839) (1,894)
Net impairment losses on financial assets ....................................... (10,351) (15,526)
Net impairment losses on other assets............................................. (6) (14)
Foreign exchange gains/(losses) ...................................................... (302) 494
General and administrative expenses ............................................... (18,833) (19,886)
Changes in insurance premium reserves .......................................... (62) (46)
Interest expenses on non-banking operations .................................. (4,911) (5,838)
Other expenses ................................................................................ (8,990) (10,091)
Total expenses ................................................................................ (223,276) (226,338)
Profit before tax .............................................................................. 52,617 55,262
Income tax....................................................................................... (7,567) (9,097)
Profit for the period ...................................................................... 45,050 46,165
Attributable to:
– Owners of the parent.................................................................... 36,709 38,352
– Non-controlling interests .............................................................. 8,341 7,813
45,050 46,165
15
RMB RMB
Earnings per share attributable to
ordinary equity holders of the parent:
– Basic ............................................................................................ 2.07 2.17
– Diluted ......................................................................................... 2.03 2.13
The following table sets forth, for the periods indicated, the Group’s unaudited consolidated statement of
comprehensive income for the three months ended 31 March 2024.
For the three months ended 31 March
2024 2023
(Unaudited) (Unaudited)
(RMB million) (RMB million)
Profit for the period ...................................................................... 45,050 46,165
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Changes in the fair value of debt instruments at fair value
through other comprehensive income........................................... 68,412 7,809
Credit risks provision of debt instruments at fair value through
other comprehensive income........................................................ 136 21
Insurance finance expenses for insurance contracts issued .......... (100,248) (7,796)
Reinsurance finance income for reinsurance contracts held ......... 277 1
Reserve from cash flow hedging instruments .............................. 327 118
Exchange differences on translation of foreign operations .......... (70) (965)
Share of other comprehensive income of associates and
joint ventures ........................................................................... 94 109
Items that will not be reclassified to profit or loss:
Changes in the fair value of equity instruments at fair value
through other comprehensive income ....................................... (67) 5,960
Insurance finance income/(expenses) for insurance
contracts issued ........................................................................ 131 (3,826)
Share of other comprehensive income of associates and
joint ventures ........................................................................... 156 400
Other comprehensive income for the period, net of tax ............. (30,852) 1,831
Total comprehensive income for the period ................................. 14,198 47,996
Attributable to:
– Owners of the parent.................................................................... 5,713 40,443
– Non-controlling interests .............................................................. 8,485 7,553
14,198 47,996
16
The following table sets forth, for the periods indicated, the Group’s unaudited consolidated statement of
financial position as at 31 March 2024.
As at 31 March As at 31 December
2024 2023
(Unaudited) (Audited)
(RMB million) (RMB million)
ASSETS
Cash and amounts due from banks and other financial institutions. 786,452 804,077
Balances with the Central Bank ...................................................... 318,059 270,976
Financial assets purchased under reverse repurchase agreements .... 132,914 167,660
Accounts receivable......................................................................... 37,514 35,636
Derivative financial assets ............................................................... 47,800 44,978
Insurance contract assets ................................................................. – 3
Reinsurance contract assets ............................................................. 22,340 22,215
Finance lease receivable .................................................................. 193,392 180,674
Loans and advances to customers.................................................... 3,384,720 3,318,122
Financial assets at fair value through profit or loss ........................ 1,962,415 1,803,047
Financial assets at amortized cost ................................................... 1,252,468 1,243,353
Debt financial assets at fair value through other
comprehensive income ................................................................. 2,750,608 2,637,008
Equity financial assets at fair value through other
comprehensive income ................................................................. 263,139 264,877
Investments in associates and joint ventures ................................... 253,714 258,877
Statutory deposits for insurance operations ..................................... 14,853 14,903
Investment properties ...................................................................... 125,978 121,406
Property and equipment................................................................... 48,759 50,401
Intangible assets .............................................................................. 98,100 99,078
Right-of-use assets .......................................................................... 9,002 9,794
Deferred tax assets .......................................................................... 108,188 101,337
Other assets ..................................................................................... 171,881 134,995
Total assets ..................................................................................... 11,982,296 11,583,417
EQUITY AND LIABILITIES
Equity
Share capital.................................................................................... 18,210 18,210
Reserves .......................................................................................... 233,095 263,752
Treasury shares................................................................................ (5,001) (5,001)
Retained profits ............................................................................... 658,666 622,050
Equity attributable to owners of the parent ..................................... 904,970 899,011
Non-controlling interests ................................................................. 337,170 329,953
Total equity .................................................................................... 1,242,140 1,228,964
Liabilities
Due to banks and other financial institutions .................................. 967,279 963,718
Financial liabilities at fair value through profit or loss ................... 72,247 48,619
Derivative financial liabilities ......................................................... 47,597 44,531
Assets sold under agreements to repurchase.................................... 243,373 241,803
Accounts payable ............................................................................ 7,658 8,858
Income tax payable ......................................................................... 9,293 7,117
Insurance contract liabilities............................................................ 4,429,595 4,159,801
Reinsurance contract liabilities........................................................ 73 53
Customer deposits and payables to brokerage customers ................ 3,589,254 3,534,539
Bonds payable ................................................................................. 998,246 964,007
Lease liabilities ............................................................................... 9,531 10,234
Deferred tax liabilities..................................................................... 14,323 14,148
Other liabilities................................................................................ 351,687 357,025
Total liabilities ............................................................................... 10,740,156 10,354,453
Total equity and liabilities ............................................................ 11,982,296 11,583,417
17
The following table sets forth, for the periods indicated, the Group’s unaudited consolidated statement of
cash flows for the three months ended 31 March 2024.
For the three months ended 31 March
2024 2023
(Unaudited) (Unaudited)
(RMB million) (RMB million)
Net cash flows from operating activities ...................................... 74,958 209,986
Cash flows from investing activities
Purchases of property and equipment, intangibles and other
long-term assets ........................................................................... (1,063) (1,414)
Proceeds from disposal of property and equipment, intangibles
and other long-term assets, net .................................................... 32 140
Proceeds from disposal of investments............................................ 484,516 505,461
Purchases of investments................................................................. (528,533) (576,028)
Acquisition of subsidiaries, net ....................................................... – (16)
Disposal of subsidiaries, net............................................................ (50) 5
Interest received .............................................................................. 39,689 37,261
Dividends received .......................................................................... 5,232 7,016
Net cash flows used in investing activities ................................... (177) (27,575)
Cash flows from financing activities
Capital injected into subsidiaries by non-controlling interests ........ 183 16
Proceeds from bonds issued ............................................................ 324,625 189,144
Decrease in as sets sold under agreements to repurchase of
insurance operations, net ............................................................. (19,708) (19,983)
Proceeds from borrowings ............................................................... 31,277 36,799
Repayment of borrowings................................................................ (338,315) (272,266)
Interest paid .................................................................................... (3,958) (6,173)
Dividends paid ................................................................................ (1,863) (2,010)
Decrease in insurance placements from banks and other financial
institutions, net ............................................................................ – (6,984)
Payment of shares purchased for Long-term Service Plan .............. – (4,451)
Repayment of lease liabilities ......................................................... (1,130) (1,399)
Payment of redemption for other equity instruments
by subsidiaries ............................................................................. – (3,650)
Others .............................................................................................. (3,133) (8,133)
Net cash flows used in financing activities .................................. (12,022) (99,090)
Net increase in cash and cash equivalents ................................... 62,759 83,321
Net foreign exchange differences .................................................... 871 (940)
Cash and cash equivalents at the beginning of the period............... 480,472 444,202
Cash and cash equivalents at the end of the period ................... 544,102 526,583
18
Key trends in the Group’s financial performance for the three months ended 31 March 2024
The key trends in the Group’s financial performance for the three months ended 31 March 2024 are set out
below:
Operating profit
The Group’s operating profit attributable to shareholders of the parent company declined 3.0% year on year
to RMB38,709 million and net profit attributable to shareholders of the parent company declined 4.3% year
on year to RMB36,709 million in the first three months of 2024. Three core businesses, namely life and
health insurance, property and casualty insurance, and banking business, resumed growth and delivered
RMB39,816 million in operating profit attributable to shareholders of the parent company, up 0.3% year on
year.
Liabilities
The total liabilities of the Group as at 31 March 2024 is approximately RMB10,740,156 million which
represents a 3.7% increase from 31 December 2023.
Equity
The total equity of the Group as at 31 March 2024 is approximately RMB1,242,140 million, which is a 1.1%
increase from 31 December 2023.
Assets
The total assets of the Group as at 31 March 2024 is approximately RMB11,982,296 million, which is a
3.4% increase from 31 December 2023.
Cash balance
The cash and cash equivalents of the Group as at 31 March 2024 is approximately RMB544,102 million,
which is a 13.2% increase from 31 December 2023.
The Group’s business performance for the three months ended 31 March 2024
The key trends in the Group’s business performance for the three months ended 31 March 2024 are set out
below:
Life and health insurance
The Group’s life and health insurance business achieved steady business development and enhanced
comprehensive strength in channels. New business value (“NBV”) amounted to RMB12,890 million in the
first three months of 2024, up 20.7% year on year on a like-for-like basis. NBV per agent increased 56.4%
year on year. NBV margin was 22.8%, up 6.5 pps year on year on a like-for-like basis.
Property and casualty insurance
The Group’s property and casualty insurance business maintained a steady business growth, as the property
and casualty insurance revenue rose by 5.7% year on year to RMB80,627 million in the first three months
of 2024. Overall combined ratio (“COR”) excluding guarantee insurance was 98.4%, up year on year
mainly due to snowstorms on early days of the Chinese New Year and increased customer travels.
Banking business
The Group’s banking business maintained steady business performance and stable asset quality. Net profit
grew 2.3% year on year to RMB14,932 million in the first three months of 2024. Core tier 1 capital
adequacy ratio rose to 9.59% and provision coverage ratio was 261.66% as of 31 March 2024.
19
Asset management
The Group continuously enhances its capabilities of making asset allocation, achieving stable long-term
returns, and managing multi-asset portfolios to provide retail and institutional customers with
comprehensive investment management services. The Group’s asset under management (“AUM”), which is
an aggregate of the AUM of Ping An Securities Co., Ltd. (“Ping An Securities”), Ping An Trust Co., Ltd.
(“Ping An Trust”), Ping An of China Asset Management Co., Ltd. (“Ping An Asset Management”), Ping
An International Financial Leasing Co., Ltd. (“Ping An Financial Leasing”) and other relevant
subsidiaries, exceeded RMB7 trillion as of 31 March 2024.
Technology
The Group continuously invests in research and development to build leading technological capabilities,
which have been widely utilised to empower its core financial businesses and accelerate the development
of its ecosystems. Ping An promotes technological empowerment in diverse business scenarios. Moreover,
Ping An improves the industry ecosystem and technology by sharing leading innovative products and
services with external entities. Ping An remains focused on developing core technologies and securing
proprietary intellectual property rights. The Group’s patent applications led most international financial
institutions, totaling 51,700 as of 31 March 2024.
Strategic Initiatives
Integrated finance
The Group has continued to develop its integrated finance model and expand retail customers under a
customer-centric philosophy to strengthen cross-selling among customer segments. Retail customers
increased 1.0% year to date to nearly 234 million and contracts per customer reached 2.94 as of 31 March
2024.
Healthcare and elderlycare
Elderlycare has become a new driver of value growth, by empowering the Group’s financial businesses
through differentiated “Product + Service” offerings. As of 31 March 2024, over 63% of Ping An’s nearly
234 million retail customers used services from the health and elderlycare ecosystem.
By integrating providers, expanding partner network and investing in service capacities, the Group has
created a health and elderlycare ecosystem, offering customers with excellent and efficient service
experience. The Group had about 50,000 in-house doctors and contracted external doctors in China as of
31 March 2024. The Group partnered with approximately 231,000 pharmacies as of 31 March 2024, up by
nearly 1,000 within the three months ended 31 March 2024.
None of the Managers or any Agent or any director, officer, employee, agent or affiliate of any such person
makes any representation or warranty, express or implied, regarding the sufficiency of the Group’s 2024
First Quarterly Results for an assessment of, and potential investors must exercise caution when using such
data to evaluate the financial condition and results of operations of the Group. In addition, the Group’s 2024
First Quarterly Results should not be taken as an indication of the expected financial condition or results
of operations of the Group for the full financial year ending 31 December 2024.
20
Accumulated gross premium incomes for the period from 1 January 2024 to 30 June 2024
Pursuant to the “No. 2 Interpretation of Accounting Standards for Business Enterprises” and the
“Regulations regarding the Accounting Treatment of Insurance Contracts” of the Ministry of Finance of the
PRC, the accumulated gross premium incomes of the subsidiaries of the Company for the period from 1
January 2024 to 30 June 2024 are set out as follows:
January-June 2024
The accumulated gross
Subsidiaries premium income Year-on-year change
(RMB million) (%)
Ping An Property & Casualty Insurance Company
of China, Ltd. ............................................................. 160,396.6 4.1
Ping An Life Insurance Company of China, Ltd. ........... 300,783.8 5.1
Ping An Annuity Insurance Company of China, Ltd. ..... 10,653.5 -4.2
Ping An Health Insurance Company of China, Ltd. ....... 9,434.3 13.0
Resignation of Ms. Tan Sin Yin and Mr. Yao Jason Bo
With effect from 1 January 2024, Ms. Tan Sin Yin resigned as a Co-Chief Executive Officer and Executive
Vice President of the Company due to her personal and family reasons. Ms. Tan Sin Yin was then
re-designated from an Executive Director to a Non-executive Director of the Company with effect from 1
January 2024 until the expiry of the term of the 12th session of the board of the Company, which occurred
on 30 May 2024.
On 30 May 2024, Mr. Yao Jason Bo has ceased to be a Non-executive Director of the Company, as the 12th
session of the board of the Company expired on the same day.
21
RISK FACTORS
This Offering Circular contains forward-looking statements relating to events that involve risks and
uncertainties. Prospective investors should carefully consider the risk factors set forth below, as well as the
other information contained elsewhere in this Offering Circular. The risks described below are not the only
ones that may affect the Company or the Bonds. Additional risks and uncertainties that we are not aware
of or that we currently believe are immaterial may also adversely affect our financial condition or results
of operations. If any of the possible events described below occur, our financial condition or results of
operations could be materially and adversely affected. In such case, we may not be able to satisfy our
obligations under the Bonds, and investors could lose all or part of their investment.
RISKS RELATING TO OUR OVERALL BUSINESS
Our business is highly dependent on the macroeconomic environment.
Our business is highly dependent on the macroeconomic environment. In particular, factors such as a
slowdown in economic growth, rising inflation, geopolitical issues, high unemployment rate, declining
consumer confidence and asset value, capital market volatility and liquidity issues may result in
unfavourable operating condition. A slowdown in economic growth, an economic downturn or other adverse
events may lead to an increase in unemployment rate and a reduction in household income, business profits,
business investments and consumer consumption, which may significantly reduce the demand for the
Group’s products and services and increase policy surrender, credit losses and investment losses, which may
materially and adversely affect the Group’s business and results of operations.
Under adverse economic conditions, capital market volatility and credit defaults may reduce the Group’s
investment return, which may materially and adversely affect the Group’s business and results of
operations. Please refer to “– Risks Related to our Financial Business, including Life and Health Insurance,
Property and Casualty Insurance, Banking and Asset Management – Our financial business is subject to
interest rate risks,” “– Risks Related to our Financial Business, including Insurance, Banking and Asset
Management – We are subject to risks related to changes in monetary policy”, and “– Risks Related to our
Financial Business, including Life and Health Insurance, Property and Casualty Insurance, Banking and
Asset Management – Our businesses are exposed to liquidity risks” for more details.
Our business and prospects would be materially and adversely affected if we are not able to manage
our growth successfully.
The management of our growth has required significant management and operational resources and is likely
to continue to do so. The management of our growth will require, among other things:
development of capabilities, skills and infrastructure required in respect of each core business;
stringent cost controls;
sufficient capital base;
continued strengthening of financial and management controls and information technology systems;
increased marketing and sales activities in respect of each core business;
hiring and training of new personnel;
effective management of risks and challenges posed by business expansion (including expansion of
overseas operation); and
successful implementation of business plans and strategies.
There is no assurance that we will be successful in managing our growth. If we are not able to manage our
growth successfully, our business and prospects would be materially and adversely affected.
22
We may need additional capital in the future, and we cannot assure you that we would be able to
obtain such capital on acceptable terms, or at all.
In order for us to grow, remain competitive, enter new businesses, expand our base of operations or meet
regulatory capital adequacy or solvency margin requirements, we may require new capital in the future. Our
ability to obtain additional capital in the future is subject to a variety of uncertainties, including:
our future financial condition, results of operations and cash flows;
the ability to obtain the necessary regulatory approvals on a timely basis;
general market conditions for capital raising activities by insurance companies and other financial
institutions; and
economic, political and other conditions globally.
We cannot assure you that we will be able to obtain additional capital in a timely manner or on acceptable
terms or at all. Furthermore, the terms and amount of any additional capital raised through issuances of
equity securities may result in significant dilution of shareholders’ interests.
Our risk management policies and procedures and internal controls, as well as the risk management
tools available to us, may not be adequate or effective in all respects, and may expose us to
unidentified or unanticipated risks, which could materially and adversely affect our business or result
in losses.
Our risk management policies and procedures and internal controls may not be fully adequate or effective
in mitigating our risk exposures in all market environments or against all types of risk, including risks that
are unidentified or unanticipated. Some methods of managing risk are based upon observed historical
market behaviour. As a result, those methods may not predict future risk exposures, which could be
significantly greater than those indicated by the historical measures. Other risk management methods
depend upon an evaluation of available information regarding operating and market conditions or other
matters. This information may not be accurate, complete, up-to-date or properly evaluated in all cases.
Management of operational, legal and regulatory risks requires, among other things, policies and procedures
to record properly and verify a large number of transactions and events, as well as appropriate internal
control systems. These policies and procedures and internal controls may not be fully effective in all
circumstances, and our business, financial condition and results of operations may be materially and
adversely affected by the corresponding increase in our risk exposure. Insurance companies typically utilize
various financial instruments and investments to manage risks associated with their businesses. However,
current PRC rules and regulations restrict some types of financial instruments and investments we may hold.
As a result, the risk management tools available to us are limited.
Any significant failure in our information technology systems, including our management information
systems, could have a material adverse effect on our business and profitability.
Our businesses are highly dependent on the ability of our information technology systems to timely process
a large number of transactions across numerous and diverse markets and products at a time when transaction
processes have become increasingly complex and the volume of such transactions is growing at a significant
rate. The proper functioning of our financial control, accounting, customer database, customer service and
other data processing systems, including those relating to underwriting and claim processing, together with
the communication systems between our various branch offices and our main information technology
centers, is critical to our business and to our ability to compete effectively.
23
If our systems fail to perform, we could experience disruptions in operations, slower response times or
decreased customer satisfaction. We must process, record and monitor a large number of transactions, and
our operations are highly dependent on the integrity of our systems and our ability to make timely
enhancements and additions to our systems. System interruptions, errors or downtime can result from a
variety of causes, including unexpected interruptions to the internet infrastructure, technological failures,
changes to our systems, changes in customer usage patterns, linkages with third-party systems and power
failures. Our systems are also vulnerable to disruptions from human error, execution errors, errors in models
such as those used for risk management and compliance, employee misconduct, unauthorised trading,
external fraud, computer viruses, denial of service attacks, computer viruses or cyber attacks, terrorist
attacks, natural disaster, power outage, capacity constraints, software flaws, events impacting our key
business partners and vendors, and other similar events.
We have built a continuity system based on multiple data centers since 2003, which features a remote
backup for disaster recovery and an intra-city active data centre, which we could utilise in the event of a
catastrophe or a failure of our primary system. However, we cannot assure you that our business activities
would not be materially disrupted in the event of a partial or complete failure of any of these primary
information technology or communications systems, which could be caused by, among others, software
bugs, computer virus attacks or conversion errors due to system upgrading. In addition, a prolonged failure
of our information technology system could damage our reputation and materially and adversely affect our
future prospects and profitability.
There is also no assurance that the internet infrastructure we depend on will remain sufficiently reliable for
our needs. Any failure to maintain the performance, reliability, security or availability of our network
infrastructure may cause significant damage to our ability to attract and retain customers. Major risks
involving our network infrastructure include:
breakdowns or system failures resulting in a prolonged shutdown of our servers;
disruption or failure in the national backbone networks in the PRC and the other markets where we
operate, which would make it impossible for customers to access our products and services;
damage from natural disasters or other catastrophic events such as typhoons, volcanic eruptions,
earthquakes, floods, telecommunications failures, or other similar events; and
any infection by or spread of computer viruses or other system failures.
Any network interruption or inadequacy that causes interruptions in the availability of our platform or
deterioration in the quality of access to our solutions could reduce customer satisfaction and result in a
reduction in the activity level of our customers. Furthermore, increases in the volume of traffic on our
platform could strain the capacity of our existing computer systems and bandwidth, which could lead to
slower response times or system failures. This could cause a disruption or suspension in our service
delivery, which could hurt our brand and reputation. We may need to incur additional costs to upgrade our
technology infrastructure and computer systems in order to accommodate increased demand if we anticipate
that our systems cannot handle higher volumes of traffic and transaction in the future. In addition, it could
take an extended period of time to restore full functionality to our technology or other operating systems
in the event of an unforeseen occurrence, which could affect our ability to deliver our solutions. There can
be no assurance that we will not suffer unexpected losses, reputational damage or regulatory actions due
to technology or other operational failures or errors, including those of our vendors or other third parties.
Penalties and negative publicity may result in the delayed or halted processing of personal data that we need
to undertake to carry on our business, as well as the forced transfer or confiscation of certain personal data.
24
Our business generates and processes a large amount of data, and any improper use or disclosure of
such data could subject us to significant reputational, financial, legal, and operational consequences,
and deter current and potential customers from using our services.
Our business generates and processes a large quantity of personal and transaction data. We face risks
inherent in handling large volumes of data and in protecting the security of such data. In particular, we face
a number of challenges relating to data from transactions and other activities on our platforms, including:
protecting the data in and hosted on our system, including against attacks on its system by outside
parties or fraudulent behaviour by our employees;
addressing concerns related to privacy and sharing, safety, security, and other factors; and
complying with applicable laws, rules, and regulations relating to the collection, use, retention,
disclosure, or security of personal information, including any requests from regulatory and
government authorities relating to such data.
Any systems failure or security breach or lapse that result in the release of user data could harm our
reputation and brand and, consequently, our business, in addition to exposing us to potential legal liability.
Any failure, or perceived failure, by us to comply with our privacy policies or with any regulatory
requirements or privacy protection-related laws, rules, and regulations could result in proceedings or
actions against it by governmental entities or others. These proceedings or actions may subject us to
significant penalties and negative publicity, require us to change our business practices, increase our costs,
and severely disrupt our business.
We are subject to domestic and international laws relating to the collection, use, retention, security, and
transfer of personally identifiable information, with respect to our customers and employees. In many cases,
these laws do not only apply to third-party transactions, but may also restrict transfers of personally
identifiable information among us and our international subsidiaries. Several jurisdictions have passed laws
in this area, and other jurisdictions are considering imposing additional restrictions. In this regard, the PRC
government has in recent years tightened the regulation of the storage, sharing, use, disclosure and
protection of personal data and user data, particularly personal data obtained through individuals’ use of
websites and online services. Relevant PRC laws and regulations require, among other things, to clearly
state the authorised purpose, methods and scope of the collection and usage of personal data and obtain the
consent of users for the processing of this personal data, as well as to establish user information protection
systems with remedial measures.
The application of these data protection laws to our business would impose on us stringent compliance
requirements, and our compliance with such requirements could require significant resources and result in
substantial costs, which may materially and adversely affect our business, financial condition, results of
operations and prospects.
Changes in taxation on our business may materially and adversely affect the Group’s business,
financial condition and results of operations.
A substantial proportion of the Group’s revenues and profits are derived from the PRC. The Group is subject
to a range of taxes in the PRC, including the Value-added Tax (the “VAT”) and the Enterprise Income Tax
(the “EIT”). Under the Law of the PRC on Enterprise Income Tax ( , the
“PRC EIT Law”), the enterprise income tax rate for domestic companies in the PRC is 25%. However,
there can be no assurance that the tax laws and practices in PRC will not be changed in the future. In the
event any such changes are made that increase the Group’s general taxation liability, there would be an
adverse impact on the Group’s financial condition and results of operations.
25
Misconduct by our employees and agents is difficult to be detected and deterred and could harm our
business, financial condition and results of operations.
Employee and sales agent misconduct could result in violations of law by us, regulatory sanctions and/or
serious reputational or financial harm to us. Such misconduct could occur in each of our businesses and
could include:
binding us to transactions that exceed authorised limits;
hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks or losses;
improperly using or disclosing confidential information;
(in relation to the insurance business) recommending products, services or transactions that are not
suitable to our insurance clients;
engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities when
marketing or selling insurance policies, other financial, healthcare and technology products and
services to our customers;
engaging in unauthorised or excessive transactions to the detriment of customers; and/or
otherwise not complying with applicable laws or our internal control procedures.
Although we have taken steps and precautions to ensure robust employee and agent supervision and
management, there is no assurance that these steps and precautions are effective or that we can detect these
activities in all cases. We cannot assure you that employee misconduct, if any, will not materially and
adversely affect our business, financial condition and results of operations. There can be no assurance that
the measures we have implemented to detect and reduce the occurrence of fraudulent activities would be
effective in combating fraudulent transactions or improving overall customer satisfaction.
Our risk management systems, information technology systems and internal control procedures are designed
to monitor our operations and overall compliance. However, we may be unable to identify non-compliance
or suspicious transactions promptly, or at all. Furthermore, it is not always possible to detect and prevent
fraud or other misconduct, and the precautions we take to prevent and detect such activities may not be
effective. Therefore, we are subject to the risk that fraud or other misconduct may have previously occurred
but was undetected, or may occur in the future. This may materially and adversely affect our business,
financial condition and results of operations.
We depend on select management and actuarial personnel as well as dedicated sales agents and other
sales channels, and could be materially and adversely affected by the loss of services of these
personnels and sales channels.
We depend on the continued service of our senior management members and skilled personnel for all our
businesses. Our businesses could suffer if we lose the services of any of these personnel and cannot
adequately replace them. In particular, we may be required to increase substantially the number of these
employees in connection with our future growth plans, and there is intense competition for their services
in the various industries. We cannot assure you that we will be able to retain our present personnel or attract
additional qualified personnel as and when needed. In addition, we may need to increase employee
compensation levels in order to retain our existing officers and employees and attract the additional
personnel we may require. Furthermore, in relation to our insurance business, we also depend to a
significant extent on sales agents to distribute our insurance products.
26
In particular, we compete to attract and retain dedicated sales agents that distribute our insurance products.
Intense competition exists for dedicated sales agents with demonstrated ability. We compete for these agents
with other insurance companies primarily on the basis of our reputation, brand name, products,
compensation and retirement benefits, training, support services and financial position. While we have
undertaken, and expect to continue to undertake, various initiatives and measures to retain and attract our
agents, we cannot assure you that these initiatives will succeed in attracting new agents or retaining existing
agents. There is no assurance that we will remain continuously successful in attracting and retaining these
sales agents. Sales and persistency in our businesses, as well as our financial condition and results of
operations, could be materially and adversely affected if we are unsuccessful in attracting and retaining
these sales agents.
In addition to sale agent, we currently promote and sell insurance products through other sales channels,
including bancassurance channel, telemarketing internet and others. In the event we are unable to maintain
these sales channels or experience significant disruptions with respect to these channels and/or develop new
channels for sales, our competitiveness may be adversely affected, and we may not be able to replace lost
premium volumes with premiums derived from other sources, which may have a material adverse effect on
our revenues and profits.
Recent developments in the global political conditions may materially and adversely affect our
business and results of operations.
In recent years, there has been a general escalation in risks related to the geopolitical environment,
including political and trade tensions among a number of the world’s major economies, for example, the
conflicts in Ukraine and trade tensions between certain states. Such political tensions around the world
could reduce levels of trades, investments, technological exchanges, and other economic activities, which
would have a material adverse effect on global economic conditions and the stability of global financial
markets. Any of these factors could have a material adverse effect on our business, prospects, financial
condition and results of operations.
Potential investors should not place undue reliance on financial information which is not audited or
reviewed.
This Offering Circular contains the audited consolidated financial statements of our Group as at and for the
year ended 31 December 2022 and the year ended 31 December 2023, being the latest available audited
financial statements of the Group.
The 2024 First Quarterly Results disclosed elsewhere in this Offering Circular is derived from the Group’s
management accounts. See “Recent Development”. Our management accounts have not been audited or
reviewed by independent auditors. As such, any such financial information including the 2024 First
Quarterly Results should not be referred to or relied on by potential investors to provide the same quality
of information associated with any audited or reviewed information and the 2024 First Quarterly Results
may not be indicative of our actual financial condition or results of operations for any period (including the
financial year ending 31 December 2024). Potential investors should exercise caution when using such data
to evaluate our financial condition and results of operations, and must not place undue reliance on such
financial information. Such financial information may be adjusted or restated to address subsequent changes
in accordance with accounting standards, our Group’s accounting policies and/or applicable laws and
regulations affecting our financial reporting or to reflect subsequent comments given by the independent
auditors during the course of their audit or review. Such adjustments or restatements may cause
discrepancies between the information with respect to a particular period or date contained in our Group
management accounts and its audited or reviewed financial statements. There can be no assurance that, had
an audit or a review been conducted in respect of such financial information, the information presented
therein would not have been materially different.
27
We are subject to reputational risks related to our business operations.
With the rapid development of the financial, healthcare and technology and changes in media
communication, the public is paying increasing attention to these industries, resulting in easier and more
frequent access to rumours related to service quality, operations and management and compliance issues of
these businesses. Such coverage may lead to negative feedback from customers, investors and other
shareholders, which may adversely affect our normal operations and management, and could adversely
affect our liquidity if such negative coverage leads to customers terminating their relationship with the
Group, including terminating insurance policies, terminating service agreements, and depositors and other
banks withdrawing their funds or refusing to lend to us. In turn, this may materially and adversely affect
our financial condition and results of operations.
Legal and other proceedings could result in financial losses or harm our businesses.
We may be involved in legal and other proceedings in our ordinary course of business. Legal and other
proceedings may cause us to incur substantial costs or fines, utilise a significant portion of our resources
and divert management’s attention from our day-to-day operations, or materially modify or suspend our
business operations, any of which could materially and adversely affect our financial condition, results of
operations and business prospects. A significant judgment or regulatory action against us or a material
disruption in our business arising from adverse adjudications in proceedings against our directors, officers
or employees would have a material adverse effect on our liquidity, business, financial condition, results
of operations, reputation and prospects.
If our security measures or those of our third-party cloud computing platform provider, or other
third-party service providers, are breached, our data, IT systems, and services may be perceived as
not being secure.
Our services involve the storage and transmission of our customers and their end-customers’ proprietary and
other sensitive data, including financial information and other personally identifiable information. Our
security measures may be breached as a result of efforts by individuals or groups of hackers and
sophisticated organisations, including by fraudulently obtaining system information from our employees or
customers. Our security measures could also be compromised by employee error or malfeasance, which
could result in someone obtaining unauthorised access to, or denying authorised access to, our IT systems,
our customers’ data or our data, including our intellectual property and other confidential business
information.
Because the techniques used to breach, obtain unauthorised access to, and sabotage IT systems change
frequently, grow more complex over time, and are generally not recognised until launched against a target,
we may be unable to anticipate or implement adequate measures to prevent such techniques. In addition,
our internal IT systems continue to evolve, and we are often early adopters of new technologies and new
ways of sharing data and communicating internally and with partners and customers, which increases the
complexity of our IT systems. In addition, our customers may authorize third-party technology providers
to access their customer data, and some of our customers may not have adequate security measures to
protect their data that is stored on our servers. Because we do not control our customers or third-party
technology providers, or the processing of such data by third-party technology providers, we cannot ensure
the integrity or security of such transmissions or processing. Malicious third parties may also conduct
attacks designed to temporarily deny customers access to our services.
A security breach could expose us to a risk of loss or inappropriate use of proprietary and sensitive data,
or the denial of access to this data. A security breach could also result in a loss of confidence in the security
of our services, damage our reputation, negatively impact our future sales, disrupt our business and lead to
legal liability. Finally, the detection, prevention and remediation of known or potential security
vulnerabilities, including those arising from third-party hardware or software, may result in additional
direct and indirect costs. For example, we may be required to purchase additional infrastructure or our
remediation efforts may degrade the performance of our solutions.
28
In the event of a system outage and physical data loss, the performance of our platform, services and
solutions would be materially and adversely affected. The satisfactory performance, reliability and
availability of our platform, services and solutions and the technology infrastructure that underlies them are
critical to our operations and reputation and our ability to retain and attract customers. Our operation
depends on its ability to protect our system against damage or interruption from natural disasters, power or
telecommunications failures, air quality issues, environmental conditions, computer viruses or other
attempts to harm our systems, including criminal acts and similar events. There is no assurance that we
would not experience interruptions and delays in our service or would not incur additional expenses in
arranging new facilities.
Complying with evolving laws and regulations in connection with cybersecurity, information security,
data privacy and protection and other related rules and requirements could be costly, and such laws,
regulations, rules and requirements are subject to changes and further interpretations. Any failure or
perceived failure to comply with such laws, regulations, rules or requirements could result in legal
proceedings, suspension or disruption of operations, negative publicity, increased operating costs or
adverse changes to business, or otherwise adversely affect our business.
Our business requires us to collect, use, store, transmit and share confidential information, including
personally identifiable information, with respect to our customers. The PRC government has in recent years
tightened the regulation of the collection, storage, sharing, use, disclosure and protection of personal data
and information.
The PRC Cybersecurity Law ( ), which became effective in June 2017,
created China’s first national-level data protection framework for “network operators”, which may
potentially include all organizations in China that provide services over the internet or through other types
of information network. Numerous regulations, guidelines and other measures have been and are expected
to be adopted under the PRC Cybersecurity Law. Any actual or perceived non-compliance with the relevant
cybersecurity laws and regulations, may result in administrative penalties, including fines, a shut-down of
our business, suspension of our offerings and revocation of requisite licenses, as well as reputational
damage or legal proceedings or actions against us, which may have material adverse effects on our business,
financial condition or results of operations.
On 10 June 2021, the Standing Committee of the National People’s Congress (
) promulgated the PRC Data Security Law ( ). For more details, please
see “PRC Laws and Regulations – Regulations on Cybersecurity and Data Protection”.
On 20 August 2021, the Standing Committee of the National People’s Congress promulgated the Personal
Information Protection Law ( ) (the “PIPL”) which came into effect in
November 2021. In addition to other rules and principles of personal information processing, the PIPL
specifically provides rules for processing sensitive personal information. Sensitive personal information
refers to personal information that, once leaked or illegally used, could easily lead to the infringement of
human dignity or harm to the personal or property safety of an individual. Only where there is a specific
purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may
personal information processors process sensitive personal information. A personal information processor
shall inform the individual of the necessity of processing such sensitive personal information and the impact
thereof on the individual’s rights and interests. We may store and process sensitive personal information,
such as ID number and bank account information. As the PIPL may be further interpreted along with the
regulatory development, we cannot assure you that we can comply with the PIPL in all respects and
regulatory authorities may order us to rectify or terminate our current practice of collecting and processing
sensitive personal information. We may also become subject to fines and/or other penalties which may have
material adverse effect on our business, operations and financial condition.
On 28 December 2021, the Cyberspace Administration of China (the “CAC”), the NDRC, the Ministry of
Industry and Information Technology of the PRC (the “MIIT”), and several other administrations jointly
promulgated the Measures for Cybersecurity Review ( ), or the Review Measures,
which became effective on 15 February 2022. The Review Measures has replaced its previous version
promulgated on 13 April 2020. For more details, please see “PRC Laws and Regulations – Regulations on
Cybersecurity and Data Protection”.
29
On 7 July 2022, the CAC promulgated the Measures on Security Assessment of Cross-border Data Transfer
( ) (the “Data Export Measures”) which became effective on 1 September
2022. The Data Export Measures require that any data processor which exports personal information
exceeding certain volume threshold under such measures shall apply for security assessment by the CAC
before transferring any personal information abroad. The security assessment requirement also applies to
any transfer of important data outside of China or transfer of personal information by an operator of critical
information infrastructure or a data processor processing the personal information of more than one million
individuals. On 22 March 2024, the CAC promulgated the Provisions on Promoting and Regulating
Cross-border Data Flows ( ), effective on the date of promulgation. The
provisions provide several exemptions and revise the above thresholds for undergoing security assessments.
As there may be further interpretations of such measures, we cannot assure you that we will be able to
comply with such regulations in all respects, and we may be ordered to rectify or terminate any actions that
are deemed illegal by regulatory authorities.
We may incur substantial costs to comply with such laws and regulations, to communicate with our users
and address their concerns in cybersecurity and data privacy and protection, and to improve our information
technology system. We may from time to time be required to rectify or further improve our internal
measures regarding cybersecurity and data privacy and protection. However, such compliance measures we
implement may turn out to be ineffective. Any failure or perceived failure by us to comply with all
applicable laws and regulations regarding cybersecurity and data privacy and protection, or any failure or
perceived failure of our business partners to do so, or any failure or perceived failure of our employees to
comply with relevant laws and regulations, may result in negative publicity and legal proceedings or
regulatory actions against us, and could result in fines, revocation of licenses, suspension of relevant
operations or other legal or administrative penalties, which may in turn damage our reputation among our
existing and potential customers and subject us to fines and damages, which could have a material adverse
effect on our business, financial condition and results of operations.
We may not be able to prevent fully or to detect timely any money laundering and other illegal or
improper activities.
We are required to comply with applicable laws and regulations relating to anti-money laundering and
anti-terrorism in the PRC and other jurisdictions where we operate. We are not currently aware of any
money laundering or other major illegal or improper activities engaged in by, or involving any employee
of, our domestic or overseas branches or subsidiaries which may materially and adversely affect our
business, financial condition and results of operations. However, we cannot assure you that such activities
will not take place in the future or that we can completely eradicate money laundering activities, activities
carried out by terrorists and terrorist-related organisations or other improper activities carried out by
organisations or individuals through the Group and certain entities within the Group have been (and may
in the future be) subject to fines and other sanctions in respect of such activities. As we have many branches
in the PRC and elsewhere, our employees or third parties that are subject to our policies may from time to
time be involved in improper conduct. In such situations where such improper conduct is discovered or
known, such activities will be handled in accordance with our internal policies, and if required, by the
applicable authorities under the applicable laws, regulations or public policy.
If we fail, in a timely manner, to detect and prevent money laundering activities or other illegal or improper
activities, relevant regulatory agencies may have the power and authority to impose sanctions on us
(including but not limited to fines, revocation of licences and/or other sanctions), which may materially and
adversely affect our business, financial condition and results of operations.
30
We or our customers may be subject to OFAC or other penalties if we are determined to have violated
any OFAC regulations or similar sanctions.
The United States imposes a range of economic sanctions against certain foreign countries, terrorists,
international narcotics traffickers and those engaged in activities related to the proliferation of weapons of
mass destruction. The U.S. sanctions are intended to advance certain U.S. foreign policy and national
interests, such as discouraging certain countries from acquiring weapons of mass destruction or engaging
in human rights abuses. The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)
is the principal government agency charged with administering and enforcing U.S. economic sanctions
programmes. These economic sanctions, as administered by OFAC, generally apply to U.S. entities and, in
certain cases, to foreign affiliates of U.S. entities, or to transactions that involve, in some manner, U.S.
products or otherwise come within the jurisdiction of the United States. The United Nations Security
Council, the European Union, the United Kingdom, the PRC and other governments and international or
regional organisations also administer similar economic sanctions. In addition, our Group may from time
to time engage in business activities in countries or with entities or involving specific sectors of certain
countries that are the subject of certain sanctions. Notwithstanding that such business activities may not
themselves be subject to sanctions, our Group may face secondary sanctions if it is determined to be
providing material support to countries or entities that are the subject of sanctions. If our Group engages
in any prohibited transactions by any means, or if it is otherwise determined that any of our transactions
violated OFAC-administered or other sanctions regulations, we could be subject to penalties, and our
reputation and ability to conduct future business in the United States or with U.S. entities, or in other
affected jurisdictions, could be affected, which may materially and adversely affect our business, financial
condition and results of operations.
RISKS RELATING TO FINANCIAL BUSINESS, INCLUDING LIFE AND HEALTH INSURANCE,
PROPERTY AND CASUALTY INSURANCE, BANKING AND ASSET MANAGEMENT
Our financial business is subject to interest rate risks.
Our businesses, particularly the insurance and banking businesses, are subject to interest rates risks. In
respect of the insurance business, the profitability of some of the Group’s products and the Group’s
investment returns are highly sensitive to interest rate levels and fluctuations, and changes in interest rates
could adversely affect the Group’s investment returns and results of operations. In periods of rising interest
rates, increased investment yields will increase the returns on newly added assets in the Group’s investment
portfolios. However, surrenders and withdrawals of existing insurance policies may also increase as
policyholders seek to buy products with perceived higher returns. These surrenders and withdrawals may
result in cash payments requiring the sale of invested assets at a time when the prices of those assets are
adversely affected by the increase in market interest rates, potentially resulting in realised investment
losses. These cash payments to policyholders would result in a decrease in total invested assets and a
potential decrease in the net income. In addition, the demand for the Group’s life insurance products, in
particular the long-term savings type policies, may decrease as investors seek more profitable alternatives.
Moreover, a rise in interest rates would adversely affect the Group’s shareholders’ equity in the immediate
financial year due to a decrease in the fair value of the Group’s fixed income investments. Such adverse
effects would directly and adversely impact the solvency margin ratio of the Group’s insurance operations.
Conversely, if interest rates decrease or remain at low levels, we may need to reinvest proceeds from
investments that have matured or have been prepaid or sold at lower yields, reducing the Group’s
investment margin and adversely affecting the Group’s profitability. In addition, borrowers may prepay or
redeem fixed income securities and commercial or other loans in the Group’s investment portfolio with
greater frequency in order to borrow at lower market rates, which exacerbates such risk. During periods of
declining interest rates, life insurance and annuity products may be relatively more attractive investments
to consumers, resulting in increased premium payments on products with flexible premium features,
repayment of policy loans and increased persistency, or a higher percentage of insurance policies remaining
in-force from year to year, during a period when the Group’s new investments carry lower returns.
31
Like other insurance companies, we seek to manage interest rate risk through managing the average
duration of our investment assets and the insurance policy liabilities supported by these assets. Matching
the duration of our assets to their related liabilities reduces our exposure to changes in interest rates,
because the effect of the changes will largely be offset against each other. However, restrictions under the
insurance laws of PRC on the assets classes in which we may invest, as well as the limited availability of
long-duration investment assets in the markets in which we invest, have resulted in the duration of our
assets being shorter than that of our liabilities. Moreover, the PRC financial markets may not provide an
effective means for us to hedge our interest rate risk through financial derivative products. We believe that,
with the gradual easing of the investment restrictions imposed on insurance companies in the PRC, our
ability to match the duration of our assets to that of our liabilities will improve. We also seek to manage
the risk of duration mismatch by focusing on product offerings whose maturity profiles are in line with the
duration of investments available to us in the prevailing investment environment. However, if we are unable
to match more closely the duration of our assets and liabilities, we will continue to be exposed to risks
related to interest changes, which may materially and adversely affect our financial condition and results
of operations.
With respect to the Group’s banking business, our net interest revenue is sensitive to adjustments in the
benchmark interest rates set by the PBOC. The PBOC publishes and adjusts benchmark interest rates on
loans and deposits from time to time. We cannot assure you that we will be able to diversify our businesses
and adjust the composition of our asset and liability portfolios and our pricing mechanism to enable us to
effectively respond to the changes in interest rates in the future. In addition, adjustments made by the PBOC
to the benchmark interest rates on loans or deposits, or any changes in market interest rates, may negatively
impact our financial condition and results of operations. For example, changes in the PBOC benchmark
interest rates could affect the average yield on our interest-earning assets and the average cost on our
interest-bearing liabilities to different extents and may narrow our net interest margin, leading to a reduction
in our net interest revenue. In addition, an increase in interest rates for loans could result in increases in
the financing costs of Ping An Bank’s customers, reduce overall demand for loans and increase the risk of
customer default, while a reduction in interest rates for deposits could cause our depositors to withdraw
their funds from us. We are also engaged in trading and investment activities involving some financial
instruments in the domestic market. As the derivatives market has yet to develop in the PRC, risk
management tools available to us for hedging market risks are limited. Income from these activities may
fluctuate due to, among other things, changes in interest rates and foreign currency exchange rates. For
example, increases in interest rates will cause the value of our fixed-rate securities to decrease, which may
materially and adversely affect our results of operations and financial condition.
In general, interest rates are highly sensitive to many factors, including governmental monetary and tax
policies, domestic and international economic and political considerations, trade surpluses and deficits,
regulatory requirements and other factors beyond the Group’s control. Any government measures in
response to changes in the macroeconomic environment may have a material adverse effect on the Group’s
business, financial condition and results of operations.
We are also subject to currency risk, the risk of loss resulting from changes in foreign currency exchange
rates. Fluctuations in exchange rates between the Renminbi and other currencies in which the Group
conducts business may affect its financial position and results of operations. The foreign currency risk
facing the Group mainly comes from movements in the USD/RMB and HKD/RMB exchange rates.
Although the Group sets limitation to its position of foreign currency, monitors the size of foreign currency
position, and limits the foreign currency position within the threshold set by utilizing hedging strategy, the
value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other
factors, changes in the PRC’s and international political and economic conditions. Conversely, any
devaluation of Renminbi may adversely affect the value of our assets in Renminbi terms, which may
materially and adversely affect our financial condition and results of operations.
32
Differences between actual benefits and claims experience and underwriting and reserving
assumptions may require us to increase our reserves.
We establish and carry, as balance sheet liabilities, reserves of how much we will need to pay for future
benefits and claims. Consequently, our earnings depend significantly upon the extent to which our actual
claims experience is consistent with the assumptions and estimate used in setting the prices for our products
and establishing the reserves for our obligations for future policy benefits and claims. To the extent that
actual benefits or claims experience is less favourable than our underlying assumptions and estimates used
in establishing our reserves, we may be required to increase our reserves. Any such increase in reserves will
result in additional charges and may reduce our net income. The process of estimating reserve liabilities is
a difficult and complex exercise involving many variables and subjective judgments. Due to the nature of
the underlying risks and the high degree of uncertainty associated with the determination of the liabilities
for unpaid policy benefits and claims, we cannot determine precisely the amount which we will ultimately
pay to settle these liabilities. These amounts may vary from the estimated amounts, particularly when those
payments may not occur until well into the future. In addition, variations in benefits or claims experience
and fluctuation on benefits or claims could cause actual underwriting experience, such as discontinuance,
mortality, expense and morbidity rates, to be different from actuarial assumptions used in the pricing of our
insurance products. We charge or credit changes in our reserves to expenses in the period the reserves are
established or re-estimated. If the reserves originally established for future policy benefits prove
inadequate, we must increase our reserves, which may have a material adverse effect on our business,
financial condition and results of operations.
We may be subject to administrative sanctions, fines and other penalties for using our funds in a
manner that is inconsistent with, or impermissible under, the applicable limitations set forth in the
PRC Insurance Law and the National Financial Regulatory Administration (the “NFRA”)
regulations.
The PRC Insurance Law and NFRA regulations have strict limitations on the use of funds by PRC insurance
companies. In particular, the PRC Insurance Law and NFRA regulations strictly restrict PRC insurance
companies from, among other things, using their funds to engage in securities or other activities that are
outside of the scope of normal insurance operations. If we use funds in a manner that is inconsistent with,
or impermissible under, the applicable limitations set forth under the PRC Insurance Law and NFRA
regulations, we may be subject to material administrative sanctions, fines or other penalties for such use of
our funds; any such administrative sanctions, fines or other penalties may have a material adverse effect on
our business, financial condition and results of operations.
Our business and corporate governance are subject to extensive regulations and exposed to
compliance risks. Changes in laws, regulations and regulatory policies from time to time could have
a material adverse effect on our shareholding, capital, business, financial condition, results of
operations and prospects.
Our businesses and corporate governance are directly affected by the changes in the PRC’s banking and
insurance policies, laws and regulations. Compliance with applicable laws, rules and regulations may
restrict our business activities. Furthermore, these laws, rules and regulations may change from time to time
and we cannot assure you that future legislative or regulatory changes, including deregulation, would not
have a material adverse effect on our business, financial condition and results of operations. We cannot
predict at this time the effect of potential regulatory changes on our business and profitability. In addition,
some of the laws, rules and regulations that we are subject to are relatively new and therefore their
interpretation and application remains evolving. Moreover, failure to comply with any of the numerous
laws, rules and regulations to which we are subject could result in fines, suspension or, in extreme cases,
business license revocation, which could materially and adversely affect us. In particular, future laws, rules
and regulations, or the interpretation of existing or future laws, rules and regulations, may have a material
adverse effect on our shareholding, capital, business, financial condition and results of operations.
33
In particular, according to the Administrative Measures for the Equity of Insurance Companies (
), we are required to obtain prior approval from the NFRA for capital increase after
receiving the contribution of capital and afterwards complete the reporting procedure for the corresponding
amendments to the articles of associations. Separately, there are certain restrictions in respect of the
ownership of shares in an insurance company. For instance, the change of a shareholder holding 5% or more
of the equity of an insurance company shall be approved by the NFRA. In addition, where an investor holds
shares of a listed insurance company, with the shareholding percentage thereof reaching the threshold of
5%, 15% and one-third respectively of the total share capital of the insurance company, such investor shall
notify the insurance company in writing within 5 business days from the trading day, and the insurance
company shall apply to the NFRA for approval thereof within 10 business days of receiving the notice. In
such cases, there is no assurance that we are able to obtain the approvals from the NFRA in a timely manner
or at all. In addition, we cannot guarantee that new rules or regulations promulgated in the future will not
impose any additional requirements on us. Any such failure or delay may subject us to regulatory measures
from the NFRA which may have a material adverse effect on our shareholding, capital, business and
financial condition, and results of operations.
Catastrophic losses could materially reduce our profitability or cash flow.
Our insurance businesses are exposed to risks of unpredictable liabilities for insurance claim payments
arising out of catastrophic events, which can be unpredictable by nature. Catastrophes can be caused by
various natural hazards, including heavy rains, hurricanes, typhoons, floods, earthquakes, severe weather,
fires and explosions. Catastrophes can also be man-made, such as terrorist attacks, wars and industrial or
engineering accidents. In addition, a health epidemic or pandemic such as the COVID-19, the severe acute
respiratory syndrome (SARS), the H5N1 strain of bird flu, or the avian influenza such as H7N9 or H1N1
can adversely affect the Group’s insurance business.
Catastrophes could also result in losses in our investment portfolios, due to, among other things, the failure
of the Group’s counterparties to perform and significant volatility or disruption in financial markets or
declines in equity stock prices, and could in turn adversely affect our profitability. Over the last several
years, changing climate conditions have added to the unpredictability and frequency of natural disasters in
certain parts of the world, including Asia, and have created additional uncertainties as to future trends and
exposures. It is possible that both the frequency and severity of natural disasters may increase in the future.
Such natural disasters may result in losses for our insurance business. Although we carry some reinsurance
to reduce the Group’s catastrophic loss exposures, due to limitations in the underwriting capacity and terms
and conditions of the reinsurance market as well as difficulties in assessing our exposures to catastrophes,
the reinsurance may not be sufficient to protect the Group adequately against losses. As a result, one or more
catastrophic events could materially affect the Group’s profits and cash flows and weaken our financial
condition.
If we are not able to obtain reinsurance on a timely basis or at all, we may be required to bear
increased risks or reduce the level of our underwriting commitments.
Our ability to obtain reinsurance on a timely basis and at a reasonable cost is subject to a number of factors,
including prevailing market conditions, that are beyond our control. The availability and cost of reinsurance
may affect the volume of our business as well as our profitability. In particular, we may be unable to
maintain our current reinsurance coverage or to obtain other reinsurance coverage in adequate amounts and
at favourable rates. If we are unable to renew our expiring coverage or to obtain new reinsurance coverage,
either our net risk exposure would increase or, if we are unwilling to bear an increase in net risk exposures,
our overall underwriting capacity and the amount of risk we are able to underwrite would decrease. To the
extent we are not able to obtain reinsurance on a timely basis and at a reasonable cost, or at all, our business,
financial condition and results of operations would be materially and adversely affected.
34
A default by one or more of our reinsurers could materially and adversely affect our financial
condition and results of operations.
Like other major insurance companies in the world, we transfer some of the risks we assume under the
insurance policies we underwrite to reinsurance companies in exchange for a portion of the premiums we
receive in connection with the underwriting of these policies. Although reinsurance makes the reinsurer
liable to us for the risk transferred, it does not discharge our liability to our policyholders. As a result, we
are exposed to credit risk with respect to reinsurers in all lines of our insurance business. The Group’s
reinsurers may default on their obligations to the Group due to various reasons such as bankruptcy, lack of
liquidity, downturns in the economy, operational failure, or fraud. The Group is also subject to the risk that
its rights against the reinsurers may not be enforceable in all circumstances. In particular, a default by one
or more of our reinsurers under our existing reinsurance arrangements would increase our financial losses
arising out of a risk we have insured, which would reduce our profitability and may adversely affect our
liquidity position. In the event of a catastrophic loss that affects a significant number of PRC insurers,
reinsurance companies may not be able to pay us on a timely basis, or at all.
If our reinsurers fail to pay us or fail to pay us on a timely basis, our financial condition and results of
operations could be materially and adversely affected.
Our ability to comply with minimum solvency requirements and capital adequacy requirements in
respect of our insurance and banking business, respectively, are affected by a number of factors, and
our compliance may force us to raise additional capital, which could increase our financing costs or
be dilutive to our existing investors, or reduce our growth rate.
Our insurance business is generally required by applicable law to maintain solvency at a level in excess of
statutory minimum standards. The solvency of the Company and our PRC subsidiaries is affected primarily
by the solvency margins each subsidiary is required to maintain, which are in turn affected by the volume
and type of new insurance policies the Group sells, the composition of our in-force insurance policies and
by regulations on the determination of statutory reserves. Our subsidiaries conducting insurance business
are required to maintain minimum solvency levels. The solvency ratios of the Company and our subsidiaries
are also affected by a number of other factors, including the profit margin of our products, returns on our
investments, underwriting and acquisition costs and policyholder and shareholder dividends. If the solvency
margin of the Company or any of our PRC subsidiaries does not satisfy the relevant requirements, the
relevant authorities may impose a range of regulatory sanctions depending on the degree of deficiency in
such subsidiary’s solvency margin. In addition, the solvency ratios of the Company and our PRC
subsidiaries may impact the Group’s operating investment activities in the PRC. For example, under the
PRC regulations, insurance companies are required to have sufficient capital commensurate with their risk
exposures and scale of business to ensure a comprehensive solvency ratio of no less than 100% and the core
solvency ratio of no less than 50%. If (i) our capital and profit cannot continue to support the growth of
our business in the future, (ii) the required statutory solvency ratios become more stringent, (iii) our
financial condition or results of operations deteriorate, or (iv) for other reasons we fail to meet the relevant
minimum solvency ratio requirements, the NFRA may adopt regulatory measures against us depending on
the different circumstances, such as ordering us to increase capital, restricting the distribution of dividends
to shareholders, prohibiting setting up new branches, restricting our current business scope, restricting
development of new business and restricting the remuneration level of senior management.
In addition, our banking business is subject to capital adequacy regulations. According to the Administrative
Measures for the Capital of Commercial Banks ( ) issued by the NFRA on 26
October 2023 and officially implemented on 1 January 2024, the NFRA will classify commercial banks
based on their capital adequacy and take corresponding regulatory measures in aspects such as business
entry, scale expansion, and establishment of institutions. The above measures stipulate that the capital
adequacy ratio of commercial banks shall not be lower than 8%, the tier-one capital adequacy ratio shall
not be lower than 6%, and the core tier-one capital adequacy ratio shall not be lower than 5%.
35
With the rapid development of business and the expansion of asset scale, the capital consumption of
commercial banks will continue to increase, which may affect the level of capital adequacy. Regulatory
authorities may implement stricter capital supervision requirements in the future. If the capital adequacy
level of our bank subsidiary further decreases, it may fail to meet the minimum capital adequacy
requirements of regulatory authorities, and our bank subsidiary may be required to make corrections. These
measures may have a significant adverse impact on our reputation, financial condition, and operating
performance.
We aim to maintain a stable and reasonable capital adequacy level in order to support the implementation
of our business development and strategic planning. However, certain adverse changes may lead to
fluctuations in our Capital Adequacy Ratio. Such adverse changes include, but are not limited to, an
increase of risk weighted assets due to rapid business expansion, an increase of capital-deducting equity
acquisitions and investments, potential deterioration in our asset quality, a decline in the value of our
investments and an increase in the minimum Capital Adequacy Ratio requirement by the NFRA, as well as
changes in the computational method for Capital Adequacy Ratio applied by the NFRA. We may be required
to raise additional core or supplementary capital in the future in order to meet the minimum NFRA capital
adequacy requirements.
To raise additional capital in order to meet the minimum NFRA capital adequacy requirements or the
solvency requirements imposed on our insurance business, we may need to issue additional equity securities
that qualify as core capital or other qualifying instruments. However, our ability to obtain additional capital
may be restricted by a number of factors, including our future business, financial condition, results of
operations and cash flows, necessary government regulatory approvals, our credit rating, general market
conditions for capital-raising activities by commercial banks and other financial institutions, and economic,
political and other conditions both within and outside the PRC. There is no assurance that we will be able
to obtain additional capital on commercially acceptable terms in a timely manner or at all. As such, there
can be no assurance that we will continue to be able to comply with our capital adequacy requirements or
solvency requirements. If our Capital Adequacy Ratio does not meet the regulatory requirements or the
solvency requirements, the regulatory authorities may adopt certain corrective measures including, but not
limited to, restricting the growth of our risk-bearing assets, suspending all of our operation activities other
than low-risk business, as well as restricting our dividend payment, which may materially and adversely
affect our business, financial condition and results of operations.
We are subject to credit risk from our counterparties.
We are subject to credit risk from our debtors and counterparties. We are exposed to credit risks primarily
associated with its deposit arrangements with commercial banks, loans and advances to customers, financial
assets at amortized cost and debt financial assets at fair value through other comprehensive income,
reinsurance arrangement with reinsurers, policy loans, margin financing, financial guarantee contracts and
loan commitments, etc. We may suffer losses due to the inabilities of debtors or counterparties to fulfill their
contractual obligations or by the adverse changes in their credit conditions. Any such losses may have a
material adverse effect on our financial condition and results of operations, as well as its liquidity and
profitability.
In addition, our investment portfolio in respect of our asset management business includes investments in
the financial services sector and other market sectors that have recently experienced significant price
fluctuations and defaults. There is no assurance that the Group’s asset management business will not suffer
losses due to defaults from certain counterparties related to our investment activities, such as trading
counterparties, counterparties under swaps and other derivative contracts and other financial intermediaries
and guarantors. Any such losses may have a material adverse effect on the Group’s financial condition and
results of operations, as well as its liquidity and profitability.
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Our businesses are exposed to liquidity risks.
Our businesses are exposed to liquidity risk. The Group’s insurance business is exposed to liquidity risk on
insurance policies that permit surrender, withdrawal or other forms of early termination. Although the
Group seeks to manage its liquidity risk by matching to the extent possible the duration of its investment
assets with the duration of its insurance policies, there is no guarantee that we are able to meet our payment
obligations and fund our lending and investment operations on a timely basis. Our banking business is
exposed to potential liquidity risk and we may not be able to maintain sufficient liquidity level to satisfy
various funds requirement and to face adverse market status. If we are required to dispose of assets on short
notice, we could be forced to sell such assets at prices significantly lower than the prices as recorded in our
consolidated financial statements, which may have a material adverse effect on our business, financial
condition and results of operation.
We may incur significant losses on our investments, which may cause our investment income to
decrease, and could have a material adverse effect on our financial condition and results of
operations.
Our investment returns, and thus our profitability, may be adversely affected from time to time by
conditions affecting our specific investments and, more generally, by market fluctuations as well as general
economic, market and political conditions. In particular, our ability to make a profit on our insurance
products depends in part on the returns on investments supporting our obligations under these products, and
the value of specific investments may fluctuate substantially. Our investment income had been affected in
the past by decreases in the fair value of equity investments, as well as fluctuations in realised gains and
losses on the sale of investments, resulting from movements in market interest rates, unfavourable
conditions in the PRC securities markets and other factors. Future movements in market interest rates,
unfavourable conditions in the PRC securities markets or other factors may cause our investment income
to decrease significantly, and could have a material adverse effect on our financial condition and results of
operations.
We are subject to risks related to changes in monetary policy.
PRC monetary policy is set by the PBOC in accordance with the macroeconomic environment. In addition,
the PBOC controls monetary supply through open market operations and adjustments to the deposit reserve
ratio and rediscount rate in order to achieve targeted control over the economy. As commercial banks are
a major means to implement monetary policy, changes in monetary policy will affect their operations and
profitability. If we cannot timely adjust our operating strategy in response to the changes in monetary
policy, our business, financial condition and results of operations may be materially and adversely affected.
RISKS RELATING TO TECHNOLOGY BUSINESS
Our technology business is subject to extensive and evolving regulatory requirements, non-compliance
with which, or changes in which, may materially and adversely affect our business and prospects.
Due to the complex nature of our technology business, we are subject to legal and regulatory requirements
of multiple industries in the PRC. These industries primarily include the Internet, finance, internet finance,
healthcare, internet health and automotive industries. Many of these regulatory requirements are evolving,
and their interpretation and enforcement involve significant uncertainty.
In addition, the PRC regulatory framework governing financial technology services is evolving. New laws
or regulations may be promulgated, which could impose new requirements or prohibitions that render our
operations or our technologies non-compliant. Due to uncertainties and complexities of the regulatory
environment, we cannot assure you that regulators will interpret laws and regulations the same way we do,
or that we will always be in full compliance with applicable laws and regulations. In the event that we must
remedy any non-compliance, we may be required to modify our business models as well as product and
service offerings in a manner that undermines our offerings’ attractiveness to our users. We may also
37
become subject to fines or other penalties or, if we determine that the requirements to operate in compliance
are overly burdensome, we may elect to terminate the non-compliant operations. In each case, our business,
financial condition and results of operations may be materially and adversely affected. Furthermore, the
introduction of new services and products may require us to comply with additional, yet undetermined, laws
and regulations. Compliance may require obtaining appropriate permits, licenses or certificates as well as
expending additional resources to monitor developments in the relevant regulatory environment. The failure
to adequately comply with these future laws and regulations may delay, or possibly prevent, some of our
products or services from being offered to users, which may have a material adverse effect on our
technology business, financial condition and results of operations.
Any lack of requisite approvals, licenses or permits applicable to our technology business may have
a material and adverse effect on our business, financial condition and results of operations.
Our technology business is subject to governmental supervision and regulation by various PRC
governmental authorities, including, but not limited to, the Ministry of Commerce of the PRC, the MIIT,
the National Health Commission of the PRC, the National Medical Products Administration, the Ministry
of Culture and Tourism of the PRC, the National Radio and Television Administration, the State
Administration of Market Regulation (the “SAMR”), the CAC and the corresponding local regulatory
authorities. Such government authorities promulgate and enforce laws and regulations that cover a variety
of business activities that our operations concern. These regulations in general regulate the entry into, the
permitted scope of, as well as approvals, licenses and permits for, the relevant business activities. Due to
uncertainties in the regulatory environment of the industries in which we operate, there can be no assurance
that we would be able to maintain our existing approvals, permits and licenses or obtain any new approvals,
permits and licenses if required by any future laws or regulations. If we fail to obtain and maintain
approvals, licenses or permits required for our business, we could be subject to liabilities, penalties and
operational disruption and our business could be materially and adversely affected. We may also be liable
for fines or a penalty of confiscating illegal gains, which may materially and adversely affect our business,
financial condition and results of operations.
The technologies we use may contain undetected errors, which could result in customer
dissatisfaction, damage to our reputation and loss of customers and business partners.
The technology solutions we offer may be built on huge stacks of data, so we adopt sophisticated and
innovative technologies to address our operating needs, predict operating patterns and help make decisions
in terms of business strategies and implementation plans. We aim to make our operations and our solutions
more streamlined, automated and cost-effective by using advanced technologies including AI, blockchain,
cloud and big data, and the application of these technologies in our solutions is still under development. We
may encounter technical obstacles, and we may discover problems that prevent our technologies from
operating properly, which could adversely affect our information infrastructure and other aspects of our
business where our technologies are applied. If our solutions do not function reliably or fail to achieve our
customers’ or their end-customers’ expectations in terms of performance, we may lose existing customers
and business partners or fail to attract new ones, which may damage our reputation and adversely affect our
business.
Material performance problems, defects or errors in our existing or new software, applications and solutions
may arise and may result from the interface between our solutions and systems and data that we did not
develop, the function of which is beyond our control, or defects and errors that were undetected in our
testing. These types of defects and errors, and any failure by us to identify and address them, could result
in a loss of revenue or market share, diversion of development resources, harm to our reputation and
increased service and maintenance costs. Defects or errors may discourage existing or potential customers
from utilizing our solutions. Correcting these types of defects or errors could prove to be impossible or
impracticable. The costs incurred in correcting any defects or errors may be substantial and could have a
material adverse effect on our business, financial condition and results of operations.
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We may not be able to prevent others from unauthorised use of our intellectual property, which could
harm our business and competitive position.
We regard our patents, copyrights, trademarks, trade secrets, and other intellectual property as critical to our
technology business. Unauthorised use of our intellectual property by third parties may adversely affect our
technology business and reputation. We rely on a combination of intellectual property laws and contractual
arrangements to protect our proprietary rights. It is often difficult to register, maintain, and enforce
intellectual property rights in countries or regions with less developed regulatory regimes or inconsistent
and unreliable enforcement mechanisms. Sometimes laws and regulations are subject to interpretation and
enforcement and may not be applied consistently due to the lack of clear guidance on statutory
interpretation. In addition, our contractual agreements may be breached by our counterparties, and there
may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to
effectively protect our intellectual property rights or to enforce our contractual rights in the PRC and other
jurisdictions in which our technology business operates. Detecting and preventing any unauthorised use of
our intellectual property is difficult and costly, and the steps we have taken may be inadequate to prevent
infringement or misappropriation of our intellectual property. If we resort to litigation to enforce or protect
our intellectual property rights, such litigation could result in substantial costs and a diversion of our
managerial and financial resources. There can be no assurance that we will prevail in such litigation. In
addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered
by, our competitors, and we would have no right to prevent others’ use of them.
We may be subject to intellectual property infringement claims, which may be expensive to defend
and may disrupt our business and operations.
We cannot be certain that our operations or any aspects of our technology business do not or would not
infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third
parties. We in the future may be subject to penalties, legal proceedings and claims relating to the intellectual
property rights of others. In addition, there may be other third-party intellectual property that is infringed
by our solutions, services, products or other aspects of our technology business. There could also be
intellectual properties that we are not aware of that our solutions, services or products may inadvertently
infringe. There can be no assurance that our patent applications will be approved, that any issued patents
would adequately protect our intellectual property, or that such patents would not be challenged by third
parties or found by competent authority to be invalid or unenforceable.
There can be no assurance that holders of patents purportedly relating to some aspects of our technology
platform or business, if any such holders exist, would not seek to enforce these patents against us in the PRC
or any other jurisdictions. Furthermore, the application and interpretation of PRC patent laws and the
procedures and standards for granting patents in the PRC are still evolving and are uncertain, and there can
be no assurance that PRC courts or regulatory authorities would agree with our analysis. If we are found
to have violated the intellectual property rights of others, we may be subject to liability for our infringement
activities or may be prohibited from using such intellectual property, and we may incur licensing fees or
be forced to develop alternatives of our own. In addition, we may incur significant expenses, and may be
forced to divert management’s time and other resources from our business and operations to defend against
these third-party infringement claims, regardless of their merits. Successful infringement or licensing
claims made against us may result in significant monetary liabilities and may materially disrupt our
business and operations by restricting or prohibiting our use of the intellectual property in question, which
may materially and adversely affect our technology business, financial condition and results of operations.
Registering, managing and enforcing intellectual property rights in the PRC is often difficult. Statutory laws
and regulations may not be applied consistently due to the lack of clear interpretation guidance. We have
filed registration applications for certain trademarks that we use in our operations, including the logo for
our website and mobile apps. However, third parties may file applications to register the same or similar
trademarks that we are applying for. In addition, third parties may object our registration applications, and
the relevant trademark authority may not rule in our favor in such disputes. If our applications are rejected
by the relevant trademark authority, we may be prohibited from using those trademarks, including the logo
for our website and mobile apps in our business operations, and we may need to change the logo of our
website and mobile apps, which may have an adverse effect on our business and operations.
39
We rely on third parties for various aspects of our technology business and the solutions that we offer.
Our business, results of operation, financial condition and reputation may be materially and adversely
affected if these third parties do not continue to maintain or expand their relationship with us, or if they fail
to perform in accordance with the terms of our contracts.
We rely on third parties for various aspects of our technology business and the technological solutions we
offer. For example, we rely on computer hardware, software, and cloud services, internet and
telecommunication services, and third-party-supplied data.
We expect to continue to rely on these third parties to supplement our capabilities for a significant period
of time if not indefinitely. Therefore, in order to conduct our business, we need all of these parties to
function in a flawless and timely manner. However, we cannot assure you that these third parties will
provide their support properly or in a cost-effective manner or the third party-supplied data we rely on will
be complete, accurate or reliable. In the event of problems with any of these third-party providers,
transitioning to a new provider may disrupt our business and increase our cost. In addition, we cannot assure
you that we would be able to find suitable replacement suppliers on commercially reasonable terms or
timely basis.
If any of our third-party service providers fails to perform properly, we cannot assure you that we will be
able to find a suitable alternative in a timely and cost-effective manner or at all. Our third-party service
providers may carry out their business in an inappropriate manner or in violation of regulations or laws. Any
of such occurrences could diminish our ability to operate or damage our business reputation, or cause us
regulatory or financial harm, any of which could negatively affect our technology business, financial
condition and results of operations.
Our inability to use software licensed from third parties, including open-source software, could
negatively affect our ability to sell our solutions and subject us to possible litigation.
Our technology platform incorporates software licensed from third parties, including open-source software,
which we use without charge. Although we monitor our use of open-source software, the terms of many
open-source licenses that we are subject to have not been interpreted by courts, and there is a risk that these
licenses could be construed to impose unanticipated conditions or restrictions on our ability to provide our
solutions. In addition, the terms of open-source software licenses may require us to provide software that
we develop to others on unfavourable license terms. For example, certain open-source licenses may require
us to offer the components of our platform that incorporate open-source software for free, to make source
code for modifications or derivative works available to others, and to license such modifications or
derivative works under the terms of the particular open-source license. In addition, we could be required
to seek licenses from third parties in order to continue offering our solutions, and these types of licenses
may not be available on terms that are acceptable to us, or at all. Alternatively, we may need to re-engineer
our solutions or discontinue using certain functionalities of our solutions. Our inability to use third-party
software could result in disruptions to our business, or delays in developing future offerings or
enhancements of our existing solutions, which could materially and adversely affect our business and
results of operations.
RISKS RELATING TO DOING BUSINESS IN THE PRC
Any change in PRC’s economic condition, as a result of the recent developments in the global
economic conditions may adversely affect us.
A substantial part of our revenue is derived from the PRC. We rely, to a significant degree, on our domestic
operations to achieve revenue growth. Domestic demand for financial and technology services is materially
affected by the growth of private consumption and overall economic growth in the PRC, which in turn is
affected by the global economic situation, governmental policies and changes in market dynamics globally
and regionally. There are uncertainties relating to the overall prospects for the global economies this year
and beyond, which may affect the PRC economic growth and have a material adverse impact to our
business, prospects, financial conditions and results of operations.
40
Turmoil in the financial markets could increase our cost of borrowing and impede access to or
increase the cost of financing our operations and investments.
The availability of credit to entities operating within emerging markets, including us, is significantly
influenced by levels of investor confidence in such markets as a whole. Any factors that may affect market
confidence could affect the costs or availability of funding for entities within emerging markets.
Historically, challenging market conditions in emerging markets have resulted in reduced liquidity,
widening of credit spreads, lack of price transparency in credit markets, a reduction in available financing
and a tightening of credit terms. Due to its increasing financial reliance upon the PRC, Hong Kong’s stock
markets experienced a similar fluctuation during the relevant times and the Hang Seng Index had a
record-breaking slump in a single day in the recent decade. As our shares are listed on both the Hong Kong
Stock Exchange and The Shanghai Stock Exchange, significant fluctuations in these financial markets could
cause substantial adverse effects on our business operations and investments as a whole.
Changes and developments in the PRC’s economic and social conditions, as well as government
policies, could have a material effect on our businesses.
A substantial majority of our businesses, assets and operations is located in the PRC. Accordingly, our
business prospects, financial condition and results of operations are, to a significant degree, subject to the
economic and legal changes and developments in the PRC. The PRC’s economy differs from the economies
of most developed countries in many respects, including, among others, government involvement, level of
development, growth rate, control of foreign exchange and allocation of resources. In recent years, the PRC
government has pushed forward a large number of economic reform measures to introduce market forces
and promote the establishment of sound corporate governance structures and has been playing an important
role in regulating industry development by imposing industry policies. For example, our financial condition
and results of operations may be affected by government policies on the insurance service industry or tax
regulations applicable to us. Furthermore, the overall economic growth of China is affected by various
factors, such as international, national, regional and local economic conditions, consumer demand,
governmental regulations and policies, among others. While the Chinese economy has experienced
significant growth over the past decades, there can be no assurance that the growth would be maintained
or equitable across sectors. Economic development in the PRC in recent years faced and may continue to
face uncertainties and potential risks arising from factors including the weakening traditional growth
drivers, diminishing demographic advantages, and the threat of a real estate market downturn, while the
banking industry faces continuous increases in non-performing loans, increasing complexity of business
structures and the acceleration of interest rate liberalisation. If the PRC’s economy experiences a decrease
in growth rate or a significant downturn, the unfavourable business environment and economic condition
for our customers could negatively impact their ability or willingness to repay our loans and reduce their
demand for our banking and other services. Our overall business, financial condition and results of
operations may be materially and adversely affected.
Failure to respond to developments in the PRC legal system and the interpretation and enforcement
of PRC laws, regulations and rules may subject your investment and us to risks.
We are organised under the laws of the PRC. The PRC legal system is based on written statutes. However,
the PRC legal system evolves rapidly, and some of the current laws and regulations are relatively new and
may be amended in the future and interpreted or enforced depending on the specific facts and
circumstances, which may affect our judgment on the relevance of legal requirements and the value of your
investment. In response to the developments of laws and regulations, we may be required to implement
additional internal control mechanisms and policies to ensure our compliance with these applicable PRC
laws and regulations, including but not limited to adjusting our relevant business operations or transactions,
engaging compliance experts and recruiting compliance talents, which may incur additional costs and
adverse impact on our business. Any failure to respond to changes in the regulatory environment in the PRC
could materially and adversely affect our results of operations and financial conditions, and impede our
ability to continue our operations.
41
The civil law system is evolving and may have an adverse effect on our business, results of operations,
financial conditions and business prospects, and limit the legal protections available to Bondholders.
We are organised under the laws of the PRC. The PRC legal system is a civil law system based on written
statutes, and prior court decisions may only be cited for reference. The PRC laws and regulations have
continued to evolve rapidly over the past decades and interpretation and enforcement of such laws and
regulations may be subject to changes and adjustments. These uncertainties relating to the interpretation of
PRC laws and regulations can affect the legal remedies and protections that are available to Bondholders
and can adversely affect the value of their investment. As the interpretation and enforcement of relevant
laws and regulations applicable to our business are also evolving, we may be required to implement
additional internal control mechanisms and policies to ensure our compliance with these applicable PRC
laws and regulations, including but not limited to adjusting our relevant business operations or transactions,
engaging compliance experts and recruiting compliance talents, which may incur additional costs and
adverse impact on our business. Any failure to respond to changes in the regulatory environment in the PRC
could materially and adversely affect our results of operations and financial conditions, and impede our
ability to continue our operations.
Any future occurrence of natural disasters or outbreaks of contagious diseases in the PRC may have
a material adverse effect on our business, financial condition and results of operations.
Any future occurrence of natural disasters or outbreaks of health epidemics and contagious diseases,
including avian influenza, SARS, COVID-19, Ebola virus disease (“Ebola”), Middle East Respiratory
Syndrome corona virus (“MERS”), H5N1 influenza, H1N1 influenza or H7N9 influenza, may adversely
affect our business, financial condition and results of operations. An outbreak of a health epidemic or
contagious disease could result in a widespread health crisis and restrict the level of business activity in
affected areas, which may in turn adversely affect our business, financial condition and results of
operations. Moreover, the PRC has experienced natural disasters such as earthquakes, floods and drought
in the past few years. Any future occurrence of severe natural disasters in the PRC may adversely affect its
economy and in turn our business, financial condition and results of operations. There is no guarantee that
any future occurrence of natural disasters or outbreak of avian influenza, COVID-19 SARS, Ebola, MERS,
H5N1 influenza, H1N1 influenza, H7N9 influenza or other epidemics, or the measures taken by the PRC
government or other countries in response to a future outbreak of these epidemics, will not seriously
interrupt our operations or those of our customers, which may have a material adverse effect on our
business, financial condition and results of operations.
RISKS RELATING TO THE BONDS AND THE SHARES
The Bonds will be unsecured obligations.
The Bonds will constitute direct, unsubordinated, unconditional and (subject to Condition 3.1 of the
Conditions) unsecured obligations of the Issuer at all times ranking pari passu and without any preference
or priority among themselves. The payment obligations of the Issuer under the Bonds, save for such
exceptions as may be provided by mandatory provisions of applicable law and subject to the negative pledge
contained in Condition 3.1 of the Conditions, will at all times rank at least equally with all of the Issuer’s
other present and future direct, unsubordinated, unconditional and unsecured obligations. The payment
obligations under the Bonds may be adversely affected if:
the Group enters into bankruptcy, liquidation, reorganisation or other winding-up proceedings;
there is a default in payment under the Group’s future secured indebtedness or other unsecured
indebtedness; or
there is an acceleration of any of the Group’s indebtedness.
If any of the above events occurs, the Group’s assets and any amounts received from the sale of such assets
may not be sufficient to pay amounts due on the Bonds.
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The Bonds will be structurally subordinated to subsidiary debt.
Payments under the Bonds will be structurally subordinated to the claims of all holders of debt securities
and other creditors, including trade creditors, of ours and our subsidiaries, and to all of our secured
creditors. A substantial part of our operations are conducted through our subsidiaries, associated companies
and jointly controlled entities. Accordingly, we are and will be dependent on the operations of our
subsidiaries, associated companies and jointly controlled entities to service our indebtedness, including
interest and principal on the Bonds. In the event of an insolvency, bankruptcy, liquidation, reorganisation,
dissolution or winding up of the business of any of our subsidiaries, creditors of such subsidiary generally
will have the right to be paid in full before any distribution is made to us.
The liquidity and price of the Bonds following the offering may be volatile.
The price and trading volume of the Bonds may be highly volatile. Factors such as variations in the Group’s
turnover, earnings and cash flows, proposals for new investments, strategic alliances and/or acquisitions,
changes in interest rates, fluctuations in price for comparable companies, changes in government
regulations and changes in general economic conditions nationally or internationally could cause the price
of the Bonds to change. Any such developments may result in large and sudden changes in the trading
volume and price of the Bonds. There is no assurance that these developments will not occur in the future.
The return on the Bonds may decrease due to inflation.
Bondholders may suffer erosion on the return of their investments due to inflation. Bondholders would have
an anticipated rate of return on the purchase of the Bonds based on expected inflation rates. An unexpected
increase in inflation could reduce the actual returns.
An active trading market for the Bonds may not develop.
The Bonds are a new issue of securities for which there is currently no trading market. Although an
application will be made to the Hong Kong Stock Exchange for the listing of, and permission to deal in,
the Bonds on the Hong Kong Stock Exchange, no assurance can be given that such application will be
approved, or even if the Bonds become so listed, an active trading market for the Bonds will develop or be
sustained. No assurance can be given as to the ability of holders to sell their Bonds or the price at which
holders will be able to sell their Bonds or that a liquid market will develop. The liquidity of the Bonds will
be adversely affected if the Bonds are held or allocated to limited investors. Bondholders should note that
they may need to hold their Bonds until maturity as there may not be an active secondary market for the
Bonds. None of the Managers is obligated to make a market in the Bonds, and if the Managers do so, they
may discontinue such market making activity at any time at their sole discretion. In addition, the Bonds are
being offered pursuant to exemptions from registration under the Securities Act and, as a result, holders will
only be able to resell their Bonds in transactions that have been registered under the Securities Act or in
transactions not subject to, or exempt from, registration under the Securities Act.
The market value of the Bonds may fluctuate.
Trading prices of the Bonds are influenced by numerous factors, including the results of operations and/or
financial condition and business strategy (in particular further issuance of debt or corporate events such as
share sales, reorganisations, takeovers or share buybacks) of the Group and/or the subsidiaries and/or
associated companies of the Group, political, economic, financial, regulatory and any other factors that can
affect the capital markets, the industry, the Group and/or the subsidiaries and/or associated companies of
the Group generally. Adverse economic developments could have a material and adverse effect on the
results of operations and/or the financial condition of the Group and/or the subsidiaries and/or associated
companies of the Group.
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In addition, the market price of the Bonds is expected to be affected by fluctuations in the market price of
the Shares. There can be no certainty as to the effect, if any, that future issues or sales of Shares, or the
availability of such Shares for future issue or sale, would have on the market price of the Shares prevailing
from time to time and therefore on the market price of the Bonds. Disposals of our Shares by shareholders
or a perception in the market that such disposals could occur, may adversely affect the prevailing market
price of the Shares and the Bonds.
The Trustee may request the Bondholders to provide an indemnity and/or security and/or prefunding
to its satisfaction.
In certain circumstances, the Trustee may request Bondholders to provide an indemnity and/or security
and/or prefunding to its satisfaction before it takes any steps and/or actions and/or institute any proceedings
on behalf of Bondholders. The Trustee shall not be obliged to take any such steps and/or actions and/or
institute any such proceedings if it is not first indemnified and/or secured and/or prefunded to its
satisfaction. Negotiating and agreeing to an indemnity and/or security and/or prefunding could be a lengthy
process and may affect when such actions can be taken. The Trustee may not be able to take steps and/or
actions and/or institute proceedings, notwithstanding the provision of an indemnity or security or
prefunding to it, in breach of the terms of the Trust Deed and/or the Conditions and in such circumstances,
or where there is uncertainty or dispute as to the applicable law or regulations, to the extent permitted by
the agreements and the applicable law and regulations, it would be for the Bondholders to take such steps
and/or actions and/or institute such proceedings directly.
Bondholders will have no rights as holders of the Shares prior to conversion of the Bonds.
Unless and until the Bondholders acquire the Shares upon conversion of the Bonds, Bondholders will have
no rights with respect to the Shares, including any voting rights or rights to receive any regular dividends
or other distributions with respect to the Shares. Upon conversion of the Bonds, these holders would be
entitled to exercise the rights of holders of the Shares only as to actions for which the applicable record date
occurs after the date of conversion.
Securities law restrictions on the resale and conversion of the Bonds may limit Bondholders’ ability
to sell the Bonds in the United States.
The Bonds and the H Shares into which the Bonds are convertible have not been and will not be registered
under the Securities Act, any state securities laws or the securities laws of any other jurisdiction. Unless
and until the Bonds and the Shares issuable upon conversion of the Bonds are registered, they may not be
offered or sold or resold except in transactions that are exempt from the registration requirements of the
Securities Act and hedging transactions may not be conducted unless in compliance with the Securities Act.
The Bonds and the Shares issuable upon conversion of the Bonds thereof will not be freely tradable absent
registration or an exemption from registration.
The Bondholders may be subject to tax on their income or gain from the Bonds.
Prospective purchasers of the Bonds are advised to consult their own tax advisers concerning the overall
tax consequences of the acquisition, ownership or disposition (including upon conversion of the Bonds) of
the Bonds or the H Shares. See “Taxation” for a discussion of tax consequences in certain jurisdictions.
The Bonds are not a suitable investment for all investors.
The Bonds are complex financial instruments and may be purchased as a way to reduce risk or enhance yield
with a measured and appropriate addition of risk to the investor’s overall portfolios. A potential investor
should not invest in the Bonds unless they have the expertise (either alone or with the help of a financial
adviser) to evaluate how the Bonds will perform under changing conditions, the resulting effects on the
value of such Bonds and the impact this investment will have on the potential investor’s overall investment
portfolio.
44
Additionally, the investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult its legal
advisers to determine whether and to what extent (a) the Bonds are legal investments for it, (b) the Bonds
can be used as collateral for various types of borrowing and (c) other restrictions apply to its purchase of
any Bonds. Financial institution investors should consult their legal advisers or the appropriate regulators
to determine the appropriate treatment of Bonds under any applicable risk-based capital or similar rules.
Each potential investor in the Bonds must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits
and risks of investing in the Bonds and the information contained or incorporated by reference in this
Offering Circular or any applicable supplement;
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Bonds and the impact such investment will have on
its overall investment portfolio;
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds;
understand thoroughly the terms of the Bonds and be familiar with the behaviour of any relevant
indices and financial markets; and
be able to evaluate (either alone or with the help of a financial adviser) possible economic scenarios,
such as interest rate and other factors which may affect its investment and the ability to bear the
applicable risks.
The Bonds contain provisions regarding modification and waivers, which could affect the rights of
Bondholders.
The Conditions and the Trust Deed contain provisions for calling meetings of Bondholders to consider
matters affecting their interests generally. These provisions will permit defined majorities to bind all
Bondholders including Bondholders who did not attend and vote at the relevant meeting and Bondholders
who voted in a manner contrary to the majority. There is a risk that the decision of the majority of holders
of the Bonds may be adverse to the interests of individual holders of the Bonds.
The Conditions also provide that the Trustee may, without the consent of the holders of the Bonds, agree
(i) to any modification (other than in respect of certain reserved matters) to, or the waiver or authorization
of any breach or proposed breach of, the Bonds, the Agency Agreement and/or the Trust Deed which in the
opinion of the Trustee would not be materially prejudicial to the interests of the holders of the Bonds and
(ii) to any modification of the Bonds, the Agency Agreement or the Trust Deed which is in the Trustee’s
opinion of a formal, minor or technical nature or is made to correct a manifest error or to comply with
mandatory provisions of law.
In addition, the Trustee may (but shall not be obliged to), without the consent of the Bondholders, determine
any Event of Default or a Potential Event of Default (both terms as defined in the Trust Deed) should not
be treated as such, provided that in the opinion of the Trustee, the interests of the Bondholders will not be
materially prejudiced thereby.
If we or any of our subsidiaries are unable to comply with the restrictions and covenants in our
respective debt agreements, there could be a default under the terms of these agreements, which could
cause repayment of the debt to be accelerated.
If we or any of our subsidiaries are unable to comply with the restrictions and covenants in our respective
current or future debt obligations and other agreements, there could be a default under the terms of these
agreements. In the event of a default under these agreements, the holders of the debt could terminate their
45
commitments to lend, accelerate repayment of the debt and declare all outstanding amounts due and payable
or terminate the agreements, as the case may be. Furthermore, some of our debt agreements contain
cross-acceleration or cross-default provisions. As a result, a default under one debt agreement may cause
the acceleration of repayment of not only such debt but also other debt, including the Bonds, or result in
a default under our other debt agreements. If any of these events occur, there is no assurance that we would
have sufficient assets and cash flow to repay in full all of our indebtedness, or that we would be able to find
alternative financing. Even if we could obtain alternative financing, we cannot guarantee that it would be
on terms that are favourable or acceptable to us.
The Issuer relies on dividends paid by its subsidiaries for cash needs, and limitations under PRC laws
on the ability of the Group’s PRC subsidiaries to distribute dividends to the Group could adversely
affect the Group’s ability to utilise such funds.
The Issuer rely on dividends paid by its subsidiaries for the Group’s cash and financing requirements,
including the funds necessary to perform its payment obligations under the Bonds, to service any foreign
currency debt the Group may incur and to make any offshore acquisitions. If any of the Group’s subsidiaries
incur debt on its own behalf in the future, the loan agreements may restrict its ability to pay dividends or
make other distributions to the Group. Under PRC laws and regulations, the Group’s subsidiaries may pay
dividends only out of their respective accumulated profits as determined in accordance with PRC
accounting standards and regulations.
As a result of the foregoing, there is no assurance that we will have sufficient cash flow from dividends or
advances from its subsidiaries to satisfy its obligations under the Bonds. Should the Issuer be unable to
make due payments under the terms of the Bonds, the Bondholders would need to rely on the Trustee to take
enforcement actions to recover their investment in the Bonds, the prospects of which are uncertain.
You may experience difficulties in effecting service of process or enforcing any judgments obtained
from non-PRC courts against the Group or its management residing in the PRC.
We are a company incorporated under the PRC laws and a substantial part of our operations and assets are
located in China. In addition, most of our management reside in China. As a result, it may be difficult for
you to effect service of process upon us or our management residing in China.
Currently, the primary sources of shareholder rights are our Articles of Association, the PRC Company Law
( ), the PRC regulations and the listing rules of the Hong Kong Stock Exchange
and The Shanghai Stock Exchange, which, among other things, impose certain standards of conduct,
fairness and disclosure on us and our directors. The legal systems across different jurisdictions vary
significantly. We cannot assure you that our shareholders will enjoy the protections to which they may be
entitled in other jurisdictions.
The service of legal process and the process of recognizing and enforcing any judgments may be different
across jurisdictions and are subject to treaties or arrangements providing for the recognition and
enforcement of judgments made by courts of other jurisdictions. As a result, the Bondholders may
experience difficulties to effect service of process and/or recognize and enforce any judgments for disputes
brought in other jurisdictions. The PRC has not entered into treaties or arrangements providing for the
recognition and enforcement of judgments made by the courts in most other jurisdictions.
On 18 January 2019, the Supreme People’s Court of the PRC and the Hong Kong government signed the
Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters
by the Courts of the Mainland and the Hong Kong Special Administrative Region (
) (the “2019 Arrangement”). The 2019 Arrangement
has been implemented in Hong Kong by the Mainland Judgments in Civil and Commercial Matters
(Reciprocal Enforcement) Ordinance (Cap. 645), which came into operation on 29 January 2024. In the
Mainland, the Supreme People’s Court promulgated a judicial interpretation to implement the 2019
Arrangement on 25 January 2024 (the “Judicial Interpretation”). The 2019 Arrangement applies to
judgments made on or after 29 January 2024.
46
Unlike other bonds issued in the international capital markets where holders of such bonds would typically
not be required to submit to an exclusive jurisdiction, the Bondholders will be deemed to have submitted
to the exclusive jurisdiction of the Hong Kong courts. Thus, the Bondholders’ ability to initiate a claim
outside Hong Kong will be limited.
Under the 2019 Arrangement, where the Hong Kong court has given a legally effective judgment in a civil
and commercial matter, any party concerned may apply to the relevant People’s Court of the Mainland for
recognition and enforcement of the judgment, subject to the provisions, limits, procedures and other terms
and requirements of the 2019 Arrangement and the Judicial Interpretation. The recognition and enforcement
of a Hong Kong court judgment could be refused if the relevant People’s Court of the Mainland consider
that the enforcement of such judgment is contrary to the basic principles of the PRC law or the social and
public interests of the Mainland. As a result, there can be no assurance that a Hong Kong court judgment
will be recognized and enforced by the relevant PRC court.
Any failure to complete the relevant filings under the Order 56 and the relevant registration with
SAFE within the prescribed time frame following the completion of the issue of the Bonds may have
adverse consequences for the Issuer and/or the investors of the Bonds.
Effective from 10 February 2023, the NDRC issued the Order 56, which has superseded the Notice on
Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Corporates
( ). Under the Order 56, the Issuer
shall (i) obtain a Certificate of Review and Registration of Enterprise Borrowing of Foreign Debt from the
NDRC (the “NDRC Certificate”), (ii) file or report or cause to be filed or reported with the NDRC the
requisite information and documents within ten PRC business days after each foreign debt issuance and the
expiration of the NDRC Certificate in accordance with Order 56, (iii) file or report or cause to be filed or
reported with the NDRC status of utilization of foreign debt funds, the status of and the plan for repayment
of principal and interest, key operating indicators, etc. within five PRC business days before the end of
January and the end of July each year, (iv) file or report or cause to be filed or reported the requisite
information and documents upon the occurrence of any material event that may affect the enterprise’s due
performance of its debt obligations and comply with other obligations under the Order 56.
The Issuer obtained an NDRC Certificate on 10 July 2024 in accordance with Order 56. Failure to comply
with the NDRC post-issue and continuing obligations (such as post-issue reporting, pre-issuance approval
expiration reporting, periodical reporting and major event reporting, etc.) under articles 24 and 26 of Order
56 may result in the relevant entities being ordered to make corrections within a time limit, and in the case
of aggravating circumstances or in the case that such corrections are not made within the prescribed time
limit, relevant entities and their main person-in-charge will be warned. The aforesaid regulatory violations
committed by enterprises shall be publicised on the “Credit China” website and the national enterprise
credit information publicity system, among others.
The Issuer undertakes that it will, within the relevant prescribed timeframes after the Issue Date, file or
cause to be filed with the NDRC the requisite information and documents in respect of the Bonds in
accordance with Order 56 and comply with the continuing obligations under Order 56 and other applicable
PRC laws and regulations in relation to the issue of the Bonds.
However, Order 56 is new, and its implementation may be subject to changes. The administration and
enforcement of Order 56 may be subject to executive and policy discretion of the NDRC.
The Circular of the State Administration of Foreign Exchange on Issuing the Administrative Measures for
Foreign Debt Registration ( < > ) containing the
Administrative Measures for Foreign Debt Registration ( ) (the “SAFE Measures”)
and Operation Guidelines for Administration of Foreign Debt Registration ( )
was issued by State Administration of Foreign Exchange (“SAFE”) on 28 April 2013, became effective on
13 May 2013 and was amended on 4 May 2015. According to the SAFE Measures, a debtor shall register
foreign debts in accordance with laws and regulations. For the domestic debtors besides bureaus of finance
and banks (“Non-Bank Debtors”), they shall submit filing or registration procedures of foreign debts with
47
the local counterparts of the SAFE. According to the Operation Guidelines for Administration of Foreign
Debt Registration, Non-Bank Debtors shall complete foreign debt registration procedure within 15 working
days after execution of related deeds of foreign debts. If the Issuer fails to complete the registration with
the local branch of SAFE, in addition to facing a sanction as set forth in the Foreign Exchange
Administrative Regulations ( ), the Issuer may also have difficulty in remitting funds
offshore to service payments in respect of the Bonds and investors may encounter difficulties in enforcing
judgments obtained in the Hong Kong courts with respect to the Bonds and the Trust Deed in the PRC. In
such circumstances, the value and secondary market price of the Bonds may be materially and adversely
affected. In the worst case scenario, the validity of the deeds of foreign debts may be affected.
According to the Cross-Border Financing Circular, the Issuer, as a financial institution, shall report required
information to the PBOC and SAFE after withdrawal from cross-border financing and timely update the
information if changed. The Issuer shall also report the required statistical information monthly. If the
Issuer fails to report or update the cross-border financing information within the prescribed time frame,
PBOC and SAFE, after verification, may circulate a notice of criticism on the Issuer, give a deadline for
rectification and impose sanctions according to the relevant PRC laws.
There may be filing or other requirements of the CSRC or other PRC government authorities in
relation to the proposed issuance of the Bonds or further capital raise activities.
On 17 February 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering
and Listing by Domestic Companies ( ) and supporting
guidelines (together, the “CSRC Filing Rules”), which came into effect on 31 March 2023. The CSRC
Filing Rules will regulate both direct and indirect overseas offering and listing of PRC domestic companies’
securities by adopting a filing-based regulatory regime. The CSRC Filing Rules state that, any post-listing
follow-on offering by an issuer in an overseas market, including issuance of shares, convertible bonds and
other similar securities, shall be subject to filing requirement within three business days after the
completion of the offering. In connection with the CSRC Filing Rules, on 17 February 2023 the CSRC also
published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and
Listing by Domestic Enterprises ( , the “Notice on
Overseas Listing Measures”). According to the Notice on Overseas Listing Measures, issuers that have
already been listed in an overseas market by 31 March 2023, the date the Overseas Listing Measures became
effective, are not required to make any immediate filing and are only required to comply with the filing
requirements under the CSRC Filing Rules when it subsequently seeks to conduct a follow-on offering. The
CSRC Filing Rules provide that an overseas offering and listing, including the follow-on offering of
convertible bonds, is prohibited under any of the following circumstances: if (i) such securities offering and
listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii)
the intended securities offering and listing may endanger national security as reviewed and determined by
competent authorities under the State Council in accordance with law; (iii) the domestic company intending
to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have
committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three years; (iv) the domestic
company intending to make the securities offering and listing is currently under investigation for suspicion
of criminal offences or major violations of laws and regulations, and no conclusion has yet been made
thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling
shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual
controller (the “Forbidden Circumstances”). In addition, in the process of filing, where the issuer may be
under any of the Forbidden Circumstances, the CSRC may solicit the opinions of the competent government
authorities under the State Council.
48
The Issuer will comply with applicable filing requirements if applicable. However, given that the CSRC
Filing Rules were recently promulgated, there remains uncertainty as to their interpretation, application and
enforcement and how they will affect our operations and our future financing. We cannot assure you that
we are able to meet such requirements, obtain such permit from the relevant government authorities, or
complete such filing in a timely manner or at all. In addition, we cannot guarantee that new rules or
regulations promulgated in the future will not impose any additional requirements on us. If it is determined
that we are subject to any approval, filing, other governmental authorisation or requirements from the CSRC
or other PRC government authorities, we may fail to obtain such approval or meet such requirements in a
timely manner or at all. Such failure may subject us to fines, penalties or other sanctions which may have
a material adverse effect on our business and financial condition.
Gains on the transfer of the Bonds may be subject to income tax under PRC tax laws.
Under the PRC EIT Law, the Law of the PRC on Individual Income Tax ( , the
“PRC IIT Law”) and their respective implementation rules, gains on the transfer of the Bonds may be
subject to income tax under PRC tax laws if such capital gains are regarded as sourced from the PRC.
Under the PRC EIT Law and the PRC IIT Law, a non-resident enterprise or individual shall pay PRC
enterprise income tax on its income sourced from inside the PRC, including the gains derived from the
disposal of equity interests in a PRC enterprise. If such capital gains are regarded as sourced from the PRC,
any gains realised on the transfer of the Bonds by holders who are deemed under the PRC EIT Law as
non-resident enterprises or under the PRC IIT Law as non-resident individual would be subject to PRC
income tax. Under the PRC EIT Law, a “non-resident enterprise” means an enterprise established under the
laws of a jurisdiction other than the PRC and whose actual administrative organisation is not in the PRC,
which has established offices or premises in the PRC, or which has not established any offices or premises
in the PRC but has obtained incomes derived from sources within the PRC. Under the PRC IIT Law, a
“non-resident individual” means any non-resident PRC individual who is not residing in the PRC or who
has resided in China for less than 183 days. If such gains are regarded to be sourced from the PRC, and thus
subject to PRC income tax, the 10 per cent. enterprise income tax rate and 20 per cent. individual income
tax rate will apply respectively unless there is an applicable tax treaty or arrangement that reduces or
exempts such income tax. The taxable income will be the balance of the total income obtained from the
transfer of the Bonds minus all costs and expenses that are permitted under PRC tax laws to be deducted
from the income.
If a Bondholder, being a non-resident enterprise or non-resident individual, is required to pay any PRC
income tax on gains on the transfer of the Bonds, the value of the relevant Bondholders’ investment in the
Bondholders may be materially and adversely affected. See “Taxation – PRC”.
Investors in the Bonds may be subject to foreign exchange risks.
The Bonds are denominated and payable in U.S. dollars. An investor who measures investment returns by
reference to a currency other than U.S. dollars would be subject to foreign exchange risks by virtue of an
investment in the Bonds, due to, among other things, economic, political and other factors over which the
Group has no control. Depreciation of the U.S. dollars against such currency could cause a decrease in the
effective yield of the Bonds below their stated coupon rates and could result in a loss when the return on
the Bonds is translated into such currency. In addition, there may be tax consequences for investors as a
result of any foreign currency gains resulting from any investment in the Bonds.
Legal investment considerations may restrict certain investments.
The investment activities of certain investors are subject to legal investment laws and regulations, or review
or regulation by certain authorities. Each potential investor should consult its legal advisers to determine
whether and to what extent:
the Bonds are legal investments for it;
49
the Bonds can be used as collateral for various types of borrowing; and
any other restrictions apply to its purchase or pledge of the Bonds.
Financial institutions should consult their legal advisers or the appropriate regulators to determine the
appropriate treatment of the Bonds under any applicable risk-based capital or similar rules.
Potential dilution of the ownership interest of existing Shareholders.
The conversion of some or all of the Bonds will dilute the ownership interests of our existing shareholders
of the Issuer. Any sales in the public market of the H Shares issuable upon such conversion could affect
prevailing market prices for the H Shares. In addition, the existence of the Bonds may facilitate short selling
of the H Shares by market participants.
We may not have the ability to redeem the Bonds.
Bondholders may require us, subject to certain conditions, to redeem for cash some or all of their Bonds
at the option of the Bondholders upon a Relevant Event as described under “Terms and Conditions of the
Bonds – Redemption, Purchase and Cancelation – Redemption for Relevant Event” or on the Put Option
Date as described under “Terms and Conditions of the Bonds – Redemption, Purchase and Cancelation –
Redemption at the Option of the Bondholders.”) We may not have sufficient funds or other financial
resources to make the required redemption in cash at such time or the ability to arrange necessary financing
on acceptable terms, or at all. Our ability to redeem the Bonds in such event may also be limited by the
terms of other debt instruments. Failure to repay, repurchase or redeem tendered Bonds by us would
constitute an event of default under the Bonds, which may also constitute a default under the terms of other
indebtedness held by us.
The Bonds may be early redeemed at the Issuer’s option.
On giving not less than 30 nor more than 60 days’ notice, the Issuer may redeem the Bonds in whole, but
not in part at their principal amount together with accrued and unpaid interest thereon to but excluding the
date fixed for redemption, (i) at any time after 5 August 2027 but prior to the Maturity Date, subject to
certain conditions as specified in the Terms and Conditions, or (ii) if at any time the aggregate principal
amount of the Bonds outstanding is less than 10 per cent. of the aggregate principal amount originally
issued (including any Bonds issued pursuant to the Conditions). In addition, the Bonds may be redeemed
at our option in whole and not in part, on giving not less than 30 days’ nor more than 60 days’ notice, at
the principal amount of the Bonds, if we satisfy the Trustee immediately prior to the giving of such notice
that we have or will become obliged to pay Additional Tax Amounts as a result of certain events set out in
the Conditions and such obligation cannot be avoided by taking reasonable measures available to us. As a
result, the trading price of the Bonds may be affected when any redemption option of the Issuer in respect
of the Bonds becomes exercisable. Accordingly, Bondholders may not be able to sell their Bonds at an
attractive price, thereby having a material adverse effect on the trading price and liquidity of the Bonds.
Bondholders have limited anti-dilution protection.
The Conversion Price will be adjusted in the event that there is a consolidation, subdivision or
re-classification, capitalisation of profits or reserves, capital distributions, rights issues of Shares or options
over Shares, rights issues of other securities, issues at less than current market price or other adjustment
including an offer or scheme which affects the Shares, but only in the circumstances and only to the extent
provided in “Terms and Conditions of the Bonds – Conversion – Adjustments to Conversion Price”. There
is no requirement that there should be an adjustment for every corporate or other event that may affect the
value of the Shares. Events in respect of which no adjustment is made may adversely affect the value of
the Shares and, therefore, adversely affect the value of the Bonds.
50
Future issuances of any Shares or equity-related securities may depress the trading price of the
Shares.
Any issuance of our equity securities after this offering could dilute the interest of the existing shareholders
and could substantially decrease the trading price of the Shares. We may issue equity securities in the future
for a number of reasons, including to finance our operations and business strategy (including in connection
with acquisitions, strategic collaborations or other transactions), to adjust our ratio of debt-to-equity, to
satisfy our obligations upon the exercise of outstanding warrants, options or other convertible bonds or for
other reasons. Sales of a substantial number of Shares or other equity-related securities in the public market
(or the perception that such sales may occur) could depress the market price of the Shares. We cannot
predict the effect that future sales of the Shares or other equity-related securities would have on the market
price of the Shares. In addition, the price of the Shares could be affected by possible sales of the Shares
by investors who view the Bonds as a more attractive means of obtaining equity participation in the
Company and by hedging or engaging in arbitrage trading activity involving the Bonds.
There may be less publicly available information about the Company than is available for public
companies in certain other jurisdictions.
There may be less publicly available information about companies listed in Hong Kong, such as the
Company, than is regularly made available by public companies in certain other countries. In addition, our
financial information in this Offering Circular has been prepared in accordance with IFRS which differs in
certain respects from generally accepted accounting principles (“GAAPs”) in certain jurisdictions which
might be material to the financial information contained in this Offering Circular. In making an investment
decision, investors must rely upon their own examination of us, the terms of the offering and our financial
information, and should consult their own professional advisers for an understanding of the differences
between IFRS and the GAAPs in their home jurisdictions and how those differences might affect the
financial information contained in this Offering Circular.
The Bonds will initially be represented by the Global Certificate and holders of a beneficial interest
in the Global Certificate must rely on the procedures of the relevant Clearing System.
The Bonds will initially be represented by the Global Certificate. Such Global Certificate will be deposited
with a common depositary for Euroclear and Clearstream (each of Euroclear and Clearstream, a “Clearing
System” and together the “Clearing Systems”). Except in the circumstances described in the Global
Certificate, investors will not be entitled to receive definitive Bonds. The relevant Clearing System will
maintain records of the beneficial interests in the Global Certificate. While the Bonds are represented by
the Global Certificate, investors will be able to trade their beneficial interests only through the Clearing
Systems.
While the Bonds are represented by the Global Certificate, the Issuer will discharge its payment obligations
under the Bonds by making payments to the common depositary for Euroclear and Clearstream, for
distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on
the procedures of the relevant Clearing System to receive payments under the Bonds. The Issuer has no
responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in
the Global Certificate.
Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the
Bonds. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant
Clearing System to appoint appropriate proxies.
51
Short selling of the Shares by Bondholders could materially and adversely affect the market price of
our Shares.
The issuance of the Bonds may result in downward pressure on the market price of the Shares. Investors
in convertible securities may seek to hedge their exposure in the underlying equity securities, often through
short selling of the underlying equity securities or similar transactions. Any short selling and similar
hedging activity could place significant downward pressure on the market price of the Shares, thereby
having a material adverse effect on the market value of the Shares owned by an investor as well as on the
trading price of the Bonds.
Bondholders may only be entitled to the Cash Settlement Amount.
During the relevant Conversion Period, the Issuer has the option to satisfy the Conversion Right in respect
of a relevant conversion notice by electing to pay to the Bondholder an amount of cash in U.S. dollars
equivalent to the relevant cash settlement amount (the “Cash Settlement Amount”) in order to satisfy such
Conversion Right in whole or in part in lieu of delivery of Shares. In such event a Bondholder will receive
fewer or no Shares (as applicable) on conversion of its Bonds.
The Cash Settlement Amount payable to Bondholders will be subject to market price volatility during
the calculation period of 20 H Share Stock Exchange Business Days.
Notwithstanding the Conversion Right of each Bondholder in respect of each Bond, at any time when the
delivery of Shares deliverable upon conversion of the Bonds is required to satisfy the Conversion Right in
respect of a Conversion Notice, the Issuer shall have the option to pay to the relevant Bondholder an amount
of cash equal to the Cash Settlement Amount. The Cash Settlement Amount will be calculated using the
average of the volume weighted average price of the H Shares for each day during the 20 days (other than
a Saturday or Sunday) on which the Stock Exchange is open for business of dealing in securities (“20 H
Share Stock Exchange Business Days”).
During the initial Conversion Period, the Cash Settlement Amount will be calculated after the date of the
relevant Cash Settlement Notice. As such, a Bondholder will need to wait for the calculation period to be
completed before receiving any payment of the Cash Settlement Amount. The calculation of the Cash
Settlement Amount will be affected by share price movements and volatility during the period of the 20 H
Share Stock Exchange Business Days, which can be affected by a wide array of factors including, without
limitation, global political conditions, general market conditions of the securities markets in Hong Kong,
the PRC, the U.S. and elsewhere in the world or economic downturn locally or globally.
52
CAPITALISATION AND INDEBTEDNESS
The table below sets forth the Issuer’s consolidated borrowings and capitalisation as of 31 December 2023
and (as adjusted to account for the issue of the Bonds, before deducting the commissions and estimated
offering expenses in connection with the issue of the Bonds). The Company derived this table from its
audited consolidated financial statements as at and for the year ended 31 December 2023 contained in this
Offering Circular. Investors should read this table in conjunction with the Issuer’s financial statements, the
related notes and other financial information contained elsewhere in this Offering Circular.
As at 31 December 2023
Actual As Adjusted
(RMB million) (USD million) (RMB million) (USD million)
(audited) (unaudited)(1) (unaudited) (unaudited)(1)
Short-term borrowings .................................. 93,322 13,176 93,322 13,176
Long-term borrowings ................................... 135,161 19,083 135,161 19,083
Bonds payable ............................................... 964,007 136,107 964,007 136,107
The Bonds to be issued(2) ............................. – – 24,789 3,500
Total indebtedness ....................................... 1,192,490 168,366 1,217,279 171,866
Equity
Share capital ................................................. 18,210 2,571 18,210 2,571
Reserves ........................................................ 263,752 37,239 263,752 37,239
Treasury shares ............................................. (5,001) (706) (5,001) (706)
Retained profits............................................. 622,050 87,827 622,050 87,827
Equity attributable to owners of the parent ... 899,011 126,931 899,011 126,931
Non-controlling interests ............................... 329,953 46,586 329,953 46,586
Total equity .................................................. 1,228,964 173,517 1,228,964 173,517
Total capitalisation(3) ................................... 2,421,454 341,883 2,446,243 345,383
Notes:
(1) Amounts in Renminbi have been translated at an exchange rate of USD1.00 = RMB7.0827 (being the exchange rate published
by the People’s Bank of China on 29 December 2023. No representation is made that the RMB amounts should have been, could
have been or may be converted to U.S. dollars, or vice versa, at that rate.
(2) The aggregate principal amount of the Bonds, without taking into account and before deducting underwriting discounts,
commissions and other estimated expenses payable in connection with the offering of the Bonds.
(3) Total capitalisation equals the aggregate of the total indebtedness and total equity.
There has been no material change in the Issuer’s capitalisation and indebtedness since 31 December 2023,
except as otherwise disclosed in this Offering Circular.
53
USE OF PROCEEDS
The Issuer estimates that the net proceeds from the offering of the Bonds, after deducting the Managers’
commissions and other estimated expenses payable in connection with this offering, will be approximately
US$3,452.0 million. The Issuer intends to use the net proceeds for the following purposes:
to further develop the Group’s core business and strengthen the Group’s capital position;
to support the Group’s new strategic initiatives in the healthcare and elderlycare sectors; and
general corporate purpose.
54
BUSINESS
Overview
Our Company was incorporated in 1988 in Shenzhen, PRC as the first joint-stock insurance company in
PRC. As at 30 June 2024, our Company has an issued share capital of RMB18,210,234,607 comprising
18,210,234,607 shares. We are dually listed on The Shanghai Stock Exchange and the Hong Kong Stock
Exchange.
Our Company and our subsidiaries (collectively referred to as the “Group”) are a leading integrated
financial services group in the PRC and have grown significantly since our inception in 1988 as a regional
property and casualty insurance business. Through the Company’s single brand and multi-channel
distribution networks, the Group provide a wide range of financial and other products and services. Our
business includes:
the insurance business which is carried out by Ping An Life Insurance Co of China Ltd. (“Ping An
Life”), Ping An Property & Casualty Insurance Company of China, Ltd. (“Ping An P&C”), Ping An
Annuity Insurance Company Ltd. (“Ping An Annuity”) and Ping An Health Insurance Company of
China, Ltd. (“Ping An Health Insurance”);
the banking business which is carried out by Ping An Bank Co., Ltd. (“Ping An Bank”);
the asset management business which is carried out primarily through companies including Ping An
Securities, Ping An Trust, Ping An Asset Management and Ping An Financial Leasing; and
the technology business, which is carried out through member companies including Autohome, Inc.
(“Autohome”), Ping An Healthcare and Technology Company Limited (“Ping An Health”), Lufax
Holding Ltd (“Lufax Holding”) and OneConnect Financial Technology Co., Ltd. (“OneConnect”),
providing diverse products and services for ecosystem users, with significant synergies. Ping An
Health, Lufax Holding and OneConnect are associates of Ping An Financial Technology.
As an integrated financial services Company, we hold equity interests in the aforementioned subsidiaries.
Our Group serves our range of products and services to our extensive customer base, which consists of
approximately 232 million retail customers in PRC. Our Group offers insurance products to our clients
across various offices in PRC and our banking services are offered to retail and corporate across 109
branches and 1,201 business outlets as of 31 December 2023.
Our vision is for the Group to become a world-leading integrated financial, healthcare and elderlycare
services provider, in line with the PRC’s 14th Five-Year Plan, which sets out the nation’s focus on
innovation-driven growth, low-carbon development, deeper social inclusion and population ageing. We
intend to achieve this vision with two key strategies. First, we will strengthen the Group’s integrated finance
model, by offering multiple products and one-stop shop services to our customers. Second, we will also
develop our healthcare product by increasing family doctors and elderlycare concierges. Both strategies will
be driven by technology and empowered through technological innovations.
As at 31 December 2023, our Group had consolidated total assets of approximately RMB11,583,417
million, which was a 5.2 per cent. increase from 31 December 2022. For the year ended 31 December 2023,
our Group generated consolidated total revenue of approximately RMB1,031,863 million and reported a
consolidated net profit of approximately RMB109,274 million, up by approximately 4.7 per cent. and down
by 18.9 per cent., respectively as compared to the year ended 31 December 2022. In particular, our Group’s
operating profit attributable to shareholders of the parent company reached RMB117,989 million in the
financial year ended 31 December 2023. Three core businesses, namely life and health insurance, property
and casualty insurance, and banking, generated RMB140,913 million in operating profits attributable to
shareholders of the parent company, slightly down 2.8% year on year.
55
For more details of the Group’s financial information, including the year-on-year profits, total assets,
liabilities and equity of the Group, please refer to the section entitled “Summary Consolidated Financial
Information” and our Group’s redacted audited consolidated financial statements as of and for the years
ended 31 December 2022 and 2023 included in this Offering Circular.
Our Competitive Strengths
We believe that the following competitive strengths contribute to the Group’s success and help distinguish
us from our competitors:
Well positioned in a growing market with massive opportunities to fill the demand for financial services,
healthcare and elderlycare.
The growing middle class and wealth diversification fuel strong demands for diverse financial services,
which our Group is able to offer. In addition, as the Chinese economy is transitioning from a stage of
high-speed growth to a stage of high-quality development coupled with the ageing population and wealth
accumulation, there is a rise in consumer demand for wealth preservation and growth, health and longevity
services and premium elderlycare. Our Group is well positioned with its developed integrated finance,
healthcare and elderlycare products to capture the potential market and meet consumer demands.
Integrated financial services group with a full suite of financial business licenses, including insurance,
banking, and asset management.
Leveraging our full suite of financial business licenses, including insurance, banking, and asset
management, we are able to seize opportunities of diverse financial services arising from the growing
middle class and wealth diversification. Our Group leverages its ecosystems to build a brand of
heartwarming financial services to capture the potential market and meet consumer demands. In 2023, the
Group ranked 33rd in the Fortune Global 500 list (1st among global insurers again and 5th among global
financial services companies), 9th in the Fortune China 500 list, 16th in the Forbes Global 2000 list, and
1st in the Brand Finance Insurance 100 list in relation to global insurance brand value for the 7th
consecutive year.
Unique business model of integrated finance, healthcare and elderlycare services, securing our market
leadership position.
We have developed an integrated finance, healthcare and elderlycare model, which enables us to serve as
a one-stop shop to provide a full suite of financial, healthcare and elderlycare services to customers who
have signed up to our family doctor membership programme. This unique business model allows us to
attract more customers whilst diversifying our businesses and profit sources, and to maximise customer’s
value during their time within the ecosystem, which has delivered proven results to our customers. It not
only creates value independently, but also empowers our Group’s core financial business as it facilitates
cross-selling and expanding our customer base, and ultimately, has achieved a positive scale effect. From
2015 to 2023, our number of retail customers increased from 109 million to 232 million, the contracts per
customers increased from 2.03 to 2.95, and as a result the retail business profit per customer increased from
RMB289 to RMB498. As of 31 December 2023, approximately 64% of our Group’s 232 million retail
customers have used the healthcare and elderlycare services provided by us.
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Trustworthy brand name in PRC, coupled with an extensive customer base which generates value
continuously.
We have established a strong brand name, having been in operation since 1988 and quickly expanded into
one of the three largest integrated financial groups in PRC. With the establishment of the Group’s brand
name and the growth of the Group’s businesses, we have amassed an extensive customer base, which
continuously generates value. The Group’s retail customers nearly tripled in the past decade to 232 million
as of 31 December 2023, including 29.20 million acquired in 2023, attributable to the diverse integrated
finance offerings and convenient customer outreach channels. As retail cross-selling continued to deepen,
22.42 million customer migrations occurred within the Group in 2023. Continuous customer development
leads to declining customer acquisition expenses, as well as economies of scale in terms of service costs,
more contracts per customer, and higher customer retention. 25.3% of customers held four or more contracts
within the Group as of 31 December 2023, with a 97.7% retention rate. Majority of the Group’s retail
customers, who account for more than 77.4% of the Group’s total retail customers, are middle-class and
above as of 31 December 2023. Out of the aforementioned customer base, high-net-worth individuals held
21.16 contracts per customer as of 31 December 2023.
The Group has achieved several accolades and awards in the lifetime of its business. Some of the recent
awards and accolades include the following, among others:
In 2024, the Group was ranked 29th in the Forbes Global 2000 list and 2nd among global insurance
companies.
In 2023, the Group ranked 31st overall, 6th among global financial enterprises, and ranked 1st as the
world’s most valuable insurance brand for 8 consecutive years in Brand Finance’s 2024 The World’s
500 Most Valuable Insurance Brands.
In the 2023 Fortune Global 500 list, the Group ranked 33rd overall, 5th among global financial
enterprises, and maintained 1st place among global insurance enterprises.
For the Hong Kong Institute of Directors’ Directors Of The Year Awards 2021, our Company won the
awards in the “Listed Companies Boards” and “Listed Companies Executive Directors” categories for
our outstanding corporate governance. In 2023, Chairman Ma Mingzhe received the Directors Of The
Year Awards 2023.
In 2023, the Group won the China Charity Award for the fourth time. The Group previously won the
award in 2001, 2005 and 2008.
For the MSCI ESG Ratings (2023), the Group maintained “A” and remained No. 1 in the multiline
insurance and brokerage industry in the Asia-Pacific region.
Well established distribution channel enforced by a strong “online + offline” network covering the whole
of China.
We have built a strong and extensive distribution network across China both online and offline. The
coverage of our offline channels span over 7,000 outlets. As at 31 December 2023, we have 347,000
individual life insurance sales agents. At the same time, we have integrated our offline professional service
networks with our expansive online network, by providing our customers with premium products and
convenient services anytime via hundred-million-user mobile applications, including Ping An Jin Guan Jia,
Ping An Pocket Bank, Ping An Auto Owner, and Ping An Health.
57
Unparalleled customer experience through world-leading technological capability across financial
technology, digital healthcare and artificial intelligence.
We have strong technical expertise, including in the rapidly developing field of artificial intelligence and
machine learning, with focus on three core technologies, namely artificial intelligence, blockchain and
cloud computing. We rely on our independent research and development, and some of our patented
application ranked first among other financial technology and digital healthcare applications. Leveraging
on technology allows our Group to improve the delivery of our services and customer outreach, as these
technologies enable us to provide our customers with premium products and convenient services anytime
via hundred-million-user mobile applications. By utilising and enhancing our technology, we have
increased customer experience and thereby customer retention. In this regard, premiums from self-service
insurance renewal enabled by smart guidance increased by 13% year on year to RMB300.3 billion in 2023.
In addition, we have a world-leading integrated operations center which is the largest in Asia. AI service
representatives recorded a customer service volume of approximately 2.22 billion times. Claims savings
from smart risk identification increased by 16.0% year on year to RMB10.82 billion in 2023. Leveraging
the technological strength of integrated finance, we continuously enhance the capability and efficiency of
cross-selling to meet customer needs for migration within the Group.
Visionary and experienced management team with a wealth of industry knowledge.
We have a very experienced management team with extensive expertise in the core businesses and markets
in which we operate, consisting of leaders with a wealth of domestic experience and international
background. As a result, the management team brings substantial expertise to the day-to-day management
of the Group’s operations in each core business segment. With a strong, diverse and experienced
management team, we are able to stay at the forefront of innovation, as well as better adapt the Group to
rapidly changing market environments by developing and introducing a range of product and service
initiatives, business strategies, and management and operational practices that have been developed by
companies worldwide. Please refer to the section entitled “Directors, Supervisors and Senior Management”
for more details on the management of the Company.
Our Strategies
We seek to grow our existing core businesses by implementing the strategies set out below.
We will continuously advance our integrated finance, healthcare and elderlycare strategy.
Our integrated finance strategy is focused on deepening engagement with retail customers and developing
customer groups under a customer-centric business philosophy. We will continue to develop our integrated
finance, healthcare and elderlycare business model to achieve the mission of serving as a one-stop shop for
multiple financial, healthcare and elderlycare products and services to our customers. To achieve such
mission, we will continue to leverage technologies and compliant data analytics to gain precise insights into
customer needs. We also intend to further improve our comprehensive suite of financial services towards
the client, by delivering thoughtful customer experience via one-stop, multi-channel integrated finance
solutions. Moreover, we intend to leverage data, products, benefits and an intelligent marketing services
platform to enhance our ability to offer products that cater to each client’s specific needs and circumstances,
which we believe will boost the number of integrated financial client accounts, and ultimately, improve our
revenues.
58
We aim to continue implementing our healthcare and elderlycare ecosystem strategy. We have been building
a healthcare and elderlycare ecosystem in China with increasingly significant differential advantages
including online, in-store and home-delivery service capabilities, wide coverage of hundreds of healthcare
and elderlycare service resources, and access to high-quality proprietary resources. Going forward, we will
leverage the capabilities and advantages of our healthcare and elderlycare ecosystem to unlock synergies
between healthcare and elderlycare services and integrated financial services, centring on family doctor
membership. Acting as a payer and integrating providers, we will constantly integrate “online, in-store and
home-delivered” healthcare and elderlycare service resources to provide corporate and retail customers with
“worry-free, time-saving and money-saving” healthcare and elderlycare service experience. Additionally,
we will further pursue competitive differentiation by developing unique “finance + service” and “insurance
+ service” managed care business models, allowing for cross-selling of our healthcare and elderlycare
services to our existing insurance customers and effectively leveraging on our existing extensive customer
base to generate more value. In this way, our healthcare and elderlycare ecosystem is creating both
standalone direct value and also significant indirect value by empowering our core financial businesses
through differentiated “product + service” offerings, and we will strive to create more stable and sustainable
value for shareholders.
Integrating ESG philosophy into company values and business operations.
Our sustainable development goals are to meet people’s aspiration for a better life, support the economic
and social transformation toward sustainability, and achieve balanced, high-quality and sustainable
long-term development of the Company. Through full communication and cooperation with stakeholders,
we aim to accommodate interests and maximize value for all stakeholders. Specifically, we strive to create
value for:
customers by practicing the philosophy of “service first and integrity guaranteed”;
employees by providing them with career plans for prosperous and contented lives;
shareholders by delivering stable returns and asset appreciation; and
society by giving back to society and developing the country.
Sustainable development is our development strategy as well as the basis for maximizing our long-term
value. Having integrated sustainability into our development strategy, we build and practice a rational,
professional corporate sustainability management framework and a clear, transparent ESG governance
structure. In this way, we continuously instruct all the functional centres and member companies of the
Group to systematically enhance corporate governance and business sustainability. In this respect, we have
formulated and implemented our sustainability plan for 2023 to 2027, which specifies 13 key initiatives and
their five-year goals, to continuously create value for the Group and stakeholders. The 13 key initiatives
include sustainable insurance, responsible banking, responsible investment, responsible products, consumer
protection and experience, corporate governance, climate change and carbon neutrality, rural vitalisation
and community impact.
Key Businesses
We undertake the following key businesses:
Insurance, which includes life and health insurance and property and casualty insurance;
Banking;
Asset management; and
Technology.
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Insurance – Life and Health Insurance
We offer a range of life and health insurance products through Ping An Life, Ping An Annuity and Ping An
Health Insurance.
Ping An Life provides customers with comprehensive life insurance products throughout their lifetimes, and
is the second largest life insurance company in PRC based on premium income in 2023. In 2023, Ping An
Life also rolled out a combination of products which couples life or health insurance with healthcare and
elderlycare services, such as the “insurance + healthcare”, “insurance + home-based elderlycare” and
“insurance + high-end elderlycare” products. In particular, with the implementation of the “insurance +
healthcare” combination service, Ping An Life provided health management services to over 20 million
customers in 2023, with about 76% of newly enrolled customers also using the health management services.
Ping An Annuity carries out pension, investment and entrusted management businesses, and is China’s first
professional pension company.
Ping An Health Insurance offers a range of health insurance products, and has emerged as the second-largest
health insurance company in China.
Life and health insurance business’s written premium amounted to RMB601,934 million in 2023.
Insurance – Property and Casualty Insurance Business
We conduct our property and casualty insurance business mainly through Ping An P&C, which offers a
range of property and casualty insurance products, including auto, corporate property and casualty,
engineering, cargo, liability, guarantee, credit, home contents, and accident & health insurance, as well as
international reinsurance business.
Ping An P&C is the second largest property and casualty (“P&C”) insurer in PRC by premium income.
An overview of the operating data of Ping An P&C’s core products, being auto insurance, liability
insurance, health insurance, accidental injury insurance, corporate property and casualty insurance and
guarantee insurance, for the year ended 31 December 2023 is set out below:
Insurance Combined
Insured Premium Insurance service Underwriting Ratio Net insurance
(RMB million) amount income revenue expenses profit (“COR”) contract liabilities
Auto insurance............................ 289,778,369 213,851 209,538 200,840 4,732 97.7% 185,461
Liability insurance...................... 868,698,218 23,221 21,848 21,811 (1,373) 106.3% 23,310
Health insurance......................... 140,735,069 13,250 10,655 9,979 511 95.2% 7,340
Accidental injury insurance ....... 958,588,454 10,160 11,224 11,646 (672) 106.0% 10,521
Corporate property and
casualty insurance .................. 21,568,692 9,423 9,090 7,128 213 97.7% 7,659
Guarantee insurance................... 47,393 665 22,003 28,625 (6,834) 131.1% 9,485
Note: COR = (insurance service expenses + (allocation of reinsurance premiums paid – amount recovered from reinsurer) + (net
insurance finance expenses for insurance contracts issued – net reinsurance finance income for reinsurance contracts held) +
changes in insurance premium reserves)/insurance revenue.
For the year ended 31 December 2023, Ping An P&C had premium income of RMB302.2 billion.
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Banking
We carry out our banking business through Ping An Bank and its wholly-owned subsidiary, being Ping An
Wealth Management. The banking business consists of the following:
Retail banking, which comprises liability business (including payroll, payment and settlement
services), asset business (including retail loans), private banking and wealth management business;
Corporate banking, which offers differentiated and comprehensive products to corporate customers,
with a focus on strategic sectors, such as new energy, next-generation infrastructure and new
manufacturing. The corporate banking business also offers “finance + technology”, which is a model
in which financial solutions are backed by technology; and
Interbank business, which includes investment trading and customer services, such as asset custody,
bond underwriting, corporate hedging, among others.
Ping An Bank had 109 branches and 1,201 business outlets in 2023. Ping An Bank’s revenue amounted to
RMB164,699 million for the financial year ended 31 December 2023, with total loans and advances
amounting to RMB3,407,509 million, net interest revenue amounting to RMB117,991 million for the
financial year ended 31 December 2023. The average balance of interest-earning assets and net interest
margin of Ping An Bank was RMB4,966,063 and 2.38% respectively, for the financial year ended 31
December 2023. Net fee and commission revenue of Ping An Bank amounted to RMB29,430 million for the
financial year ended 31 December 2023.
Asset Management
We conduct our asset management business primarily through companies including Ping An Securities, Ping
An Trust, Ping An Financial Leasing, and Ping An Asset Management.
Ping An Securities provides securities brokerage, futures brokerage, investment banking, asset management
and financial advisory services. Ping An Securities had over 23 million individual clients, securing our
position as the industry leader in 2023. The company maintains a prominent standing in the industry with
our substantial scale of debt financing, ranking first and sixth in annual asset-backed securities and bond
underwriting volumes, respectively, in 2023.
Ping An Trust provides trust services, with a focus on industrial investment and product and financial
service trusts. As of 31 December 2023, the total assets held in trust amounted to RMB662,503 million.
Ping An Financial Leasing provides financing and leasing to clients in various industries, particularly in
engineering and construction, manufacturing and processing, next-generation infrastructure, urban
redevelopment, city operations, auto finance, commercial vehicles, and includes the provision of small and
micro finance, structured financing and factoring. As of 31 December 2023, the company’s total assets
reached RMB240,024 million.
Ping An Asset Management’s primary focus lies in managing investment funds for Ping An Group while
also offering asset management services to third-party clients, domestically and internationally. Assets
under management (“AUM”) grew to RMB5,033,945 million as of 31 December 2023, including
RMB528,427 million in third-party AUM.
Technology
We develop core technologies and security in proprietary intellectual property rights, with a view to
transforming and upgrading Ping An’s core businesses. The Company engages in technology business
through member companies including Lufax Holding, OneConnect, Ping An Health and Autohome.
Lufax Holding is a leading financial services enabler for small business owners (“SBOs”) in PRC, and
provides SBOs with comprehensive, convenient financial products and services as well as enabling
financial institutions to reach and serve SBOs efficiently. Lufax Holding achieved RMB34,255 million in
total income in 2023.
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OneConnect is a technology-as-a-service provider for the financial services industry. OneConnect provides
“full-stack” integrated technology solutions to financial institutional customers, including digital banking
solutions and digital insurance solutions. OneConnect also provides digital infrastructure for financial
institutions through Gamma Platform. Under the “business + technology” model, OneConnect’s solutions
enable our customers’ digital transformations, which help them improve efficiency, enhance service quality,
and reduce costs and risks. OneConnect also focuses on digital banking solutions tailored for Southeast
Asian financial institutions. OneConnect’s revenue reached RMB3,668 million in 2023.
Ping An Health centering on family doctor membership and leveraging a diversified, premium online-to-
offline service network, has developed a specialized, comprehensive, high-quality and one-stop “healthcare
and elderlycare” services platform to provide users with comprehensive healthcare and elderlycare services.
Ping An Health achieved RMB4,674 million in revenue, with the number of cumulative paying users being
close to 40 million for the financial year ended 31 December 2023.
Autohome provides an online destination for automobile consumers in PRC and provides an ecosystem that
offers auto consumers with diverse products and services across the full auto lifecycle. Autohome’s revenue
and net profit reached RMB7,184 million and RMB2,160 million respectively in the financial year ended
31 December 2023.
Key Operating Subsidiaries
The following chart sets forth the key operating subsidiaries of the Company as at 31 December 2023:
Principal activities and Place of incorporation and
Name of Subsidiary place of operation kind of legal entity
Ping An Life ................................ Life insurance, Shenzhen Shenzhen, Corporation
Ping An Property & Casualty ....... Property and casualty insurance, Shenzhen, Corporation
Shenzhen
Ping An Bank ............................... Banking, Shenzhen Shenzhen, Corporation
Ping An Trust ............................... Investment and trust, Shenzhen Shenzhen, Corporation
Ping An Securities........................ Securities investment and Shenzhen, Corporation
brokerage, Shenzhen
Ping An Annuity........................... Annuity insurance, Shanghai Shanghai, Corporation
Ping An Asset Management Asset management, Shanghai Shanghai, Corporation
Co., Ltd. ...................................
Ping An Health Insurance ............ Health insurance, Shanghai Shanghai, Corporation
China Ping An Insurance Investment holding, Hong Kong Hong Kong, Corporation
Overseas (Holdings) Limited ....
Ping An International Financial leasing, Shanghai Shanghai, Corporation
Financial Leasing......................
The Company also has the following key associated companies as at 31 December 2023:
Name of Associated Company Principal activities Place of incorporation
Lufax Holding .............................. Financial technology The Cayman Islands
OneConnect .................................. Technology-as-a-service cloud The Cayman Islands
platform for financial
institutions
Ping An Health............................. Online healthcare The Cayman Islands
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Employees
As of 31 December 2023, the Company had 288,751 current employees, of whom 237,019 were in the
parent company and major subsidiaries.
The Group adheres to, and complies with, the relevant labour laws of PRC, Hong Kong and other
jurisdictions in which it operates. Staff benefits include salaries, provident fund contributions, insurance
and medical care. The Group believes that its employees are critical to its success, and it is committed to
investing in the development of its employees through continuing education and training, as well as the
creation of opportunities for career growth. In order to motivate employees, employee salaries are tied to
business and individual performance. As at the date of this Offering Circular, the Group has not experienced
any labour strikes or other material labour disputes that affected its operations.
Insurance
The Group maintains insurance which covers losses caused by fire, flood, riot, strike and malicious damage.
The Group believes that its properties are covered by adequate insurance provided by reputable independent
insurance companies in the relevant jurisdictions, and with commercially reasonable deductibles and limits
on coverage which are normal for the type and location of the assets and properties which they relate.
Legal And Regulatory Proceedings
From time to time, the Group may be subject to legal claims and regulatory actions against the Group in
the ordinary course of its business. As of the date of this Offering Circular, the Group is not currently
involved in, nor is its management aware of any threat of, any litigation, regulatory proceeding or
arbitration, the outcome of which would, in the reasonable judgment of the Group’s management, have a
material adverse effect on its business, financial condition or results of operations.
Awards And Accolades
The Group has achieved several accolades and awards in the lifetime of its business. Some of the recent
awards and accolades include the following, among others:
In 2024, the Group was ranked 29th in the Forbes Global 2000 list and 2nd among global insurance
companies.
In 2023, the Group ranked 31st overall, 6th among global financial enterprises, and ranked 1st as the
world’s most valuable insurance brand for 8 consecutive years in Brand Finance’s “2024 The World’s
500 Most Valuable Insurance Brands”.
In the 2023 Fortune Global 500 list, the Group ranked 33rd overall, 5th among global financial
enterprises, and maintained 1st place among global insurance enterprises.
For the Hong Kong Institute of Directors’ Directors Of The Year Awards 2021, our Company won the
awards in the “Listed Companies Boards” and “Listed Companies Executive Directors” categories for
our outstanding corporate governance. In 2023, Chairman Ma Mingzhe received the Directors Of The
Year Awards 2023.
In 2023, the Group won the China Charity Award for the fourth time. The Group previously won the
award in 2001, 2005 and 2008.
For the MSCI ESG Ratings (2023), the Group maintained “A” and remained No. 1 in the multiline
insurance and brokerage industry in the Asia-Pacific region.
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PRC LAWS AND REGULATIONS
This section is a high-level overview of the PRC legal system and a summary of the principal PRC laws and
regulations relevant to the issue of the Bonds by the Issuer. As this is a summary, it does not contain a
detailed analysis of the PRC laws and regulations.
The PRC Legal System
The PRC legal system is based on the Constitution of the People’s Republic of China (the “PRC
Constitution”) and is made up of written laws, regulations, directives and local laws and laws resulting
from international treaties entered into by the PRC government. In general, court judgments do not
constitute binding precedents. However, they are used for the purposes of judicial reference and guidance.
The National People’s Congress of the PRC (the “NPC”) and the Standing Committee of the NPC are
empowered by the PRC Constitution to exercise the legislative power of the State. The NPC has the power
to amend the PRC Constitution, enact and amend basic laws governing State agencies and civil, criminal
and other matters. The Standing Committee of the NPC is empowered to enact and amend all laws except
for the laws that are required to be enacted and amended by the NPC.
The State Council is the highest organ of the State administration and has the power to enact administrative
rules and regulations. The ministries and commissions under the State Council are also vested with the
power to issue orders, directives and regulations within the jurisdiction of their respective departments. All
administrative rules, regulations, directives and orders promulgated by the State Council and its ministries
and commissions must be consistent with the PRC Constitution and the national laws enacted by the NPC
and the Standing Committee of the NPC. In the event that a conflict arises, the Standing Committee of the
NPC has the power to annul administrative rules, regulations, directives and orders. The People’s
Congresses or their standing committees of the comparatively larger cities may, in light of the specific local
conditions and actual needs, formulate local regulations, provided that they do not contradict the PRC
Constitution, the national laws, the administrative regulations and the local regulations of their respective
provinces or autonomous regions, and they shall submit the regulations to the standing committees of the
people’s congresses of the provinces or autonomous regions for approval before implementation.
At the regional level, the provincial and municipal congresses and their respective standing committees may
enact local rules and regulations and the people’s governments may promulgate administrative rules and
directives applicable to their own administrative areas. These local rules and regulations must be consistent
with the PRC Constitution, the national laws and the administrative rules and regulations promulgated by
the State Council.
The State Council, provincial and municipal governments may also enact or issue rules, regulations or
directives in new areas of the law for experimental purposes or in order to enforce the law. After gaining
sufficient experience with experimental measures, the State Council may submit legislative proposals to be
considered by the NPC or the Standing Committee of the NPC for enactment at the national level.
The PRC Constitution vests the power to interpret laws in the Standing Committee of the NPC. The
Supreme People’s Court, in addition to its power to give general interpretation on the application of laws
in judicial proceedings, also has the power to interpret specific cases. The State Council and its ministries
and commissions are also vested with the power to interpret rules and regulations that they have
promulgated. At the regional level, the power to interpret regional rules and regulations is vested in the
regional legislative and administrative bodies which promulgated such laws.
The PRC Judicial System for Insurance Industry
The insurance industry in the PRC is subject to various regulatory provisions and guidelines formulated by
the PRC regulatory authorities, including but not limited to the NFRA, the SAMR, the State Administration
of Taxation (the “SAT”) and their respective local branches. The legal provisions constituting the legal
framework for supervising and regulating insurance activities in the PRC mainly include the PRC Insurance
Law ( ) and the administrative rules, regulations and other regulatory documents
formulated pursuant to the PRC Insurance Law.
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Regulatory Authority
The NFRA is established on 16 March 2023 on the foundation of the China Banking and Insurance
Regulatory Commission (the “CBIRC”) according to the Party and State Institutional Reform Plan (2023)
( (2023) ). The NFRA is a public institution directly under the State Council, and
is now the principal regulatory authority for the insurance industry in China, responsible for the supervision
and regulation of insurance institutions and practitioners operating in China.
According to the Provisions on the Functions, Structure and Staffing of the National Financial Regulatory
Administration ( ) promulgated by the General
Office of the CPC Central Committee for Institutional Organisational Reform on 29 October 2023, the
primary regulatory functions and measures of the NFRA and its local branches over the insurance industry
include:
Implementing unified supervision and management of the insurance industry in accordance with the
law, strengthening institutional supervision, behavioural supervision, functional supervision,
penetrating supervision, and continuous supervision, and maintaining the legal and sound operation
of the financial industry;
Conducting systematic research on issues related to the reform and opening up and the effectiveness
of supervision of the financial industry, and participating in the formulation of the financial industry
reform and development strategic planning. Formulating draft laws and regulations related to the
insurance industry and providing suggestions for formulation and amendment. Establishing relevant
regulatory systems for insurance institutions;
Coordinating the work of protecting the rights and interests of financial consumers. Formulating the
development plan for the protection of the rights and interests of financial consumers, establishing and
improving the regulatory system for the protection of the rights and interests of financial consumers;
Implementing access management for insurance institutions in accordance with the law, and
supervising their corporate governance, risk management, internal control, capital adequacy, solvency,
business conduct, information disclosure, etc.;
Conducting on-site inspections and off-site supervision of insurance institutions in accordance with
the law, carrying out risk and compliance assessments, and investigating and punishing illegal and
non-compliant activities;
Uniformly compiling the regulatory data reports of insurance institutions and publish them in
accordance with relevant national regulations, and performing the related work responsibilities of the
comprehensive statistics of the financial industry;
Being responsible for the technological supervision of insurance institutions, establishing a
technological supervision system, formulating technological supervision policies, building a
supervisory big data platform, carrying out risk monitoring, analysis, evaluation, and early warning,
and making full use of technological means to strengthen supervision and prevent risks;
Implementing penetrating supervision of insurance institutions, formulating a shareholding
supervision system, reviewing and approving shareholders, actual controllers and changes in
shareholding and investigating shareholders, actual controllers and their concerted actors, and
ultimate beneficiaries in accordance with the law, and taking relevant measures or impose penalties
for illegal and non-compliant acts;
Establishing a financial audit system outside the fields of currency, payment, credit reporting,
anti-money laundering, foreign exchange and securities and futures, investigating, collecting evidence
and handling relevant subjects of illegal financial activities in accordance with the law, and
transferring those suspected of crimes to judicial authorities;
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Leading in cracking down on illegal financial activities, organizing the establishment of a monitoring
and early warning system for illegal financial activities;
Supervising the information technology outsourcing cooperation between insurance institutions and
intermediary institutions such as information technology service institutions.
Regulatory Framework
The PRC Insurance Law is the most important law in the regulatory and legal framework for the PRC
insurance industry. The PRC Insurance Law was passed on 30 June 1995, implemented on 1 October 1995
and amended in 2002, 2009, 2014 and 2015, respectively.
The PRC Insurance Law covers general principles, insurance contracts, insurance companies, insurance
operational rules, supervision and regulation of the insurance industry, insurance agencies and insurance
brokers, legal liabilities and supplementary provisions.
In 2015, the PRC Insurance Law was amended for the fourth time. Major amendments include: (i) deleting
the requirement that the establishment of an offshore representative office by an insurance company shall
be subject to the approval of the insurance regulatory authority of the State Council; (ii) deleting the
requirement that the individuals who are engaged in insurance sales for an insurance company shall obtain
the qualification certificates issued by the insurance regulatory authority of the State Council, and instead
it only stipulates that the aforesaid individuals should be of good character and have the professional
competence required for insurance sales; (iii) deleting the requirement that individual insurance agents,
agency practitioners of insurance agencies and brokerage practitioners of insurance brokers shall obtain the
qualification certificates issued by the insurance regulatory authority of the State Council, and instead it
only stipulates that the aforesaid individuals should be of good character and have professional competence
required for insurance agencies and insurance brokerage businesses; (iv) deleting the requirement that the
division and merger, any change of the corporate structure, establishment of branches and dissolution of
insurance agencies and insurance brokerages shall be subject to the approval of the insurance regulatory
authority of the State Council.
Since the promulgation of the PRC Insurance Law in 1995, the insurance supervision and regulatory
authority has promulgated a series of departmental rules and regulations and other regulatory documents
based on the PRC Insurance Law, which cover almost all aspects of insurance operations, thereby
establishing a preliminary regulatory framework with three parallel pillars, supervision of corporate
governance, supervision of market conduct and supervision of solvency.
Supervision of corporate governance includes laws and regulations on the establishment, equity
management, directors, supervisors and senior management, and related party transactions of insurance
companies. The governance structure of insurance companies is constantly improved to prevent their
operating risks fundamentally and enhance the efficiency of insurance supervision. Supervision of market
conduct includes laws and regulations on the businesses of insurance companies, reinsurance business,
personnel and use of insurance funds in the insurance industry. The insurance supervision authorities
gradually establish and improve the codes of market conduct to impose penalties for non-compliance and
promote legal operation and fair competition, driving the normative development of the insurance industry.
Supervision of solvency includes laws and regulations on the China Risk-Oriented Solvency System
(“C-ROSS”), capital supplementary bonds and subordinated debts, etc.
Establishment Of Insurance Companies
Supervision on Equity and Qualifications of Shareholders
The PRC insurance laws and regulations set out different requirements on establishment and business
operation qualification for different types of entities engaged in insurance business, including insurance
group (holding) companies, insurance companies, insurance intermediaries and insurance asset management
companies.
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For the establishment of insurance companies, in addition to the PRC Insurance Law, important laws and
regulations also include the Administrative Regulations for Insurance Companies ( )
implemented on 1 October 2009 and amended on 19 October 2015. The Administrative Regulations for
Insurance Companies regulates the organisation structuring of insurance companies, branch establishment,
change in organisation structure, dissolution and deregistration of organisation, branch management,
insurance operation and supervision and management.
Under the Administrative Regulations for Insurance Companies, establishing an insurance company
requires the approval by the NFRA and satisfying the following conditions: (i) there are investors who meet
the conditions stipulated by laws, administrative regulations and the NFRA, and the equity structure is
reasonable; (ii) there is a draft of the articles of association that meet the provisions of the PRC Insurance
Law and the PRC Company Law; (iii) investors commit to contribute capital or subscribe for shares, and
the proposed registered capital shall not be less than RMB200 million, which must be paid-in monetary
capital; (iv) there are clear development plans, business strategies, organisational structure frameworks, and
risk control systems; (v) the proposed chairman and general manager shall meet the qualification
requirements stipulated by the NFRA; (vi) there is a preparatory group leader recognised by the investors;
and (vii) other conditions stipulated by the NFRA.
Pursuant to the Administrative Measures for the Equity of Insurance Companies (
), shareholders of insurance companies are classified into four categories based on the shareholding
percentage and their influence on the operation management of insurance companies: Type I financial
shareholders (holding less than 5% of the equity of insurance companies), Type II financial shareholders
(holding 5% or more but less than 15% of the equity of insurance companies), strategic shareholders
(holding 15% or more but less than one-third of the equity of insurance companies, or shareholders who
may exert substantial influences over resolutions of the meetings of the shareholders of insurance
companies through their voting power acquired through the capital contribution or shares they hold), and
controlling shareholders (holding one-third or more of the equity of insurance companies, or shareholders
who may exert controlling influences on resolutions of the meetings of shareholders of insurance companies
through their voting power acquired through the capital contribution or shares they hold). Different
regulatory policies and standards have been adopted to specify the various capital investment percentage
limits and quantitative restrictions.
An investor may acquire equities of an insurance company by the following means: (i) establishing an
insurance company; (ii) subscribing for unlisted equities issued by an insurance company; (iii) accepting
the equities of an insurance company from other shareholders by way of agreement; (iv) publicly acquiring
equities of an insurance company transferred from another shareholder by means of bidding; (v) purchasing
equities of a listed insurance company from the stock market; (vi) purchasing convertible bonds of an
insurance company, and acquiring its equities in accordance with terms of the bonds; (vii) acquiring equities
of such insurance company as the pledgee of the equities of an insurance company in accordance with
relevant provisions; (viii) acquiring the equities of an insurance company through participating in the risk
resolutions by the NFRA for an insurance company; (ix) acquiring the equities of an insurance company
through administrative allocation; (x) other methods as permitted by the NFRA. The shareholding
percentage of a single shareholder shall not exceed one-third of the registered capital of an insurance
company. A single domestic limited partnership shall not hold equities exceeding 5% of the registered
capital of an insurance company, and the aggregate shareholding percentage of domestic limited
partnerships in the same insurance company shall not exceed 15% of the registered capital of the insurance
company. Where an investor acquires convertible bonds of an insurance company and converts the bonds
to shares in accordance with the contractual criteria, or acquires shares in an insurance company through
realisation of pledge, the approval/filing formalities with the NFRA shall be completed pursuant to the
provisions of the Administrative Measures for the Equity of Insurance Companies.
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The shareholding percentage of a shareholder, its related parties and persons acting in concert shall be
consolidated when calculating the holding percentages. An investor and its related parties and persons
acting in concert may only be the controlling shareholder of one insurance company operating in the same
type of insurance business.
Those who become Type I financial shareholders (holding less than 5% of the equity of insurance
companies) of insurance companies through purchasing shares of listed insurance companies are not subject
to certain restrictions on the qualifications of shareholders and are exempted from submitting certain
declaration materials generally required for investors of insurance companies under the Administrative
Measures for the Equity of Insurance Companies.
The change of a shareholder holding 5% or more of the equity of an insurance company shall be approved
by the NFRA. Except for a listed insurance company, the change of a shareholder holding less than 5% of
the equity of an insurance company shall be reported to the NFRA for record-filing, and be disclosed to the
public on the website of the insurance company and the websites designated by the NFRA respectively.
Where an investor purchases shares of a listed insurance company, with the shareholding percentage thereof
reaching the threshold of 5%, 15% and one-third respectively of the total share capital of the insurance
company, the investor shall notify the insurance company in writing within 5 business days from the trading
day, and the insurance company shall apply to the NFRA for approval thereof within 10 business days of
receiving the notice.
Registered Capital
Pursuant to the Administration Regulations for Insurance Companies, the registered capital of an insurance
company shall be no less than RMB200 million and fully paid up in cash. Where an insurance company
established with the minimum registered capital of RMB200 million applies to set up a branch for the first
time in each province other than its place of domicile, not less than RMB20 million shall be added to its
registered capital for each new branch. An insurance company may apply for establishment of a provincial
level branch without increasing its registered capital as required if its registered capital already reaches the
minimal capital amount required for setting up branches. When the registered capital of an insurance
company reaches RMB500 million, the insurance company need not increase its registered capital for
setting up new branches provided that it satisfies the solvency requirements.
According to the Administrative Regulations for Insurance Companies, insurance institutions shall obtain
approval from the NFRA under the following circumstances: (i) change of insurance company name; (ii)
change of registered capital; (iii) expansion of business scope; (iv) change of business premises; (v)
division or merger of insurance companies; (vi) amendment of the insurance company’s articles of
association; (vii) change in the amount of contribution by a shareholder holding 5% or more of the total
capital of a limited liability company, or change in ownership of 5% or more of a joint stock company; and
(viii) other circumstances as specified by the NFRA.
Pursuant to the Administrative Measures for the Equity of Insurance Companies and the Guidelines for the
Approval of Establishment, Merger, Division, Change and Dissolution of Insurance Group Companies and
Insurance Holding Companies, published by the NFRA on 16 June 2023, an insurance group company shall
obtain prior approval from the NFRA for any change to the registered capital and afterwards fulfil the
reporting procedure for the corresponding amendments to the articles of associations.
The application materials required of change of registered capital include but are not limited to: (i)
application letter for changing registered capital; (ii) resolution by the company’s general meeting to change
the registered capital; (iii) proposal and feasibility study for the change of the registered capital; (iv) report
on the equity structure after the change of the registered capital; (v) materials to be submitted by investors
participating in the capital increase, as applicable, (vi) explanation of the source of investment funds and
a statement on the legality of the source of investment funds, etc. Also, according to the type of shareholder
each investor belongs to, investors shall meet the corresponding qualifications for shareholders of an
insurance group company.
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Subject to other regulations or arrangements as may be accepted by the NFRA from time to time, the NFRA
shall make a written decision to approve or disapprove the change of capital within 20 working days from
the date of formal acceptance of the complete application materials. Upon approval, the time limit can be
extended by 10 working days. If laws and regulations provide otherwise, such provisions shall be followed.
Pursuant to the Administrative Measures for the Equity of Insurance Companies, if an insurance company
fails to comply with the provisions of these measures in managing its equity, the NFRA may adjust the
company’s corporate governance evaluation results or classification supervision evaluation category. If
shareholders of an insurance company or related parties violate the provisions of these measures, the NFRA
may take the following regulatory measures: (i) issue a notice of criticism and order rectification; (ii)
publicly condemn and disclose the violation to society; (iii) restrict their relevant rights in the insurance
company; (iv) order them to transfer or auction their equity holdings according to the law, and before the
equity transfer is completed, restrict their shareholder rights. If the transfer is not completed within the
specified period, the equity will be transferred to an investor who meets NFRA’s requirements at the
assessed price; (v) restrict their investment activities in the insurance industry and inform other financial
regulatory institutions; (vi) legally restrict the insurance company’s dividend distribution, debt issuance,
listing, and other actions; (vii) other measures that the NFRA can lawfully take.
Qualification for Conducting Insurance Business
Pursuant to the PRC Insurance Law, the Administrative Regulations for Insurance Companies and other
related regulatory documents, the insurance companies engaging in insurance business must first apply to
the NFRA for commencement of business and obtain the insurance business license. To acquire the
insurance business license, insurance companies must satisfy the requirements in aspects of shareholders,
articles of association, registered capital, organisational structure, management system, business
development plan, business premises and the qualifications of directors, supervisors and senior
management.
An insurance company may apply for establishing branches to meet its business development needs. The
hierarchies of an insurance company’s branches include branch, central sub-branch, sub-branch, and
business outlet or sales service centre. An insurance company shall file with the NFRA and its local office
when establishing a branch.
Business Scope
Insurance companies must conduct insurance business activities within the business scope approved by the
NFRA in accordance with the law. An insurance company shall not concurrently engage in both property
and casualty insurance business and life and health insurance business. However, a property and casualty
insurance company may, upon approval by the NFRA, engage in short-term health insurance business and
accidental injury insurance business.
Pursuant to the PRC Insurance Law, the business scope of insurance companies includes:
life and health insurance business, including life insurance, health insurance, accidental injury
insurance;
property and casualty insurance business, including insurance against loss or damage to property,
liability insurance, credit insurance and guarantee insurance; and
other insurance business approved by the NFRA.
Insurance companies may also engage in the outward and/or inward reinsurance business with respect to the
aforesaid insurance business, subject to the approval of the NFRA.
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Insurance Group Companies
Pursuant to the Measures for the Supervision and Administration of Insurance Group Companies (
, the “Insurance Group Companies Measures”), promulgated by the CBIRC and
effective on 24 November 2021, an insurance group company refers to a company registered in accordance
with the law and formed upon the approval of the NFRA with the words “insurance group” or “insurance
holding” in its name, which exerts control, joint control or significant influence over the members of the
insurance group.
The establishment of an insurance group company shall be subject to approval of the NFRA and shall meet
the following conditions: (i) having investors that meet the qualifications for shareholders of an insurance
company as prescribed by the NFRA, have appropriate equity structure and jointly control more than 50%
of the equity of at least two domestic insurance companies; (ii) having members who satisfy the
requirements under Article 6 of the Insurance Group Companies Measures; (iii) having a minimum
registered capital of RMB2 billion; (iv) having directors, supervisors and senior management who satisfy
the eligibility requirements as prescribed by the NFRA; (v) having a sound corporate governance structure,
integrated organisational structure, and effective risk management and internal control management
systems; (vi) having business premises, office equipment and information systems commensurate with its
operation and management; and (vii) other conditions as specified by laws, administrative regulations and
the NFRA. Where it involves mitigating risks, the aforementioned conditions may be appropriately relaxed
upon the approval of the NFRA.
The main business of insurance group companies is equity investment and management. Insurance group
companies shall use their own funds to make significant equity investments. An insurance group company
may invest in the following insurance-related enterprises: (i) insurance companies; (ii) insurance asset
management institutions; (iii) specialized insurance agencies, insurance brokers and insurance loss
adjusting institutions; and (iv) other insurance-related enterprises established under the approval of the
NFRA.
Insurance group companies may also invest in non-insurance financial enterprises. The aggregate book
value of significant equity investments in domestic non-insurance financial enterprises by an insurance
group company and its subsidiaries shall not exceed 30% of the group’s consolidated net assets as of the
end of the previous year.
Under the Insurance Group Companies Measures, insurance group companies and their subsidiaries shall
be included in the scope of consolidated supervision. The NFRA may carry out its supervision directly or
indirectly on the basis of consolidated supervision and conduct comprehensive monitoring on the risks of
all the members of the insurance group through insurance group companies or other regulated members in
accordance with the law and take corresponding measures as necessary.
An annual information disclosure report shall be published by the insurance group company before 30 April
every year. The insurance group company shall post the basic information, material matters and annual
information disclosure report of the Company and the Group as a whole on the Company’s website. In the
event of any changes to the basic information, the insurance group company shall update the information
within ten working days from the date of such change. If a significant event takes place, the insurance group
company shall issue a temporary information disclosure announcement within 15 working days from the
date of such significant event.
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Corporate Governance
Articles of Association
Insurance companies are required to formulate the basic contents of their articles of association, (including
the formulation and modification procedures thereof) in accordance with the PRC Insurance Law, the PRC
Company Law, the Opinions of Regulating the Articles of Association of Insurance Companies (
), promulgated by the Chinese Insurance Regulatory Commission (the “CIRC”,
now substituted by the NFRA) and effective on 1 October 2008, the Guidelines for the Articles of
Association for Insurance Companies ( ), promulgated by the CIRC and effective on
24 April 2017 and amended on 4 February 2020, the Insurance Group Companies Measures and other
applicable laws, regulations and regulatory documents.
Corporate Governance Structure
Pursuant to the PRC Company Law and the Administrative Measures for Independent Directors of Insurance
Institutions ( ) amended on 4 February 2020, insurance companies are
required to hold shareholders’ meetings (general shareholders’ meetings) and establish the board of
directors, the board of supervisors and the management, and to allocate and classify the powers of the same
in the articles of association and relevant internal governance documents. The board of directors of
insurance companies must have at least three independent directors and the proportion of independent
directors must account for not less than one third of the members of the board of directors.
Pursuant to the Corporate Governance Guidelines for Banking and Insurance Institutions (
), promulgated by the CBIRC and effective on 2 June 2021, insurance companies shall, in
accordance with laws and regulations, regulatory provisions and the conditions of the institution, separately
or jointly, establish specialized committees, such as specialized committees of strategy, audit, nomination,
remuneration, related party transaction control, risk management and protection of consumers’ rights and
interests. The chairman or person in charge of the audit, nomination, remuneration and related party
transaction control committee shall be an independent director. In principle, the proportion of independent
directors in the audit, nomination, remuneration, risk management and related party transaction control
committees shall be no less than one third.
Pursuant to the Administrative Measures for Independent Directors of Listed Companies (
), promulgated by the CSRC and effective on 4 September 2023, The independent directors
of a listed company shall at least include one accounting professional. A listed company shall set up an audit
committee in the board of directors. The members of the audit committee shall be the directors that are not
one of the senior management of the listed company, and the number of independent directors shall exceed
the majority, and an accounting professional among the independent directors shall act as the chairman or
convener. A listed company may, in light of the needs, set up specialized committees of nomination,
remuneration and appraisal, and strategy, etc. The number of independent directors in the nomination
committee and the remuneration and appraisal committee shall exceed the majority, and independent
directors shall act as the chairman or conveners.
In addition, according to the Corporate Governance Guidelines for Banking and Insurance Institutions,
insurance companies are required to set up an (i) an independent risk management department to be
responsible for integrated risk management; (ii) an independent internal audit department to be responsible
for the work relating to internal audit; (iii) an internal control system to specify internal control duties, to
strengthen internal control guarantees, and to continuously carry out internal control evaluation and
supervision; and (iv) a sound information system that runs through all levels of bodies and covers all
operations and all processes, and record operation and management information in a timely and accurate
manner to ensure the completeness, continuity, accuracy and traceability of information.
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Pursuant to the Insurance Group Companies Measures, an insurance group company shall, at the same time
as properly operating the general meeting, board of directors, and board of supervisors of the insurance
group company in accordance with the law, strengthen the decision-making support and organisational
management of meetings at different levels and categories of its subsidiaries. An insurance group company
should establish or designate the relevant functional departments to provide support and services for the
directors and supervisors it dispatches to its subsidiaries. The directors and supervisors of the subsidiaries
shall bear legal responsibility for their performance of duties on the board of directors or board of
supervisors.
Qualification of Directors, Supervisors and Senior Management
Pursuant to the Administrative Provisions on the Qualification of Directors, Supervisors and Senior
Management of Insurance Companies ( ),
promulgated by the CBIRC and effective from 3 July 2021, the director, supervisor and senior management
of an insurance institution shall, before taking the office, be confirmed by the NFRA to satisfy the office
qualifications. Senior management of an insurance company refers to the following persons who have the
decision-making power or have a significant impact on the business management and risk control of an
insurance institution:
the general manager, deputy general manager and general manager assistant of the headquarters;
board secretary, chief compliance officer, chief actuary, chief financial officer and officer responsible
for auditing of the headquarters;
general manager, deputy general manager and general manager assistant of provincial branches;
general manager of other branches and central sub-branches;
other management with identical authority as the aforementioned senior management.
Pursuant to the Administrative Measures for Independent Directors of Insurance Institutions, an
independent director shall possess high professional qualities and good reputation, and shall meet the
qualification requirements in accordance with applicable laws, regulations and other relevant conditions
prescribed by the NFRA. An independent director shall ensure that he or she has sufficient time and energy
to effectively perform the duties and may only concurrently serve as independent directors in no more than
four enterprises.
Internal Control, Compliance and Risk Management
Pursuant to the Basic Standards for Internal Control of Insurance Companies (
), promulgated by the CIRC and effective from 1 January 2011, the internal control of an insurance
company shall include sales control, operational control, basic management control and control over
investments with insurance funds. An insurance company shall establish an internal control organisation
system. In such system, the board of directors bears the ultimate responsibility, the management takes direct
leadership, the internal control functional department carries out coordination, the internal audit department
carries out inspection and supervision, and the business units hold primary responsibilities, together with
explicit division of responsibilities, clear reporting lines, mutual cooperation and efficient implementation.
Pursuant to the Administrative Measures for Compliance Management of Insurance Companies (
), promulgated by the CIRC and effective from 1 July 2017, insurance companies shall
establish and improve the compliance management system. Insurance companies shall formulate
compliance policies and file with the NFRA for record once approved by the board of directors. The board
of directors of insurance companies shall bear the ultimate responsibility for the compliance management
of the company. Insurance companies shall appoint a chief compliance officer, who shall report to the board
of directors and work under the leadership of the board of directors and the general manager. Insurance
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companies shall establish clear cooperation and information exchange mechanisms between the compliance
department and the internal audit department. An insurance group (holding) company shall set up an overall
compliance management system for the group, strengthen the planning, leadership and supervision over the
compliance management of the whole group, and enhance the level of compliance management. Each
member company shall implement the group’s overall compliance management requirements and be
responsible for its own compliance management.
Pursuant to the Guidelines for the Risk Management of Insurance Companies (For Trial Implementation)
( ( ) ), promulgated by the CIRC and effective from 1 July 2007, insurance
companies shall establish a risk management framework that covers all business units under the direct
leadership of the management and with the support of the risk management department, wherein relevant
functional departments shall coordinate closely with each other. The ultimate responsibilities of the risk
management shall be assumed by the board of directors. Insurance companies shall set up a risk
management department or designate a department to take charge of matters relating to risk management.
Insurance companies shall identify and assess various types of significant risks in the operating process,
including insurance risk, market risk, credit risk and operational risk.
Related Party Transaction
Pursuant to the PRC Insurance Law, insurance companies shall establish systems on the management and
disclosure of related party transactions. The controlling shareholders, actual controllers, directors,
supervisors and senior management of insurance companies shall not injure the interests of the companies
through related party transactions.
Pursuant to the Administrative Measures for Related-party Transactions of Banking and Insurance
Institutions ( ), promulgated by the CBIRC and effective from 1 March
2022, insurance companies shall identify related parties and related party transactions and calculate the
transaction amounts based on the principle of substance-over-form and look-through. The board of directors
of an insurance company shall establish a related party transaction control committee to take charge of the
management, review and risk control of related party transactions. The board of directors shall bear the
ultimate responsibility of the management of related party transactions. The related party transaction
control committee shall consist of three or more directors, and be chaired by an independent director. The
related party transaction control committee shall focus on the compliance, fairness and necessity of related
party transactions. Insurance companies shall establish management system for related party transactions,
which shall include the identification, reporting, information collection and management of related parties,
and the pricing, examination, recusal, reporting, disclosure, auditing and accountability of related party
transactions. Insurance companies shall report and disclose related party transaction information in an
authentic, accurate, complete and timely manner.
Pursuant to the Notice on Strengthening Supervision of related party transactions in the Use of Funds by
Insurance Institutions ( ) issued by CBIRC on 27
May 2022, insurance institutions should comply with laws, regulations and supervisory provisions in
conducting related party transactions in the use of funds, operate prudently and independently, and follow
the principles of good faith, openness and fairness, look-through identification, and clear structure. Related
parties of insurance institutions shall not interfere with or manipulate the use of funds, and the use of
insurance funds for illegal and irregular related party transactions is strictly prohibited.
Information Disclosure
Pursuant to the Administrative Measures for the Information Disclosure of Insurance Companies (
), promulgated by the CBIRC and effective from July 2018, insurance companies
shall disclose information in compliance with laws, regulations, and other regulatory documents, and
comply with the principles of authenticity, accuracy, completeness, timeliness and effectiveness, and the
information disclosed shall not contain any misrepresentation, misleading statements or have material
omissions. The board secretaries of insurance companies shall be responsible for managing the information
disclosure affairs of the company.
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Insurance companies shall disclose the following information:
basic information, including company overview, summary of corporate governance, and basic
information of products;
financial and accounting information, including financial statements and main audit opinions in the
audit reports;
premium reserve information, including the qualitative information and quantitative information on
the assessment of the reserves;
risk management information, including risk evaluation explanations, risk control system, strategies
and the implementation;
business information on insurance products, with different information disclosure requirements
applicable to life and health insurance products and property and casualty insurance products;
solvency information, including the core solvency margin ratio, comprehensive solvency margin ratio,
actual capital, minimum required capital;
information on significant related party transactions, including overview of the transactions and the
basic information on the targets of the transaction, transaction counterparties, the main content and
pricing method of the transactions, and opinions of independent directors;
information on significant matters; and
other information stipulated by the NFRA.
Where any of the following significant issues arises, an insurance company shall disclose the relevant
information with a brief explanation:
the controlling shareholder or the actual controller is changed;
the chairman or the general manager is changed;
over one third of directors of the board of directors are changed in aggregate in the current year;
the name, registered capital, domicile or business premises of the company are changed;
the business scope of the company is changed;
the company merges with another one, spins off or dissolves itself, or files for bankruptcy;
the company cancels its provincial-level branches;
the company makes a major equity investment in another company, aiming to acquire control of it;
the actual heavy losses of a single investment made by the company amounts to over 5% of its net
asset value at the end of the last quarter; where the value of its net assets is negative, such losses shall
be measured by 5% of the company’s registered capital;
a heavy indemnity of over 5% of its net assets value at the last quarter end that is actually paid for
a single claim or all claims arising out of the same insurance accident; where the value of its net assets
is negative, such indemnity shall be measured by 5% of company’s registered capital;
any significant litigation which has significant impacts on the company’s net assets and actual
business operations or results in a ruling against the company to pay compensation of over RMB50
million;
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any major arbitration which has significant impacts on the company’s net assets and actual business
operations or any arbitration award rendered against the company to pay compensation of over
RMB50 million;
the insurance company or its chairman or general manager is imposed a criminal punishment;
the insurance company or the provincial-level branch thereof is imposed an administrative punishment
by the NFRA or its local branch office;
change or early dismissal of the accounting firm; and
other matters as prescribed by the NFRA.
Where an insurance company is unable to disclose the information on time, it shall report relevant
particulars to the NFRA before the expiration of the stipulated time limit for the disclosure, and publish the
reasons for failure of disclosure on time as well as the estimated disclosure time on its website.
Solvency
Pursuant to the PRC Insurance Law, an insurance company shall have the minimum solvency matched up
with its business scale and risk level. The solvency of an insurance company represents the ability of an
insurance company to fulfil its obligation to pay indemnity. According to the Administrative Provisions on
the Solvency of Insurance Companies (2021) ( (2021) ) which was
promulgated by CBIRC on 15 January 2021 and implemented on 1 March 2021, an insurance company that
meets all of the following three regulatory requirements shall be deemed as solvency-compliant: (1) the core
solvency ratio is not less than 50%; (2) the comprehensive solvency ratio is not less than 100%; and (3) the
integrated risk rating is Category B and above. An insurance company that fails to meet any of the above
requirements shall be deemed to be solvency non-compliant.
Insurance companies shall establish a sound organisational structure for solvency risk management,
establish a complete solvency risk management system and mechanism, assess its solvency ratio on a
regular basis, calculate its core solvency ratio and comprehensive solvency ratio, submit solvency reports
as required, conduct solvency stress tests in accordance with the regulations of the CBIRC, establish a
solvency data management system and prepare its three-year capital plan on an annual rolling basis.
According to the Notice of the Overall Framework of China Risk-Oriented Solvency System (
), issued by the CIRC on 3 May 2013, the overall framework of the
C-ROSS regime comprises three parts: institutional characteristics, supervisory pillars and supervisory
foundation. The three pillars are also applicable to the supervision of insurance groups. The substance and
requirements of group-level supervision involve all three pillars. Moreover, insurance groups typically have
risk diversification effects and they also face special risks different from those faced by an individual
insurance company. In developing specific supervisory standards for the three pillars, these special risks
should be taken into account and reflected accordingly.
There are three indicators to evaluate the solvency position of an insurance company: core solvency ratio,
comprehensive solvency ratio and integrated risk rating. The core solvency ratio and the comprehensive
solvency ratio reflect the company’s capital adequacy position for quantified risks, and the integrated risk
rating reflects the company’s overall solvency-related risk status.
The CIRC issued the Construction Plan for Second Phase Project of the C-ROSS (
) on 18 September 2017, officially initiating the second phase project of the C-ROSS, to further
enhance and optimise the C-ROSS supervision system, and improve the scientificity, effectiveness and
pertinence of the solvency supervision system. On 30 December 2021, the CBIRC issued the Regulatory
Rules on the Solvency of Insurance Companies (II) ( (II) , the “Rules II”),
which provides that the insurance industry shall implement the Rules II from the preparation of the
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quarterly solvency report for the first quarter of 2022. For insurance companies whose core solvency ratio
or comprehensive solvency ratio has fallen significantly, or has fallen below a threshold that triggers
regulatory action as a result of the Rules II, the NFRA would set transitional policies according to the actual
situation, allowing some regulatory rules to be put into practice step by step and fully implemented by 2025
at the latest. Pursuant to the Rules II, solvency supervision covers actual capital, minimum capital, life
insurance contract liability valuation, minimum capital for insurance risk (non-life insurance business),
minimum capital for insurance risk (life insurance business), minimum capital for insurance risk
(reinsurance company), minimum capital for market risk, minimum capital for credit risk, stress testing,
integrated risk rating (classified supervision), solvency aligned risk management requirements and
assessment, liquidity risk, solvency information public disclosure, solvency information exchange, credit
rating of insurance company, solvency report, insurance group, Lloyd’s Insurance Company (China)
Limited, look-through approach for market risk and credit risk, and capital planning under the regulatory
framework of the C-ROSS.
The Notice on Optimizing the Solvency Supervision Standards for Insurance Companies (
), issued by the NFRA and effective on 10
September 2023, proposes that on the basis of keeping the comprehensive solvency adequacy ratio at 100%
and the core solvency adequacy ratio at 50% as the regulatory standards unchanged, the solvency
supervision standards for insurance companies will be optimized according to the actual development of the
insurance industry.
Reserves
Pursuant to requirements of the PRC Accounting Standards for Business Enterprises No. 25 – Primary
Insurance Contracts ( 25 – ), promulgated by the MOF and effective from
January 2007, the PRC Accounting Standards for Business Enterprises No. 26 – Reinsurance Contracts
( 26 – ), promulgated by the MOF and effective from January 2007 and the
Administrative Measures for the Reserves for Non-life Insurance Business of Insurance Companies (
), promulgated by the CBIRC on 14 October 2021 and effective from
1 December 2021, insurance companies shall set aside unearned premium reserves, claim reserves, life
insurance reserves and long-term health insurance reserves.
Pursuant to the Administrative Measures for Reserves for Non-Life Insurance Business of Insurance
Companies ( ), insurance companies should establish and improve
the internal control system of reserve management, and clarify the division of responsibilities and work
processes. In assessing various reserves, an insurance company shall, in accordance with the provisions of
the NFRA and the principles and methods of non-life insurance actuarial calculation, keep objective and
prudent, and withdraw and carry forward various reserves adequately and reasonably. Insurance companies
shall submit reserve assessment reports, reserve retrospective analysis reports, and other reports as required
by the NFRA or its local branches to the NFRA or its local branches in accordance with regulations. The
NFRA or its local branches shall conduct random inspections and review of the above-mentioned reports
submitted by insurance companies in accordance with the law. Where an insurance company fails to
withdraw or carry forward various liability reserves in accordance with relevant provisions, a fine ranging
from RMB50,000 to RMB300,000 may be imposed by the NFRA or its local branches according to relevant
provisions of the PRC Insurance Law. According to the seriousness of the breach of the law, the NFRA may
impose penalties such as restricting business scope, ordering to stop accepting new business or revoking
business license. The directly responsible person-in-charge and other directly responsible persons shall be
warned and fined between RMB10,000 and RMB100,000 by the NFRA or its local branches in accordance
with the relevant provisions of the PRC Insurance Law; and if the circumstance is serious, the position
holding qualification shall be revoked.
Pursuant to the Implementation Rules for the Administrative Measures for Reserve of Non-life Insurance
Business of Insurance Companies (No. 1-7) ( (1-7 ) ),
effective as of 2 March 2022, retrospective analysis of reserves of non-life insurance business comprises
a retrospective analysis of unearned premium reserves and a retrospective analysis of claim reserves. Claim
reserves include incurred and reported reserves, incurred but not reported reserves, and claim expense
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reserves. An insurance company shall submit the reserve retrospective analysis report signed by the general
manager and the chief actuary to the NFRA or its local branches on a regular basis. The general manager
of an insurance company shall be responsible for the truthfulness of the basic information and the chief
actuary shall be responsible for the methodology of the retrospective analysis, the reasonableness of the
assumptions, and the accuracy of the calculation result.
Insurance Guarantee Fund
According to the provisions of the PRC Insurance Law, insurance companies shall pay the insurance
guarantee fund. Insurance guarantee fund should be under centralised management, and used in a
coordinated manner in the following situations: (i) when an insurance company is deregistered or declared
bankrupted, provide relief to the policyholders, the insured or the beneficiaries; (ii) when an insurance
company is deregistered or declared bankrupted, provide relief to the insurance companies legally accepting
its life insurance contracts; (iii) other cases specified by the State Council.
According to the Administrative Measures for Insurance Guarantee Fund ( ),
promulgated by the CBIRC, the MOF and the PBOC and effective on 12 December 2022, insurance
guarantee funds are non-governmental industry risk relief funds used to assist policyholders, policy
transferee companies, or to address risks in the insurance industry, divided into property guarantee
protection funds and life insurance guarantee funds. Insurance companies shall promptly and fully deposit
the insurance guarantee funds into the dedicated account of the insurance guarantee fund company. The
insurance business for which the insurance guarantee fund is paid shall be included in the scope of
assistance provided by the insurance guarantee fund.
Security Deposit
An insurance company is required by the PRC Insurance Law to make a security deposit which amount to
20% of its total registered capital into a bank designated by the insurance regulatory authority of the State
Council. Such security deposit shall not be used for any purposes other than settling the debts of such
insurance company during liquidation proceedings.
Pursuant to the Administration of Security Deposits of Insurance Companies (
) amended and implemented by the CIRC on 3 April 2015, insurance companies should choose two
or more than two commercial banks as security deposit banks. Insurance companies can make security
deposit in the form of: (1) fixed-term deposits; (2) large-amount agreement deposits; or (3) other forms
approved by the insurance regulatory authority of the State Council. The amount of each security deposit
shall not be less than RMB10 million (or equivalent foreign currency). If the increase in registered capital
(working capital) of an insurance company is less than RMB50 million (or equivalent foreign currency), a
one-off security deposit which is equal to 20% of the actual increase in capital shall be deposited. The term
for deposits of the security deposits shall not be shorter than one year. During the term of deposits,
insurance companies are not allowed to change the nature of the security deposits or use the security
deposits for mortgage financing.
Market Behavior
Insurance Clauses and Premium Rate
Pursuant to the Administrative Measures for Insurance Clauses and Insurance Premium Rates of Property
and Casualty Insurance Companies ( ) promulgated by the
CBIRC on 16 August 2021 and implemented on 1 October 2021, property and casualty insurance company
shall, before the end of March each year, make a statistical analysis of the development, revision and
clearance of the insurance clauses and premium rates of the previous year, and form an annual analysis
report and summary schedule of the insurance clauses and premium rates of the property and casualty
insurance company. After consideration and approval by the company’s product management committee, it
will be reported to the NFRA and its provincial-level branch at the same time. Property and casualty
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insurance companies and their branches shall strictly comply with the approved or filed insurance clauses
and insurance premium rates, and shall not change the insurance clauses or insurance premium rates in any
way in violation of the provisions of these Measures. The compliance officer and the chief actuary of a
property and casualty insurance company are responsible for the review of insurance clauses and the review
of premium rates, respectively. The heads of the department responsible for the development and
management of insurance clauses and premium rates of the property and casualty insurance company are
directly responsible for the development and management of the company’s insurance clauses and premium
rates, respectively. The compliance officer is directly responsible for the review of insurance clauses, and
the chief actuary is directly responsible for the review of premium rates.
According to relevant provisions of the Regulation on Compulsory Traffic Accident Liability Insurance for
Motor Vehicles ( ) as amended by State Council on 2 March 2019,
insurance companies may engage in the business of the compulsory insurance for liability for traffic
accidents of motor vehicles. The compulsory insurance for liability for traffic accidents of motor vehicles
shall apply the uniform insurance clauses and basic premium rates. The insurance supervision and
regulatory authority under the State Council shall examine and approve the premium rates under the
principle of making no profit or loss in general for the compulsory insurance for liability for traffic
accidents of motor vehicles. When signing a contract for the compulsory insurance for liability for traffic
accidents of motor vehicles, insurance companies shall not force the policyholder to sign a commercial
insurance contract or make a request for adding other conditions.
According to the Administrative Measures for Insurance Clauses and Premium Rates of Life and Health
Insurance Companies ( ) implemented on 30 December
2011 and as amended on 19 October 2015, insurance companies are required to submit to the insurance
supervision and regulatory authority under the State Council, for approval of the insurance clauses and
premium rates of the following insurance products before they are adopted: (i) insurance products
associated with public interests; (ii) insurance products of a compulsory nature in accordance with laws;
(iii) newly developed life and health insurance products as stipulated by the insurance supervision and
regulatory authority under the State Council; and (iv) other insurance products as required by the insurance
supervision and regulatory authority under the State Council. Other types of insurance other than the above
must be submitted to the insurance supervision and regulatory authority under the State Council for filing.
If insurance companies change insurance clauses and premium rates of life and health insurance already
approved or filed, or change their insurance liability, insurance categories or pricing methods, insurance
clauses and premium rates should be resubmitted for approval or filing. If insurance companies decide to
terminate the use of insurance clauses and premium rates of life and health insurance throughout the
country, they shall submit a report to the NFRA under the State Council within ten days after the
termination, explaining the reason for the termination, follow-up services and other related measures, and
submit the report copy to the local branches of the NFRA of original operating locations.
Internet Insurance Business
According to the Measures for the Regulation of Internet Insurance Business (
), promulgated by CBIRC on 7 December 2020 and implemented on 1 February 2021, internet
insurance business, refers to insurance operating activities such as conclusion of insurance contracts and
provision of insurance services that are conducted by insurance institutions relying on the Internet, shall be
carried out by legally established insurance institutions rather than other institutions or individuals. No
insurance institution may carry out internet insurance business beyond the scope of business specified in
the institution’s permit (filing form). An insurance institution which conducts internet insurance business
shall be subject to centralized operation and unified management by its head office, thus establishing a
unified and centralized business platform, business process and management systems.
Reinsurance
Pursuant to the PRC Insurance Law, the liability borne by an insurance company for each risk unit, that is,
the maximum loss caused by the occurrence of a single insurance accident, shall not exceed 10% of the
combination of its actual capital and capital reserves. The portion in excess of the amount shall be reinsured.
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Pursuant to the Provisions on the Administration of Reinsurance Business ( )
promulgated by CBIRC on 21 July 2021 and implemented on 1 December 2021, except for the aviation and
space insurance, nuclear insurance, oil insurance and credit insurance, any direct insurance company shall,
when ceding direct insurance business for property insurance by means of the proportional reinsurance, for
each risk unit, the proportion ceded to the same reinsurer shall not exceed 80% of the insured amount or
liability limit specified in the direct insurance contract undertaken by the cedant. A cedant shall inform
reinsurers of important information affecting the pricing and qualifications of reinsurance in writing. After
the reinsurance contract comes into force, the cedant shall promptly provide the reinsurers with such
information having a major effect on the solvency calculation, reserves and estimated claim amount of the
reinsurer as details on significant claims and claim reserves.
Insurance Intermediaries
Insurance Agent
An insurance agent is an institution or individual entrusted by insurance companies to collect commissions
from insurance companies and to handle insurance business within the scope authorised by insurance
companies. Insurance agents include individual insurance agents, full-time insurance agencies and sideline
insurance agencies. An insurance company shall not entrust institutional or individual insurance agent that
has not been approved by the NFRA to handle insurance business on its behalf.
Pursuant to the PRC Insurance Law, insurance companies shall sign entrustment agreement with insurance
agents, which shall set forth the rights and obligations of the parties and other matters related to the
entrustment. An insurance company shall be responsible for the behaviours of its insurance agents in
handling the insurance business on its behalf according to its authorisation. If an insurance agent enters into
a contract on behalf of an insurance company without its authorisation, beyond its authorisation or after the
termination of the agent entrustment, while the applicant, as its contractual party, has good reasons to
believe that it has the authorisation from the insurance company, the agent’s act shall be effective and the
insurance company shall bear the responsibilities of such act. However, an insurance company may pursue
the liability of the ultra vires act by the insurance agent.
Pursuant to the Provisions on Insurance Agents ( ), promulgated by the CBIRC and
effective on 1 January 2021, an insurance agent refers to an institution or individual that, pursuant to the
entrustment of an insurance company, receives commissions from the insurance company and handles
insurance business within the scope authorised by the insurance company, which includes professional
insurance agencies, sideline insurance agencies, and individual insurance agents. Professional insurance
agency companies and sideline insurance agency legal entities operating insurance agency business within
the PRC must meet the conditions stipulated by the NFRA and obtain the relevant business license for
operating insurance agency business. Individual insurance agents and personnel of insurance agency
institutions should possess the professional capabilities required for engaging in insurance agency business.
Professional insurance agencies may engage in all or part of the following businesses: (i) acting as an agent
for the sale of insurance products; (ii) acting as an agent for the collection of insurance premiums; (iii)
acting as an agent for the investigation and settlement of claims for related insurance business; and (iv)
other related businesses as stipulated by the insurance regulatory authority under the State Council. Sideline
insurance agencies may engage in (i) acting as an agent for the sale of insurance products; (ii) acting as an
agent for the collection of insurance premiums; and (iii) other related businesses as stipulated by the
insurance regulatory authority under the State Council.
Insurance Broker
Pursuant to the PRC Insurance Law and the Provisions on the Supervision and Administration of Insurance
Brokers ( ), promulgated by the CIRC and effective from May 2018, insurance
brokers, including insurance brokerage companies and their branches, are institutions that provide
intermediary services for an insured and an insurance company to enter into an insurance contract, based
on the interests of the insured, and collect commissions according to law. Insurance brokerages shall satisfy
the qualification requirements prescribed by the CBIRC, and obtain an insurance brokerage business permit.
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Deployment of Insurance Funds
Overview
Insurance funds refer to the capital, reserves, undistributed profits, various provisions, and other funds
denominated in domestic and foreign currencies of insurance groups (holding) companies and insurance
companies.
Pursuant to the Administrative Measures for the Use of Insurance Funds ( ),
promulgated by the CIRC and effective on 1 April 2018, the deployment of insurance funds must primarily
aim to serve the insurance business, adhering to principles of prudence, stability, and safety. It should
comply with solvency regulatory requirements and involve asset-liability management and comprehensive
risk management based on the nature of insurance funds. This approach ensures intensive, professional,
standardized, and market-oriented operations.
Insurance funds are limited to the following forms of investment: (i) bank deposits; (ii) trading in bonds,
stocks, securities investment fund shares, and other securities; (iii) investment in real estate; (iv) investment
in equity interests; and (v) other forms of investment as stipulated by the State Council. Overseas
investment with insurance funds shall comply with the relevant requirements of the NFRA, the PBOC and
the SAFE.
Except where otherwise regulated by the NFRA, insurance groups (holding) companies and insurance
companies engaging in the utilization of insurance funds must not conduct the following activities: (i)
depositing funds with non-bank financial institutions; (ii) purchasing stocks listed under special treatment
or those flagged with the risk of delisting by the exchanges; (iii) investing in equity or real estate that does
not comply with national industrial policies; (iv) directly engaging in real estate development and
construction; (v) using investment assets formed from insurance fund utilization to provide guarantees or
issue loans to others, except for personal policy pledge loans; and (vi) other investment activities prohibited
by the NFRA.
Pursuant to the Several Opinions of Accelerating the Development of the Modern Insurance Service
Industry ( ), promulgated by the State Council and
effective from 10 August 2014, the State Council requires that the unique long-maturity advantages of
insurance funds should be fully utilised when making investments. Efforts shall be made to innovate the
investment models of insurance funds and improve the efficiency of insurance fund allocation on the
precondition that the security and profitability is guaranteed.
Bank Deposits
Pursuant to PRC Insurance Law, the Administrative Measures for the Use of Insurance Funds, and the
Notice on Regulating the Bank Deposit Business for Insurance Funds (
) implemented on 28 February 2014 and amended on 8 December 2021, the insurance funds could
be deployed for bank deposits, and an insurance company shall incorporate its bank deposits other than
demand deposits as needed in maintaining its routine operations into the administration of investment
accounts, strictly implement the rules for credit assessment, investment decision-making, and risk
management, improve the management of operational procedures such as the opening of accounts, transfer
of funds, and safekeeping of documents, and procure operations in compliance with regulations.
When an insurance company makes bank deposit, it should choose a commercial bank with insurance funds
custodian qualification or other professional financial institutions to conduct a third-party custody, so as to
prevent the risk of fund misappropriation. Any insurance company shall not use its bank deposit for
providing pledge financing to others, guarantees, entrusted loans or seeking benefits for others. If an
insurance company finances itself by pledging its bank deposits, the obtained funds should be primarily
used for the needs such as temporary position adjustments and large-amount insurance claims, and the
amount of financing will be covered by the financial leverage ratio supervision and management.
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Equity of Listed Companies
Pursuant to the Notice on Regulating the Stock Investment Business of Insurance Institutions (
) implemented on 18 March 2009 and amended on 8 December 2021, an
insurance company shall, in light of the characteristics of insurance funds and its solvency, uniformly
allocate the domestic and overseas stock assets and reasonably determine the stock investment scale and
proportion.
According to the Notice on Matters in relation to Further Enhanced Regulation of Stock Investment with
Insurance Funds ( ) promulgated by the CIRC
on 24 January 2017 and effective from the same date, investment in listed companies’ shares by insurance
institutions or insurance institutions with non-insurance parties acting in concert can be categorized into
three types, namely general stock investment, substantial stock investment and acquisition of listed
companies, and the insurance regulatory authority of the State Council implements differential supervision
criteria in accord with actual situations. An insurance institution which engages in general stock investment
shall have a comprehensive solvency ratio no less than 100% in the last quarter, while an insurance
institution which engages in substantial stock investment and acquisition of listed companies shall have a
comprehensive solvency ratio no less than 150% in the last quarter and shall report its investment
management capability to the competent authorities and fulfil its internal control requirements in relation
to deployment of insurance funds. An insurance institution can apply its insurance funds for investment in
listed companies’ shares and is free to choose industries for its investment but shall make rational
investment choices in accord with sources, costs and durations of the funds and the investment shall be
beneficial to asset-liability management and has synergy to its core business.
Equity of Unlisted Companies
Pursuant to the Interim Measures on Equity Investment with Insurance Funds (
), promulgated by the CIRC on 5 September 2010 and amended on 12 November 2020, insurance
company can invest in unlisted corporate shares and private equity funds. An enterprise to which direct or
indirect equity investment is made with insurance funds shall satisfy the following conditions:
(1) it was legally registered and formed and has the legal person status;
(2) it complies with the industrial policies of the state and has the qualifications prescribed by the relevant
departments of the state;
(3) its shareholders and senior managements have a good credit and good business reputation;
(4) its industry is at the stage of growth or maturity or is a strategical emerging industry, or it has the
specific intent of going public and has relatively high value for mergers and acquisitions;
(5) it has advantages in terms of market, technologies, resources, or competition and has room for value
appreciation, expects good cash returns and has a specific dividend system;
(6) its management team has the professional knowledge, industrial experience and management ability
appropriate for performing its functions;
(7) it is not involved in any major legal disputes, the property rights of its assets are integrated and intact,
and there is no legal defect in its equities or ownership;
(8) it has no affiliated relationship with any insurance company, investment institution or professional
institution, except for the relationships permitted by regulatory provisions, and have been reported and
disclosed in advance; and
(9) it satisfied other prudent conditions as prescribed by the insurance regulatory authority of the State
Council.
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No insurance funds shall be invested in the equity of an enterprise which does not comply with the industrial
policies of the state, has no prospect for a stable cash return or appreciation in asset value, emits high
pollution or is a high energy-consuming project, fails to reach the national standards on energy conservation
or environmental protection, or has relatively low added value in technology. Neither shall insurance funds
be invested in venture capital, venture capital funds, establishment of or equity investment in investment
institutions.
Insurance funds that invest in the equities of insurance-like enterprises are not governed by the preceding
paragraphs (2), (4), (5), (8).
According to the Circular on Matters Relating to Financial Equity Investment of Insurance Funds (
) implemented on 12 November 2020, when insurance funds
are invested in the financial equity investment, insurance institutions can, under the conditions of safety,
liquidity and profitability, comprehensively consider such factors as solvency, risk preference, investment
budget, assets and liabilities, and independently select the industry scope of investment enterprises
according to laws and regulations.
Overseas Investment
Pursuant to the Interim Administrative Measures for Overseas Investment with Insurance Funds (
) implemented on 28 June 2007, if an insurance company plans to be in the
engagement of overseas investments with insurance funds, it shall file an application with the insurance
regulatory authority of the State Council and obtain relevant approval. A trustor who has been approved by
the insurance regulatory authority of the State Council to be in the engagement of the business of overseas
investment with insurance funds shall file an application with the SAFE for the quota for foreign exchange
remittance due to overseas investment.
When conducting overseas investments, insurance funds shall select the financial markets in the countries
and regions listed in the Detailed Rules for the Implementation of the Interim Administrative Measures for
Overseas Investment with Insurance Funds ( ) implemented
on 12 October 2012, amended on 12 November 2020 and 8 December 2021 and invest in the following types
of products: (i) money market products; (ii) fixed-income products; (iii) equity products; and (iv) real estate
products.
Regulations on Commercial Banking
The banking industry in the PRC is highly regulated. The current principal regulatory authorities of the PRC
banking industry include the NFRA and the PBOC. The NFRA is responsible for supervising and regulating
banking institutions. The PBOC, as the central bank of the PRC, is responsible for formulating and
implementing monetary policies and preparing drafts of important laws and regulations in the banking
industry and prudently regulating basic systems. The laws and regulations applicable to the PRC banking
industry mainly include Commercial Banking Law of the PRC (2015 Amendment) (
(2015 ) ) (the “Commercial Banking Law”), Law of the PRC on the People’s Bank of China
(2003 Amendment) ( (2003 ) ) (the “PBOC Law”) and Banking
Supervision and Regulatory Law of the PRC (2006 Amendment) (
(2006 ) ), and relevant regulations, rules and normative documents established thereunder.
The PRC Company Law, Commercial Banking Law and other laws, regulations and regulatory documents
provided specific requirements for corporate governance. Among them, the Corporate Governance
Guidelines for Banking and Insurance Institutions requires commercial banks to establish a sound corporate
governance system and a clear organizational structure, with management and supervisory powers,
functions and responsibilities being clearly split among the board of directors, the board of supervisors and
the senior management. A commercial bank shall establish a sound internal control system, clarify internal
control responsibilities, improve internal control measures, strengthen internal control guarantees, and
continue to carry out internal control evaluation and supervision.
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Since its inception, the China Banking Regulatory Commission (the “CBRC”, now substituted by the
NFRA), has published, in addition to guidelines concerning granting loan and credit to certain specific
industries and customers and measures in respect of the implementation of Basel Accords, numerous risk
management guidelines and rules in an effort to improve the risk management of PRC commercial banks,
including operational risk management, market risk management, compliance risk management, liquidity
risk management, information technology risk management and a supervisory rating system. The CBRC
also issued the Core Indicators for Risk-based Supervision of Commercial Banks (Provisional) (
( ) ) as a basis of supervising the risk management of PRC commercial banks.
The CBRC established requirements for ratios relating to risk levels and risk provisions in the Core
Indicators for Risk-based Supervision of Commercial Banks (Provisional) and is expected to establish
requirements for certain ratios relating to risk mitigation for the purpose of evaluating and monitoring the
risks of PRC commercial banks.
On 7 June 2012, the CBRC promulgated the Administrative Measures for the Capital of Commercial Banks
(Provisional) ( ( ) ) (effective on 1 January 2013), which was replaced on 1
January 2024 with Administrative Measures for the Capital of Commercial Banks (
), promulgated by the NFRA. Regulatory requirements in respect of the capital adequacy ratios of
commercial banks include the minimum capital requirement, capital reservation buffer requirement,
countercyclical capital buffer requirement, additional capital requirement for systematically important
banks and capital requirement under the second pillar. Pursuant to the Administrative Measures for the
Capital of Commercial Banks, the capital adequacy ratio of commercial banks at each tier must meet the
following minimum requirements: (1) core tier-one capital adequacy ratio shall not be lower than 5%; (2)
tier-one capital adequacy ratio shall not be lower than 6%; and (3) capital adequacy ratio shall not be lower
than 8%. Commercial banks are required to calculate and set aside their capital reservation buffer after
meeting the minimum capital requirements. The capital reservation buffer requirement is required to be
equal to 2.5% of risk-weighted assets and is to be fulfilled by core tier-one capital. The NFRA has the
authority to adjust the requirement for reserve capital based on the macroeconomic and financial situation,
the overall risk status of the banking industry, as well as the operational management and risk level of
individual banks. Under certain circumstances, commercial banks are required to calculate and set aside
countercyclical capital after meeting the minimum capital requirements and the capital reservation buffer
requirements. The rules for the accrual and use of countercyclical capital shall be separately stipulated by
the PBOC together with NFRA.
Regulations on Asset Management Business
Securities Business in General
The current principal regulatory authority of the PRC securities industry is the CSRC. According to the PRC
Securities Law ( ), effective on 1 March 2020, establishment of a securities
company shall be approved by the CSRC. Without the approval of the CSRC, no enterprise or individual
may engage in securities business activities in the name of a securities company. Subject to approval of the
securities regulatory authority of the State Council, a securities company may engage in all or some of the
following businesses: (i) securities brokerage; (ii) securities investment advisory; (iii) financial advisory
relating to securities trading and securities investment activities; (iv) securities underwriting and
sponsoring; (v) margin trading and short-selling; (vi) securities market making; (vii) proprietary securities
business; and (viii) other securities businesses.
Securities Brokerage
According to the Administrative Measures for Securities Brokerage Services ( ),
promulgated by the CSRC on 13 January 2023 and effective on 28 February 2023, a securities company may
engage in securities brokerage services. Except for securities companies, no organisation or individual may
engage in securities brokerage services. A securities company shall, in accordance with the principles of
soundness, reasonableness, checks and balances and independence, continuously improve the level of
internal control over securities brokerage services, strengthen the centralized and unified management in
key fields and key links, and disclose to the public such information as business premises, business scope,
personnel qualifications, products and services, and channels for receipt and payment of funds of investors.
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Securities Underwriting
According to the PRC Securities Law, except for securities companies, no other entity or individual shall
engage in securities underwriting. A securities company engaged in securities underwriting shall verify the
truthfulness, accuracy and completeness of the public offering documents. Where false record, misleading
representation or major omission is found, no sales activities shall be carried out. If any securities have been
sold, the sales activities shall be terminated immediately and corrective measures shall be taken.
According to the Administrative Measures for the Issuance and Underwriting of Securities (
), promulgated by the CSRC on 17 September 2006 and latest amended on 17 February
2023, in underwriting securities, securities companies shall formulate strict risk management systems and
internal control systems, strengthen the management of pricing and placement processes and implement
underwriting responsibilities in accordance with the Measures and the risk control, internal control and
other relevant provisions of the CSRC.
Securities Investment Consulting Business
According to the Interim Administrative Measures for Investment Consulting on Securities and Futures
( ) which came into effect on 1 April 1998, a firm engaging in the
securities investment consulting business shall obtain a business license from the CSRC. Business
practitioners of securities investment consulting must obtain the securities investment consulting
qualifications and join a qualified securities investment consulting institution with business qualification
before providing securities investment consulting services. A company engaging in securities and futures
investment consulting business needs to satisfy the following requirements: it shall have more than five
professionals with qualifications for securities or futures investment consultancy. A firm engaging in both
securities and futures investment consultancy shall have more than 10 professionals with relevant
qualifications. At least one member of its senior management shall obtain the relevant qualification for
securities or futures investment consultancy business; its registered capital shall not be less than RMB1.0
million; it shall have permanent business premises and such communication and other information
transmission facilities as appropriate to its business; it shall have articles of association; It shall have
effective internal management system; and it shall satisfy other requirements as required by the CSRC.
Private Assets Management Business
A securities company engaging in private assets management business is mainly regulated by the
following laws and regulations: Guidance on the Regulation of Asset Management Business of Financial
Institutions ( ), effective on 27 April 2018, Notice on
Further Specifying Certain Matters Concerning the Guidance on Regulating Asset Management Business
of Financial Institutions ( ),
effective on 20 July 2018, the Administrative Measures for Private Investment Assets Management Business
of Securities and Futures Operators ( ), effective on 1
March 2023, and Regulations on the Operation and Management of Private Asset Management Plans for
Securities And Futures Operators ( ), effective on 1
March 2023.
The securities and futures operation institutions (including securities companies, fund management
companies, futures companies and subsidiaries legally established by the aforementioned institutions to
engage in private asset management business) engaging in private investment assets management business
shall satisfy the relevant conditions, including the requirements of net assets and net capital, the
requirements of corporate governance structure, the conditions of internal control, senior management
qualifications and staffing requirements, etc., and shall be legally authorized by the CSRC. Such asset
management scheme shall have a definite and legal investment direction, clear risk return characteristics,
and differentiate the asset categories the investment finally goes into, and determine the category of asset
management scheme according to the relevant provisions. Where the asset management scheme invests in
other asset management products, it shall clearly stipulate that the asset management products invested shall
no longer invest in other asset management products other than public funds.
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Insurance Asset Management
Pursuant to the Administrative Provisions on Insurance Asset Management Companies (
), which was promulgated by CBIRC on 28 July 2022 and implemented on 1 September 2022,
the insurance asset management company refers to a financial institution established in PRC upon approval
by the NFRA to carry out asset management business and other businesses permitted by the financial
regulatory departments of the State Council in such form as accepting entrustment by insurance group
(holding) companies, insurance companies or other qualified investors and issuance of insurance asset
management products, to materialise long-term preservation and appreciation of asset value.
The business scope of an insurance asset management company shall include the following businesses: (i)
entrusted management of insurance funds and all kinds of assets arising therefrom; (ii) entrusted
management of other funds and all kinds of assets arising therefrom; (iii) management and operation of
self-owned funds in Renminbi or foreign currencies; (iv) carrying out insurance asset management product
business, asset securitization business, insurance private equity fund business, etc.; (v) carrying out
investment consultation, investment consultancy, and providing professional services such as operation,
accounting and risk management related to asset management business; (vi) other businesses approved by
the NFRA; and (vii) businesses approved by other departments of the State Council. “Other funds” referred
to in aforementioned item (ii) shall include basic pension insurance funds, social security funds, enterprise
annuity funds, occupational annuity funds, etc., as well as other funds of domestic and overseas qualified
investors with corresponding risk identification and risk tolerance.
An insurance asset management company shall establish a corporate governance structure with a sound
organisation, clear division of duties, effective checks and balances and reasonable incentives and
restraints, maintain independent and standardised operation, and safeguard the legitimate rights and
interests of investors. An insurance asset management company shall establish an effective risk isolation
mechanism with shareholders and a system for the isolation of business and client key information, prevent
risk contagion, insider trading, conflict of interest and tunnelling by taking such measures as isolating
funds, businesses, management, personnel, systems, business premises and information, etc., and prevent
the use of undisclosed information for trading or other illegal or irregular acts.
Trust
The current principal regulatory authorities of the PRC trust companies is the NFRA. Pursuant to the
Banking Regulation Law of the PRC ( ), promulgated by the
Standing Committee of the NPC on 31 October 2006 and effective on 1 January 2007, the banking
regulatory authority of the State Council shall be responsible for regulating all financial institutions in the
banking industry throughout the country and their business activities and the provisions on regulation of
financial institutions in the banking industry hereof shall apply to trust and investment companies that are
established in the PRC.
According to the Administrative Measures for Trust Companies ( ), promulgated by
the CBRC on 23 January 2007 and effective on 1 March 2007, the approval of the NFRA and a financial
permit must be obtained before the incorporation of a trust company. Trust companies may apply to engage
in all or part of the following business activities in Renminbi or foreign currencies: (i) trust funds; (ii) trusts
for movables; (iii) real estate trusts; (iv) securities trusts; (v) trusts in other property or property rights; (vi)
act as the promoter of an investment fund or a fund management company and engage in fund investment
activities; (vii) enterprise asset restructuring, mergers and acquisitions, and project financing, corporate
finance, financial consulting, etc.; (viii) securities underwriting as entrusted by the relevant departments of
the State Council; (ix) mediation, advisory, credit investigation, etc.; (x) bailment and safe deposit locker
facility; and (xi) any other business activity stipulated by laws and regulations or approved by the NFRA.
Trust companies shall manage and dispose trust property with utmost diligence, perform all duties with
honesty, trustworthiness, prudence and management effectiveness, and protect the greatest beneficial
interests of the beneficiaries.
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Regulations on Cybersecurity and Data Protection
Internet content in China is regulated and restricted from a state security standpoint. The SCNPC enacted
the Decisions on the Maintenance of Internet Security ( ) on 28 December
2000, which was amended on 27 August 2009, that may subject persons to criminal liabilities in China for
any attempt to: (i) gain improper entry to a computer or system of strategic importance; (ii) disseminate
politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information or (v)
infringe upon intellectual property rights.
On 7 November 2016, the SCNPC promulgated the Cyber Security Law of the PRC (
), which became effective on 1 June 2017, pursuant to which, network operators shall comply
with laws and regulations and fulfil their obligations to safeguard security of the network when conducting
business and providing services. Those who provide services through networks shall take technical
measures and other necessary measures pursuant to laws, regulations and compulsory national requirements
to safeguard the safe and stable operation of the networks, respond to network security incidents effectively,
prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of network
data, and the network operator shall not collect the personal information irrelevant to the services it
provides or collect or use the personal information in violation of the provisions of laws or agreements
between both parties, and network operators of critical information infrastructure shall store within the
territory of the PRC all the personal information and important data collected and produced within the
territory of PRC. Their purchase of network products and services that may affect national security shall
be subject to national cybersecurity review.
On 28 December 2021, the CAC together with 12 other departments, promulgated the Measures for
Cybersecurity Review ( ), which took effect on 15 February 2022. The Measures for
Cybersecurity Review provides that: (i) network platform operators that are engaged in data processing
activities which have or may have an implication on national security shall undergo a cybersecurity review;
(ii) a critical information infrastructure operator, (the “CIIO”), that purchases internet products and
services which affect or may affect national security, shall be subject to the cybersecurity review; (iii) the
CSRC is one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review
mechanism; (iv) network platform operators that master personal information of more than one million
users and seek to list abroad ( ) shall apply for a cybersecurity review with the Cybersecurity
Review Office; (v) the risks of core data, important data or large amounts of personal information being
stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties, and the risks of critical
information infrastructure, core data, important data or large amounts of personal information being
influenced, controlled or used maliciously shall be collectively taken into consideration during the
cybersecurity review process; and (vi) the competent authorities may initiate a cybersecurity review without
application when they have reason to believe that any data processing activities affect or may affect national
security.
On 10 June 2021, the SCNPC promulgated the PRC Data Security Law ( ),
which took effect on 1 September 2021. The Data Security Law introduces a data classification and
hierarchical protection system based on the materiality of data in economic and social development, as well
as the degree of harm it will cause to national security, public interests, or legitimate rights and interests
of persons or entities when such data is tampered with, destroyed, divulged, or illegally acquired or used.
It also provides for a security review procedure for the data activities which may affect national security.
In addition, the Data Security Law provides that important data processors shall appoint a data security
officer and establish a management department to take charge of data security, and such processors shall
evaluate the risk of their data activities periodically and file assessment reports with the relevant regulatory
authorities.
On 30 July 2021, the State Council issued the Regulations for the Security Protection of Critical
Information Infrastructure ( ) (the “CII Regulations”), which took
effect on 1 September 2021. Pursuant to the CII Regulations, “critical information infrastructures” refers
to important network facilities and information systems of important industries and sectors such as public
communications and information services, energy sources, transport, water conservation, finance, public
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services, e-government, and science and technology industry for national defence, as well as other
important network facilities and information systems that may have severe impact on national security,
national economy and citizen’s livelihood and public interests if they are damaged or suffer from
malfunctions, or if any leakage of data in relation thereto occurs. Competent authorities as well as the
supervision and administrative authorities of the above-mentioned important industries and sectors are
responsible for the security protection of critical information infrastructures.
On 31 December 2021, the CAC, the MIIT, the Ministry of Public Security, and the SAMR promulgated the
Administrative Provisions on Internet Information Service Algorithm Recommendation (the “Algorithm
Recommendation Provisions”) ( ), which took effect on 1 March
2022. The Algorithm Recommendation Provisions implements classification and hierarchical management
for algorithm recommendation service providers based on various criteria, and stipulates that algorithm-
based recommendation service providers should inform users of their provision of algorithm-based
recommendation services in a conspicuous manner, and publicize the basic principles, purpose intentions,
and main operating mechanisms of algorithm-based recommendation services in an appropriate manner, and
requires such service providers to provide users with options that are not specific to their personal profiles,
or convenient options to cancel algorithmic recommendation services.
On 7 July 2022, the CAC issued the Measures for the Security Assessment of Data Cross-border Transfer
( ) (the “Data Export Measures”) which took effective on 1 September 2022.
The Data Export Measures provides four circumstances, under any of which data processors shall, through
the local cyberspace administration at the provincial level, apply to the national cyberspace administration
for security assessment of data cross-border transfer. These circumstances include: (i) where the important
data to be transferred to an overseas recipient by data processor; (ii) where the personal information to be
transferred to an overseas recipient by operators of critical information infrastructure and personal
information processor that has processed personal information of more than one million people; (iii) where
the personal information of more than 100,000 people or sensitive personal information of more than 10,000
people are transferred overseas accumulatively from 1 January of last year; or (iv) other circumstances
under which security assessment of data cross-border transfer is required as prescribed by the national
cyberspace administration. Any failure to comply with such requirements may subject us to, among others,
suspension of services, fines, revoking relevant business permits or business licenses and penalties.
On 22 February 2023, the CAC issued the Measures for Standard Contract for Outbound Data Transfer of
Personal Information ( ), effective on 1 June 2023. The measures provide a
transitional period of six months from the effective date for companies to take necessary measures to
comply with the requirements. According to the measures, where a personal information processor provides
personal information abroad by concluding a standard contract, the contract should be concluded in
compliance with the form standard contract. The measures further provide that personal information
processors may agree on other terms with overseas recipients, but they should not conflict with the standard
contract. According to the measures, the personal information processor should within ten working days
from the effective date of the standard contract, file with the local provincial network information
department and submit the standard contract and personal information protection impact assessment report
for record.
On 22 March 2024, the CAC promulgated the Provisions on Promoting and Regulating Cross-Border Data
Flows ( ), effective on the date of promulgation. The provisions provide
several exemptions from undergoing data security assessment, obtaining personal information protection
certification, or entering into standard contract for outbound transfer of personal information for businesses.
On 14 November 2021, the CAC published the Regulations for the Administration of Network Data Security
(Draft for Comment) ( ( ) , the “Draft Data Security Regulations”),
which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or separation of network platform operators that have acquired a large
number of data resources related to national security, economic development or public interests affects or
may affect national security; (ii) listing abroad ( ) of data processors processing over one million
users’ personal information; (iii) listing in Hong Kong which affects or may affect national security; and
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(iv) other data processing activities that affect or may affect national security. The Draft Data Security
Regulations also state that data processors processing important data or going public overseas ( ) shall
conduct an annual data security assessment by themselves or entrust a data security service institution to
do so, and submit the data security assessment report of the previous year to the local branch of CAC at
the municipal level before 31 January of each year. In addition, the Draft Data Security Regulations also
require network platform operators to establish platform rules, privacy policies and algorithm strategies
related to data, and solicit public comments on their official websites and personal information protection
related sections for no less than 30 working days when they formulate platform rules or privacy policies
or make any amendments that may have a significant impact on users’ rights and interests. Further, platform
rules and privacy policies formulated by operators of large internet platforms with more than 100 million
daily active users, or amendments to such rules or policies by operators of large internet platforms with
more than 100 million daily active users that may have significant impacts on users’ rights and interests
shall be evaluated by a third-party organization designated by the CAC and reported to local branch of the
CAC at the provincial level for approval. The CAC solicited comments on this draft, but there is no
timetable as to when it will be enacted.
Regulatory Procedure on the Issuance of Foreign Bonds
Pursuant to the Order 56, which was promulgated by NDRC and became effective on 10 February 2023,
where domestic enterprises, overseas enterprises controlled by them or their overseas branches issue foreign
debts, which are debt instruments of no less than one year of tenor that are denominated in domestic
currency or foreign currency with the capital repaid and interest paid as agreed, including bonds issued
overseas and long and medium-term international commercial loans, the enterprises shall apply to NDRC
for dealing with the formalities of record-filing and registration before issuance. NDRC shall issue a
Certificate of Examination and Registration within 3 months after accepting the application. The enterprises
shall submit the issuance information to NDRC within 10 working days after the completion of issuance
each time.
According to the SAFE Measures and its operating guidelines, effective on 13 May 2013 and amended on
4 May 2015, the Capital Account Foreign Exchange Operational Guidelines (2024) (
(2024) ), issuers of foreign debts are required to register with the SAFE. Issuers other than banks and
financial departments of the government shall go through registration or record-filing procedures with the
local branch of the SAFE within the prescribed time limit. If the receipt and payment of funds related to
the foreign debt of such issuer is not handled through a domestic bank, the issuer shall, in the event of any
change in the amount of money withdrawn, principal and interest payable or outstanding debt, go through
relevant record-filing procedures with the local branch of the SAFE.
On 12 January 2017, the PBOC issued the Circular of the People’s Bank of China on Implementation of the
Macro-prudence Management of Cross-border Financing in Full Aperture ( -
) (the “Cross-Border Financing Circular”), which came into
effect on the same date, and amended on 11 March 2020. The Cross-Border Financing Circular established
a mechanism aimed at regulating cross-border financing activities based on the capital or net asset of the
borrowing entities using a prudent management principle on a macro nationwide scale.
On 17 February 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering
and Listing by Domestic Companies ( ) and supporting
guidelines (together, the “CSRC Filing Rules”), which came into effect on 31 March 2023. The CSRC
Filing Rules will regulate both direct and indirect overseas offering and listing of PRC domestic companies’
securities by adopting a filing-based regulatory regime. The CSRC Filing Rules state that, any post-listing
follow-on offering by an issuer in an overseas market, including issuance of shares, convertible bonds and
other similar securities, shall be subject to filing requirement within three business days after the
completion of the offering. In connection with the CSRC Filing Rules, on 17 February 2023 the CSRC also
published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and
Listing by Domestic Enterprises ( ) (the “Notice on
Overseas Listing Measures”). According to the Notice on Overseas Listing Measures, issuers that have
already been listed in an overseas market by 31 March 2023, the date the Overseas Listing Measures became
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effective, are not required to make any immediate filing and are only required to comply with the filing
requirements under the CSRC Filing Rules when it subsequently seeks to conduct a follow-on offering. The
CSRC Filing Rules provide that an overseas offering and listing, including the follow-on offering of
convertible bonds, is prohibited under any of the following circumstances: if (i) such securities offering and
listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii)
the intended securities offering and listing may endanger national security as reviewed and determined by
competent authorities under the State Council in accordance with law; (iii) the domestic company intending
to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have
committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three years; (iv) the domestic
company intending to make the securities offering and listing is currently under investigation for suspicion
of criminal offences or major violations of laws and regulations, and no conclusion has yet been made
thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling
shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual
controller (the “Forbidden Circumstances”). In addition, in the process of filing, where the issuer may be
under any of the Forbidden Circumstances, the CSRC may solicit the opinions of the competent government
authorities under the State Council.
Tax
Laws and Regulations Related to Enterprise Income Tax
According to the PRC EIT Law, promulgated by the People’s Congress on 16 March 2007 and revised and
implemented on 24 February 2017 and 29 December 2018, and the Implementation Rules for Law of the
PRC on Enterprise Income Tax ( ) promulgated by the State
Council on 6 December 2007 and taking effect on 1 January 2008, and amended on 23 April 2019, all the
domestic enterprises in China (including foreign-invested enterprises) shall be subject to enterprise income
tax at the uniform tax rate of 25%, except for the high-tech enterprises provided by the state, which will
be subject to enterprise income tax at the reduced rate of 15%.
Laws and Regulations Related to Value-added Tax
According to Provisional Regulations on Value-added Tax of the PRC (
) issued by the State Council on 13 December 1993 and taking effect on 1 January 1994 and revised
respectively on 10 November 2008, 6 February 2016 and 19 November 2017 (“Provisional Regulations on
VAT”), all the entities and persons engaged in sales of goods or provision of processing, repair and
maintenance labor, sales of services, intangible assets or real estate or import of goods in China shall be
subject to value-added tax. The taxable value shall be calculated based on the output tax and input tax.
Unless otherwise specified by the Provisional Regulations on VAT ( ), for the sales of
goods, labor, tangible asset lease services or import of goods by the tax payer, the VAT rate shall be 17%;
for the sales of transportation, postal, basic telecom, construction and real estate lease service, sales of real
estate, transfer of land use right, sales and import of special goods listed in the Provisional Regulations on
VAT by the tax payer, the VAT rate shall be 11%; for the sales of services and intangible assets by the tax
payer, the VAT rate shall be 6%. Unless otherwise specified, the VAT rate for the export of goods by the
tax payer shall be zero; and the VAT rate for the cross-border sales of services and intangible assets within
the scope as specified in the regulations of the State Council by the domestic institutions and individuals
shall be zero.
In addition, according to the Pilot Proposals for the Change from Business Tax to Value-Added Tax (
) jointly issued by the MOF and SAT, on and from 1 January 2012, the
government will gradually commence the taxation reform and the change from business tax to value-added
tax for the regions and industries with strong economic performance. Implementation Measures for Change
from Business Tax to Value-Added Tax ( ) issued on 23 March 2016
and latest amended on 1 April 2019, prescribed that the pilot operation of change from business tax to
value-added tax shall be started for all the regions and industries.
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According to the Circular on Simplifying and Integrating Policies Related to Value-added Tax Rate (
) jointly issued by SAT and MOF on 28 April 2017 and taking effect
on 1 July 2017, the VAT rate structure will be simplified on 1 July 2017, and the VAT rate of 13% will be
canceled. The tax payer selling or importing the following goods shall be subject to value-added tax at the
tax rate of 11%: agricultural products (including food), tap water, heating, liquefied petrochemical gas,
natural gas, edible vegetable oil, air conditioning, hot water, gas, coal product for household use, edible salt,
farm machinery, feedstuff, pesticide, agricultural film, fertilizer, marsh gas, dimethyl ether, books,
newspaper, magazines, audio and video products and electronic publications.
On 4 April 2018, SAT and MOF jointly issued Circular on Adjusting Value-added Tax Rate (
) to further adjust the VAT rate, including the change of tax rate from 17% and 11% to
16% and 10% respectively for the taxable sales or import of goods by the tax payer. Subsequently, the
Ministry of Finance, the SAT and the General Administration of Customs jointly issued the Announcement
on Relevant Policies for Deepening the VAT Reform ( ) on 20
March 2019 to make a further adjustment, which came into effect on 1 April 2019. The tax rate of 16%
applicable to the VAT taxable sale or import of goods shall be adjusted to 13%, and the tax rate of 10%
applicable thereto shall be adjusted to 9%.
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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
The members of the Company’s board of directors at the date of this Offering Circular are as follows:
Name Title
Mr. Ma Mingzhe ..................................................... Chairman and Executive Director
Mr. Xie Yonglin ...................................................... Executive Director, President and Co-Chief
Executive Officer
Ms. Cai Fangfang.................................................... Executive Director and Senior Vice President
Mr. Soopakij Chearavanont ..................................... Non-executive Director
Mr. Yang Xiaoping .................................................. Non-executive Director
Mr. He Jianfeng ...................................................... Non-executive Director
Ms. Cai Xun ........................................................... Non-executive Director
Mr. Ng Sing Yip ..................................................... Independent Non-executive Director
Mr. Chu Yiyun ........................................................ Independent Non-executive Director
Mr. Liu Hong .......................................................... Independent Non-executive Director
Mr. Ng Kong Ping Albert........................................ Independent Non-executive Director
Mr. Jin Li ................................................................ Independent Non-executive Director
Mr. Wang Guangqian .............................................. Independent Non-executive Director
Note: The appointments of Mr. Michael Guo and Ms. Fu Xin as Executive Directors of the Company were approved by shareholders
but shall become effective upon the approval from NFRA for their qualifications as Directors are obtained.
The biographies of the Company’s directors, supervisors and senior management as at the date of this
Offering Circular are as follows:
(a) Directors
Mr. Ma Mingzhe
Mr. Ma Mingzhe, 68, is the founder of the Group and has been a Director of the Company since March
1988. Mr. Ma is presently the Chairman and Executive Director of the Company. Since the
establishment of the Company, Mr. Ma had been fully involved in the operations and management of
the Company until June 2020 when he ceased to act as the CEO. He now plays a core leadership role,
in charge of decision-making on the Company’s strategies, human resources, culture and major issues.
Mr. Ma successively served as the President, a Director, and the Chairman and CEO of the Company.
Prior to founding the Company, Mr. Ma was the Deputy Manager of China Merchants Shekou
Industrial Zone Social Insurance Company. Mr. Ma has a Ph.D. in Money and Banking from Zhongnan
University of Economics and Law (previously known as Zhongnan University of Finance and
Economics).
Mr. Xie Yonglin
Mr. Xie Yonglin, 55, is the Executive Director, President and Co-CEO of the Company. Mr. Xie is also
the Chairman of Ping An Bank, a Director of Ping An Asset Management and a Non-executive
Director of Lufax Holding. Mr. Xie joined the Company in 1994 and has been a Director of the
Company since April 2020. He was the Deputy Director of the Company’s Strategic Development &
Reform Center from June 2005 to March 2006. He held positions of the Operations Director, the
Human Resources Director, and a Vice President of Ping An Bank from March 2006 to November
2013, and served as the Special Assistant to the Chairman, the President and the CEO, and the
Chairman of Ping An Securities from November 2013 to November 2016 consecutively. He was a
Senior Vice President of the Company from September 2016 to December 2019. Previously, Mr. Xie
served as a Deputy General Manager of sub-branches of Ping An P&C, a Deputy General Manager and
then the General Manager of branches of Ping An Life, and the General Manager of Ping An Life’s
Marketing Department. Mr. Xie holds a Master’s degree in Science and Ph.D. in Corporate
Management from Nanjing University.
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Ms. Cai Fangfang
Ms. Cai Fangfang, 50, is the Executive Director and Senior Vice President of the Company. Ms. Cai
joined the Company in 2007 and has been a Director since July 2014. Ms. Cai is also a Director of
a number of controlled subsidiaries of the Company including Ping An Life, Ping An P&C and Ping
An Bank as well as a Non-executive Director of Ping An Health. Ms. Cai successively held the
positions of a Vice General Manager and the General Manager of the Remuneration Planning and
Management Department of the Human Resources Center of the Company from October 2009 to
February 2012, served as the Vice Chief Financial Officer and General Manager of the Planning
Department of the Company from February 2012 to September 2013, the Vice Chief Human Resources
Officer of the Company from September 2013 to March 2015, and the Chief Human Resources Officer
of the Company from March 2015 to April 2023. Prior to joining the Company, Ms. Cai served as the
consulting director of Watson Wyatt Consultancy (Shanghai) Ltd. and the audit director on the
financial industry of British Standards Institution Management Systems Certification Co., Ltd.
Ms. Cai holds a Master’s degree in Accounting from the University of New South Wales, Australia.
Mr. Soopakij Chearavanont
Mr. Soopakij Chearavanont, 60, is a Non-executive Director of the Company. Mr. Chearavanont has
been a Director of the Company since June 2013. He is the Chairman of CP Group, an Executive
Director and the Chairman of C.P. Lotus Corporation, a Non-executive Director and the Chairman of
Chia Tai Enterprises International Limited, and an Executive Director and the Chairman of C.P.
Pokphand Co., Ltd. Mr. Chearavanont is also the Chairman of CP ALL Public Company Limited and
Charoen Pokphand Foods Public Company Limited (both listed in Thailand). Mr. Chearavanont served
as a Director of True Corporation Public Company Limited (listed in Thailand) and the Chairman of
CT Bright Holdings Limited in the past. Mr. Chearavanont holds a Bachelor’s degree in Science from
the College of Business and Public Administration of New York University.
Mr. Yang Xiaoping
Mr. Yang Xiaoping, 60, is a Non-executive Director of the Company. Mr. Yang has been a Director
of the Company since June 2013. Mr. Yang is the Senior Vice Chairman of CP Group, the Vice
Chairman and CEO of CPG Overseas, an Executive Director and the Vice Chairman of C.P. Lotus
Corporation, the CEO of CT Bright Holdings Limited, and a Non-executive Director of CITIC Limited
and Honma Golf Limited. Mr. Yang is also an Associate Dean of the China Institute for Rural Studies
of Tsinghua University, a Vice Director of the Management Committee of the Institute for Global
Development of Tsinghua University, the President of Beijing Association of Enterprises with Foreign
Investment and an Adviser on Foreign Investment to the Beijing Municipal Government. Prior to his
current offices, Mr. Yang was a member of the 12th National Committee of the Chinese People’s
Political Consultative Conference, and served as the Manager for China Division and the Chief
Representative of Beijing Office of Nichiyo Co., Ltd. Mr. Yang was a Non-executive Director of
Tianjin Binhai Teda Logistics (Group) Corporation Limited and Chery Holding Group Co., Ltd., a
Non-executive Director and the Vice Chairman of True Corporation Public Company Limited, and the
Vice Chairman of the board of directors of China Minsheng Investment Co., Ltd. Mr. Yang holds a
Bachelor’s degree from Nanchang University (previously known as Jiangxi Polytechnic College) and
a certificate for completing a doctoral program in Tsinghua University.
Mr. He Jianfeng
Mr. He Jianfeng, 52, is a Non-executive Director of the Company, and has been a Director since July
2022. Mr. He is currently the Party Committee Secretary and Chairman of Shenzhen Investment
Holdings Co., Ltd. and the President of Research Institute of Tsinghua University in Shenzhen. Prior
to his current positions, Mr. He served as the Party Committee Secretary and Chairman of Shenzhen
Agricultural Products Group Co., Ltd., the Party Committee Secretary and Chairman of Shenzhen
Food Materials Group Co., Ltd., the Chief Economist and a Party Committee Member of the
State-owned Assets Supervision and Management Commission of Shenzhen Municipal People’s
Government, a Vice President of Shenzhen SEZ Construction and Development Group Co., Ltd.,
among others. Mr. He holds a Bachelor of Laws degree in International Law from Wuhan University.
Mr. He is a senior economist and a qualified PRC lawyer.
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Ms. Cai Xun
Ms. Cai Xun, 49, is a Non-executive Director of the Company, and has been a Director of the
Company since July 2022. Ms. Cai is currently an Employee Director and the Deputy Party Committee
Secretary of Shum Yip Group Limited, an Executive Director of Shenzhen Investment Limited, and
a Non-executive Director of Road King Infrastructure Limited. Prior to her current positions, Ms. Cai
served as the division director of the Cadre Division I, the division director of the Research and
Publicity Division, the division director of the Cadre Supervision Division and the deputy division
director of the Cadre Division I and II of the Organization Department of Shenzhen Municipal Party
Committee. Ms. Cai holds a Bachelor’s degree in Economics from Central South University
(previously known as Central South University of Technology).
Mr. Ng Sing Yip
Mr. Ng Sing Yip, 73, is an Independent Non-executive Director of the Company. Mr. Ng has been a
Director of the Company since July 2019. Mr. Ng currently serves as a member of the Professional
Advisory Board of the Asian Institute of International Financial Law of the University of Hong Kong,
the Chairman of the Board of Supervisors of HSBC Bank Vietnam Limited, and an Independent
Non-executive Director of HSBC Bank Australia Limited. Prior to his current positions, Mr. Ng served
as a Crown Counsel in the Attorney General’s Chambers in Hong Kong before going into private
practice. Mr. Ng joined HSBC in June 1987 as an Assistant Group Legal Consultant, was later
appointed as a Deputy Head of the Legal and Compliance Department, and the Head of Legal and
Compliance in Asia Pacific, and served as a Non-executive Director of HSBC Bank (China) Limited,
an Independent Non-executive Director of Hang Seng Bank Limited and the Vice Chairman of the
Legal Committee of the Hong Kong General Chamber of Commerce. Mr. Ng holds a Bachelor’s
degree and Master’s degree in Laws (L.L.B. and L.L.M.) from the University of London, a Bachelor’s
degree in Laws (L.L.B.) from Peking University, and is admitted as solicitor to the supreme courts of
England, Hong Kong, and Victoria, Australia.
Mr. Chu Yiyun
Mr. Chu Yiyun, 59, is an Independent Non-executive Director of the Company. Mr. Chu has been a
Director of the Company since July 2019. Mr. Chu is a professor and doctoral supervisor at the School
of Accountancy of Shanghai University of Finance and Economics, a full-time researcher at the
Accounting and Finance Research Institute of Shanghai University of Finance and Economics, a Key
Research Institute of Humanities and Social Sciences under the Ministry of Education, a member of
the first and second Senior Accounting Professional Qualification Evaluation Committee of the
National Government Offices Administration, a Director of the Ninth Council of the Accounting
Society of China, and a Renowned Accounting Expert designated by the Ministry of Finance. Mr. Chu
is also an Independent Non-executive Director of Bank of Hebei Co., Ltd. and an Independent
Supervisor of Bank of China Co., Ltd. Mr. Chu was a member of the First Accounting Standards
Advisory Committee of the Ministry of Finance, the Executive Secretary-General of the Accounting
Education Branch of the Accounting Society of China (formerly known as Chinese Accounting
Professors Association), and an Independent Non-executive Director of Universal Scientific Industrial
(Shanghai) Co., Ltd. and Tellhow Sci-tech Co., Ltd. Mr. Chu holds Ph.D., Master’s and Bachelor’s
degrees in Accounting from Shanghai University of Finance and Economics.
Mr. Liu Hong
Mr. Liu Hong, 56, is an Independent Non-executive Director of the Company. Mr. Liu has been a
Director of the Company since July 2019. Mr. Liu is currently a professor and doctoral supervisor at
Peking University, a Vice President of the Chinese Association for Artificial Intelligence, a member
of the leading expert group of the national key R&D program of “Intelligent Robots” under the “13th
Five-Year Plan” and one of the first group of experts under the National “High-level Talent Special
Support Plan”. Previously, Mr. Liu served as an Independent Director of Shenzhen JingQuanHua
Electronics Co., Ltd. Mr. Liu holds a Ph.D. in Engineering from Harbin Institute of Technology and
has completed postdoctoral research at Peking University.
93
Mr. Ng Kong Ping Albert
Mr. Ng Kong Ping Albert, 66, is an Independent Non-executive Director of the Company. Mr. Ng has
been a Director of the Company since August 2021. Mr. Ng is currently the President of the Hong
Kong China Chamber of Commerce, an Honorary Advisor of the Hong Kong Business Accountants
Association, and a member of the Advisory Board of the School of Accountancy of The Chinese
University of Hong Kong. Mr. Ng is a member of the Audit Committee of The Chinese University of
Hong Kong, Shenzhen and a Council Member of the Education Foundation of The Chinese University
of Hong Kong, Shenzhen. Mr. Ng is also an Independent Non-executive Director of China
International Capital Corporation Limited, Beijing Airdoc Technology Co., Ltd. and Shui On Land
Limited, and an Independent Director of Alibaba Group Holding Limited. Previously, Mr. Ng served
as the Chairman of Ernst & Young China, Managing Partner of Ernst & Young in Greater China, and
a member of the EY Global Executive. He has over 30 years of professional experience in the
accounting industry in Hong Kong and the Chinese mainland. Before joining Ernst & Young, Mr. Ng
was the partner-in-charge of Arthur Andersen LLP in Greater China, the partner-in-charge of China
business of PricewaterhouseCoopers, and the Managing Director of Citigroup China Investment
Banking. Mr. Ng served as a member of the First and Second Accounting Standards Advisory
Committee of the Ministry of Finance of the PRC. Mr. Ng holds a Bachelor’s degree and Master’s
degree in Business Administration from The Chinese University of Hong Kong. Mr. Ng is a member
of the Hong Kong Institute of Certified Public Accountants, Chartered Accountants Australia and New
Zealand, Certified Public Accountants Association and the Association of Chartered Certified
Accountants.
Mr. Jin Li
Mr. Jin Li, 53, is an Independent Non-executive Director of the Company. Mr. Jin has been a Director
of the Company since August 2021. Mr. Jin is currently a Vice President and Chair Professor of
Southern University of Science and Technology, a member of the Committee for Economic Affairs of
the 14th CPPCC National Committee, a member of the Central Committee of Jiusan Society, a
member of the Board of Directors and the Academic Committee of the Global Corporate Governance
Forum, and a Vice Chairman of China Management Science Society. Mr. Jin is also an Independent
Non-executive Director of Guosen Securities Co., Ltd. Mr. Jin was an Associate Dean of Guanghua
School of Management, Peking University, a tenured professor and a doctoral supervisor in the
Department of Finance at Oxford University’s Sad Business School, and an associate professor in the
Department of Finance at Harvard Business School. He was also an Independent Non-executive
Director of Yingda International Trust Company Limited, Beijing Financial Holdings Group, Dacheng
Fund Management Co., Ltd. and CITIC aiBank Corporation Limited, and an Independent Director of
S.F. Holding Co., Ltd. Mr. Jin holds a Ph.D. from Massachusetts Institute of Technology, USA.
Mr. Wang Guangqian
Mr. Wang Guangqian, 68, is an Independent Non-executive Director of the Company, and has been a
Director since July 2023. Mr. Wang is currently a professor at the School of Finance of Central
University of Finance and Economics, a Vice President of China Society for Finance and Banking, and
a Vice President of China Modern Financial Society. Mr. Wang was a Vice Dean of Central College
of Finance (now Central University of Finance and Economics) and then a Vice President and the
President of Central University of Finance and Economics. Mr. Wang holds a Ph.D. in Finance from
Renmin University of China.
94
(b) Supervisors
Mr. Sun Jianyi
Mr. Sun Jianyi, 71, is the Chairman of Supervisory Committee (Employee Representative Supervisor).
Mr. Sun joined the Company in 1990 and has become a Supervisor since August 2020. Since joining
the Company in July 1990, Mr. Sun has been the General Manager of the Management Department,
Senior Vice President, Executive Vice President, Deputy Chief Executive Officer and Vice Chairman
of the Company, and the Chairman of the board of directors of Ping An Bank successively. Prior to
joining the Company, Mr. Sun was the Head of the Wuhan Branch of the People’s Bank of China, a
Deputy General Manager of the Wuhan Branch of the People’s Insurance Company of China, and the
General Manager of Wuhan Securities Company. Mr. Sun was also a Non-executive Director of China
Vanke Co., Ltd., a Non-executive Director of China Insurance Security Fund Co., Ltd., and an
Independent Non-executive Director of Haichang Ocean Park Holdings Ltd. Mr. Sun holds a Diploma
in Finance from Zhongnan University of Economics and Law (previously known as Zhongnan
University of Finance and Economics).
Ms. Zhu Xinrong
Ms. Zhu Xinrong, 67, is an Independent Supervisor in the Company. She is a Supervisor since July
2022. Ms. Zhu is currently a second-level professor and doctoral supervisor of finance at Zhongnan
University of Economics and Law, an expert entitled to a special government allowance from the State
Council, a national master teacher, and the Director of the Collaborative Innovation Center of
“Industrial Upgrade and Regional Finance,” a university-affiliated think tank at Zhongnan University
of Economics and Law. Ms. Zhu also serves as an executive council member of the China Society for
Finance and Banking and an expert in the consulting expert pool of the Monetary Policy Committee
of the People’s Bank of China. Previously, Ms. Zhu was a member of the National Supervisory
Committee for Professional Degrees in Finance and the Vice President of Hubei Finance Society. Ms.
Zhu served as an Independent Non-executive Director of Guangdong Sanhe Pile Co., Ltd., Hubei
Xianning Rural Commercial Bank Co., Ltd. and Wuhan Credit Investment Group Co., Ltd. Ms. Zhu
holds a Ph.D. in Money and Banking from Zhongnan University of Economics and Law (previously
known as Zhongnan University of Finance and Economics).
Mr. Liew Fui Kiang
Mr. Liew Fui Kiang, 57, is an Independent Supervisor of the Company and has been a Supervisor since
July 2022. Mr. Liew currently serves as an Independent Non-executive Director of Shandong Gold
Mining Co., Ltd., China Apex Group Limited, Zhaoke Ophthalmology Limited, Zhengye International
Holdings Company Limited, and Zhongchang International Holdings Group Limited. Previously, Mr.
Liew served as an Independent Non-executive Director of Baoshan Iron & Steel Company Limited and
the Chairman of PacRay International Holdings Limited. Mr. Liew holds a Master of Business
Administration degree from the University of Hull Business School, Bachelor’s degree of Laws from
the University of Leeds, United Kingdom. He is also a fellow of the Hong Kong Institute of Directors,
solicitor of Hong Kong and solicitor of England and Wales.
Mr. Hung Ka Hai Clement
Mr. Hung Ka Hai Clement, 68, is an Independent Supervisor of the Company and has been a
Supervisor since July 2022. Mr. Hung currently serves as an Independent Non-executive Director of
Starjoy Wellness and Travel Company Limited (formerly known as Aoyuan Healthy Life Group
Company Limited), China East Education Holdings Limited, Huarong International Financial
Holdings Limited, Skyworth Group Limited, USPACE Technology Group Limited (formerly known
as Hong Kong Aerospace Technology Group Limited) and JX Energy Ltd., and a Non-executive
Director of High Fashion International Limited and Capital Estate Limited. Previously, he served
Deloitte China for 31 years where he assumed the Chairman role of Deloitte China and a board
95
member of Deloitte International. Mr. Hung served as an adviser to the Guangzhou Institute of
Certified Public Accountants. He also served as a member of the Political Consultative Committee of
Luohu District, Shenzhen and was appointed as an expert adviser to the Ministry of Finance of the
People’s Republic of China. Mr. Hung was an Independent Non-executive Director and then a
Non-executive Director of SMI Holdings Group Limited, an Independent Non-executive Director,
then a Non-executive Director and subsequently a redesignated Independent Non-executive Director
of Lerthai Group Limited (formerly known as LT Commercial Real Estate Limited). Mr. Hung was
also an Independent Non-executive Director of Zhongchang International Holdings Group Limited
(formerly known as Henry Group Holdings Limited), Tibet Water Resources Ltd., SY Holdings Group
Limited (formerly known as Sheng Ye Capital Limited), and Gome Finance Technology Co., Ltd.
(formerly known as Sino Credit Holdings Limited). Mr. Hung holds a Bachelor’s degree of Arts in
Accountancy from the University of Lincoln, United Kingdom (previously known as The Polytechnic,
Huddersfield) and is a life member of The Institute of Chartered Accountants in England and Wales.
Mr. Wang Zhiliang
Mr. Wang Zhiliang, 45, is an Employee Representative Supervisor. He joined the Company in 2002
and has become a Supervisor since August 2017. Mr. Wang is the Chief Administrative Affairs Officer
of the Group. Previously, Mr. Wang served as the Administrative Director and the Director of General
Office of the Group, a Deputy General Manager of the Group’s Head Office in Shanghai, a Deputy
Director of the Group’s General Office, the Chairman of Ping An Financial Leasing and served in the
Administration Department of Tianjin Branch of Ping An Life. Mr. Wang holds a Bachelor’s degree
in Economic Information Management from Tianjin University of Finance and Economics (previously
known as Tianjin Institute of Finance and Economics).
(c) Senior Management
Mr. Ma Mingzhe, Mr. Xie Yonglin and Ms. Cai Fangfang form part of the senior management of the
Company. Please refer to the section entitled “Directors, Supervisors and Senior Management – (a)
Directors” for more information on their work experience and concurrent positions.
Mr. Michael Guo
Mr. Michael Guo, 52, is the Co-Chief Executive Officer and Senior Vice President of the Company.
Mr. Guo joined the Company in 2019 and has been in his present office since September 2023. Mr.
Guo is also a Director of Ping An Life, as well as a Non-executive Director of OneConnect and Ping
An Health. Previously, Mr. Guo successively held the positions of the Vice Chief Human Resources
Officer and the Chief Human Resources Officer of the Company from August 2022 to September
2023. Before then, he served as the Special Assistant to the Chairman and an Executive Vice President
of Ping An P&C. Prior to joining the Company, Mr. Guo was a Partner and Managing Director of
Boston Consulting Group, and a Global Co-CEO of Willis Towers Watson Capital Markets. Mr. Guo
holds a Masters of Business Administration degree from the University of New South Wales,
Australia.
Mr. Huang Baoxin
Mr. Huang Baoxin, 59, is a Senior Vice President of the Company. Mr. Huang joined the Company
in 2015 and has been in his present office since April 2020. Mr. Huang is also the General Manager
of the Group’s Beijing Head Office. Prior to joining the Company, Mr. Huang served as a Deputy
Division Director of the Industrial Transportation Department of the Ministry of Finance of the PRC,
a Deputy Director General of the Second Secretary Bureau of the General Office of the State Council
of the PRC, a Deputy Director General and then the Director General of the Supervisory Bureau of
the General Office of the State Council of the PRC, and a deputy head of the discipline inspection
team of the Publicity Department of the Central Committee of the CPC accredited by the Central
Commission for Discipline Inspection of the CPC. Mr. Huang holds a Bachelor’s degree in Finance
96
from Zhongnan University of Economics and Law (previously known as Zhongnan University of
Finance and Economics) Master’s degree in Political Economics from Renmin University of China
Doctorate degree in Public Finance from the Chinese Academy of Fiscal Sciences (previously known
as Research Institute for Fiscal Science, Ministry of Finance of the PRC).
Ms. Fu Xin
Ms. Fu Xin, 44, is a Senior Vice President of the Company. Ms. Fu joined the Company in 2017 and
has been in her current office since August 2023. Ms. Fu is also a Director of Ping An Life, Ping An
Bank and Ping An Asset Management. Ms. Fu joined the Company as the General Manager of the
Group’s Planning Department in October 2017, and served as the Group’s Deputy Chief Financial
Officer from March 2020 to March 2022 and the Company’s Chief Operating Officer from March
2022 to September 2023. Prior to joining the Company, Ms. Fu served as a Financial Services Partner
at Roland Berger International Management Consulting and an Executive Director of
PricewaterhouseCoopers. Ms. Fu holds a Masters of Business Administration degree from Shanghai
Jiao Tong University.
Mr. Sheng Ruisheng
Mr. Sheng Ruisheng, 55, is the Board Secretary and Company Secretary. He joined the Company in
1997 and has been in office since April 2017. Mr. Sheng also serves as the Brand Director and
spokesperson of the Company. Previously, Mr. Sheng served as the Assistant to the General Manager,
a Deputy General Manager, and the General Manager of the Company’s Branding Department from
August 2002 to January 2014. Mr. Sheng holds a Bachelor of Arts degree from Nanjing University and
a Masters of Business Administration degree from The Chinese University of Hong Kong.
Ms. Zhang Zhichun
Ms. Zhang Zhichun, 48, is the Chief Financial Officer (Financial Director) of the Company. She joined
the Company in 1998 and has been in her current office since January 2023. Ms. Zhang is also a
Director of a number of controlled subsidiaries of the Company including Ping An P&C, Ping An
Securities and Ping An Annuity. Previously, Ms. Zhang successively served as the Assistant President,
Chief Investment Officer, Financial Director, and Board Secretary of Ping An P&C from December
2017 to December 2022. Before then, she served as a Deputy General Manager of Ping An P&C’s
Planning Department and a Deputy General Manager and then the General Manager of the Company’s
Planning Department. Ms. Zhang holds a Bachelor’s degree in Actuarial Science from Shanghai
University of Finance and Economics, and is also an associate of the China Association of Actuaries.
Mr. Guo Shibang
Mr. Guo Shibang, 59, is an Assistant President and Chief Risk Officer of the Company. He joined the
Company in 2011 and has been in his present office since March 2024. Previously, Mr. Guo served
as a Senior Vice President and the Chief Risk Officer, and the Compliance Director of Ping An
Securities from September 2014 to October 2016, and the Special Assistant to the Chairman, the
Assistant President, an Executive Director and the Vice President of Ping An Bank from October 2016
to December 2023. Prior to that, Mr. Guo served as a Director and the President of Ping An Bank’s
Small and Micro Finance Business Unit. Prior to joining the Company, Mr. Guo was a chief officer
and a deputy division-level researcher (presiding) of the Treasury Planning Department of the Head
Office of Industrial and Commercial Bank of China, and the Manager of Beijing Shangdi Sub-branch,
a Party Committee Member and a Deputy General Manager of Beijing Management Department, the
Party Committee Secretary and Manager of Dalian Branch, and the Vice Chairman of the Head Office
Retail Management Committee and the General Manager of the Retail Banking Department of China
Minsheng Bank. Mr. Guo holds a Ph.D. and Master’s degree in Economics from Peking University,
and a Bachelor’s degree in Engineering from Shanghai Jiao Tong University, is a senior economist.
97
Ms. Zhang Xiaolu
Ms. Zhang Xiaolu, 56, is the Compliance Officer of the Company. She joined the Company in 2019
and has been in her current office since June 2021. Previously, Ms. Zhang served as the Chief Risk
Officer from August 2021 to March 2024, the Chief Operating Officer of the Company from February
2021 to October 2021, and a Special Assistant to the President of Ping An Bank from June 2019 to
August 2020. Prior to joining the Company, Ms. Zhang served as a Managing Partner of Advisory
Service (CEO of Advisory) at Ernst & Young Greater China and the General Manager of Consulting
Service in Insurance Industry at IBM. Ms. Zhang holds a Masters of Business Administration degree
from Massey University in New Zealand.
Mr. Deng Bin
Mr. Deng Bin, 54, is an Assistant President and Chief Investment Officer of the Company. He joined
the Company in 2021 and has been in his current office since March 2022. Mr. Deng is also a Director
of Ping An Life, Ping An Annuity, Ping An Asset Management and China Ping An Insurance Overseas
(Holdings) Limited. Prior to joining the Company, Mr. Deng served as the Chief Investment Officer
of China Pacific Insurance (Group) Co., Ltd. and China Pacific Insurance Co., (H.K.) Ltd., the Head
of Investment Analytics & Derivatives of AIA Group, and the Head of Market Risk Management
(Asia-Pacific ex. Japan and South Korea) of AIG. Mr. Deng holds a Masters in Business
Administration and master’s degree in Quantitative Method and Modeling from Baruch College, City
University of New York. He is also a Chartered Financial Analyst and Financial Risk Manager.
Mr. Huang Yuqiang
Mr. Huang Yuqiang, 42, is the Person-in-charge of Auditing. He joined the Company in 2004 and has
held his current position since June 2023. Mr. Huang also serves as the General Manager of the
Group’s Audit and Supervision Department and a Director of Ping An Financial Leasing. After joining
the Company in 2004, Mr. Huang successively held the positions of the General Manager of Asset
Monitoring of the Risk Management Department of Ping An Bank and a Deputy General Manager
(presiding) of the Risk Management Department of the Group. Mr. Huang holds a Bachelor’s degree
in Business Administration from Nanjing University.
98
SUBSTANTIAL SHAREHOLDERS AND DIRECTORS’ INTERESTS
Substantial Shareholders
As of 31 December 2023, as far as is known to any Directors or Supervisors of the Company, the following
persons had interests or short positions in the Ordinary Shares or underlying shares which shall be disclosed
to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures
Ordinance (the “SFO”) or recorded in the register required to be kept under section 336 of the SFO:
Percentage of
total number Percentage
Name of substantial Class of Number of Nature of of H/A shares of total shares
shareholder Shares Capacity Notes H/A shares interest in issue in issue
(%) (%)
CP Group Ltd.............. H Interest of (1) 1,114,859,403 Long position 14.96 6.12
controlled
corporations
UBS Group AG ........... H Interest of (2) 711,184,930 Long position 9.54 3.90
controlled
corporations
Interest of (2) 520,441,099 Short position 6.98 2.85
controlled
corporations
JPMorgan Chase H Interest of (3) 131,991,408 Long position 1.77 0.72
& Co. ..................... controlled
corporations
Investment 95,845,736 Long position 1.28 0.52
manager
Person having a 3,836,904 Long position 0.05 0.02
security
interest in
shares
Trustee 8,412 Long position 0.00 0.00
Approved (3) 230,152,823 Lending pool 3.09 1.26
lending agent
Total: (3) 461,835,283 6.20 2.53
Interest of (3) 147,162,206 Short position 1.97 0.80
controlled
corporations
Investment 307,992 Short position 0.00 0.00
manager
Total: (3) 147,470,198 1.98 0.80
Citigroup Inc............... H Interest of (4) 48,259,575 Long position 0.64 0.26
controlled
corporations
Approved (4) 352,841,906 Lending pool 4.73 1.93
lending agent
Total: (4) 401,101,481 5.38 2.20
Interest of (4) 30,529,269 Short position 0.40 0.16
controlled
corporations
BlackRock, Inc............ H Interest of (5) 401,713,391 Long position 5.39 2.20
controlled
corporations
Interest of (5) 591,000 Short position 0.00 0.00
controlled
corporations
Shenzhen Investment A Beneficial 962,719,102 Long position 8.94 5.29
Holdings Co., Ltd... owner
99
Notes:
(1) According to the disclosure form filed by CP Group Ltd. on 30 May 2023, CP Group Ltd. was deemed to be interested in a
total of 1,114,859,403 H shares (long position) of the Company by virtue of its control over several wholly-owned corporations.
As of 31 December 2023, CP Group Ltd. indirectly held 1,063,597,013 H shares (long position) of the Company in total,
representing 5.84% of the Company’s total share capital.
(2) According to the disclosure form filed by UBS Group AG on 4 January 2024, UBS Group AG was deemed to be interested in
a total of 711,184,930 H shares (long position) and 520,441,099 H shares (short position) of the Company by virtue of its
controlled corporations. The entire interests and short positions of UBS Group AG in the Company included 462,835,379 H
shares (long position) and 346,669,990 H shares (short position) held through derivatives.
(3) According to the disclosure form filed by JPMorgan Chase & Co. on 28 December 2023, JPMorgan Chase & Co. was deemed
to be interested in a total of 461,835,283 H shares (long position) and 147,470,198 H shares (short position) of the Company
by virtue of its controlled corporations. The entire interests and short positions of JPMorgan Chase & Co. in the Company
included a lending pool of 230,152,823 H shares (long position). In addition, 94,815,360 H shares (long position) and
120,347,960 H shares (short position) were held through derivatives.
(4) According to the disclosure form filed by Citigroup Inc. on 23 November 2023, Citigroup Inc. was deemed to be interested in
a total of 401,101,481 H shares (long position) and 30,529,269 H shares (short position) of the Company by virtue of its
controlled corporations. The entire interests and short positions of Citigroup Inc. in the Company included a lending pool of
352,841,906 H shares (long position). In addition, 8,549,090 H shares (long position) and 27,017,772 H shares (short position)
were held through derivatives.
(5) According to the disclosure form filed by BlackRock, Inc. on 23 December 2023, BlackRock, Inc. was deemed to be interested
in a total of 401,713,391 H shares (long position) and 591,000 H shares (short position) of the Company by virtue of its
controlled corporations. The entire interests and short positions of BlackRock, Inc. in the Company included 3,857,500 H shares
(long position) and 591,000 H shares (short position) held through derivatives.
(6) As figures for the percentage of H shares held have been rounded down to the nearest second decimal place, they may not add
up to the totals. The percentage figures are based on the number of shares of the Company as of 31 December 2023.
Interests of Directors, Supervisors and Senior Management
Interests of Directors, Supervisors and Senior Management in the Company
As of 31 December 2023, the interests of the Company’s current directors, supervisors and senior
management and those who vacated office during the year ended 31 December 2023 in the Company’s
shares which shall be disclosed pursuant to the Standard No. 2 Concerning the Contents and Formats of
Information Disclosed by Listed Companies – The Contents and Formats of Annual Report issued by the
CSRC, were as follows:
Number of
shares held Number of
at the shares held Percentage Percentage
beginning at the end of total of total
H/A of the of the Change Reason for Nature of issued H/A issued
Name Capacity shares period period (shares) the change interest shares shares
(%) (%)
Ma Mingzhe ..... Beneficial A 2,245,730 2,524,802 +279,072 Key Employee Long position 0.02346 0.01386
owner Share
Purchase
Plan
Sun Jianyi......... Beneficial A 5,048,596 5,048,596 – – Long position 0.04691 0.02772
owner
Xie Yonglin ...... Beneficial A 666,487 942,767 +276,280 Key Employee Long position 0.00876 0.00518
owner Share
Purchase
Plan
Cai Fangfang .... Beneficial A 378,064 477,260 +99,196 Key Employee Long position 0.00443 0.00262
owner Share
Purchase
Plan
Yang Xiaoping.. Beneficial H 100,000 100,000 – – Long position 0.00134 0.00055
owner
100
Number of
shares held Number of
at the shares held Percentage Percentage
beginning at the end of total of total
H/A of the of the Change Reason for Nature of issued H/A issued
Name Capacity shares period period (shares) the change interest shares shares
(%) (%)
Yao Jason Beneficial A 686,391 837,826 +151,435 Key Employee Long position 0.00778 0.00460
(1)
Bo ............ owner Share
Purchase
Plan
Beneficial H 24,000 24,000 – – Long position 0.00032 0.00013
owner
Tan Sin Yin(1) ... Beneficial A 547,920 714,249 +166,329 Key Employee Long position 0.00664 0.00392
owner Share
Purchase
Plan
Beneficial H 40,000 40,000 – – Long position 0.00054 0.00022
owner
Wang Zhiliang .. Beneficial A 68,281 76,840 +8,559 Key Employee Long position 0.00071 0.00042
owner Share
Purchase
Plan
Michael Guo..... Beneficial A – 22,993 +22,993 Key Employee Long position 0.00021 0.00013
owner Share
Purchase
Plan
Huang Baoxin... Beneficial A 101,319 114,707 +13,388 Key Employee Long position 0.00107 0.00063
owner Share
Purchase
Plan
Fu Xin .............. Beneficial A 25,065 42,474 +17,409 Key Employee Long position 0.00039 0.00023
owner Share
Purchase
Plan
Sheng Beneficial A 379,613 453,412 +73,799 Key Employee Long position 0.00421 0.00249
Ruisheng ..... owner Share
Purchase
Plan
Zhang Zhichun . Beneficial A 93,999 106,370 +12,371 Key Employee Long position 0.00099 0.00058
owner Share
Purchase
Plan
Zhang Xiaolu.... Beneficial A 12,627 46,535 +33,908 Key Employee Long position 0.00043 0.00026
owner Share
Purchase
Plan
Beneficial H 10,000 10,000 – – Long position 0.00013 0.00005
owner
Deng Bin .......... Beneficial A – 5,328 +5,328 Key Employee Long position 0.00005 0.00003
owner Share
Purchase
Plan
Hu Jianfeng(1) ... Beneficial A 67,836 78,264 +10,428 Key Employee Long position 0.00073 0.00043
owner Share
Purchase
Plan
101
Note:
(1) Mr. Yao Jason Bo and Ms. Tan Sin Yin have resigned as directors of the Company on 30 May 2024. Mr. Hu Jianfeng resigned
as the Person-in-charge of Auditing of the Company on 19 June 2023.
Save as disclosed above, as of 31 December 2023, the interests and short positions of the Company’s
Directors, Supervisors and chief executives in the Company’s shares, underlying shares and debentures
which shall have been notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions
7 and 8 of Part XV of the SFO (including interests and short positions which the Company’s Directors,
Supervisors or chief executives are taken as or deemed to have under such provisions of the SFO), or are
recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or are
otherwise required to be notified by the Directors, Supervisors and chief executives to the Company and
the Hong Kong Stock Exchange pursuant to the Model Code, were as follows:
Interests
held at the Interests
beginning held at the Percentage Percentage
of the end of the of total of total
H/A period period Change Reason for Nature of issued H/A issued
Name Capacity shares (shares) (shares) (shares) the change interest shares shares
(%) (%)
Ma Mingzhe......... Interest of H 20,000 20,000 – – Long position 0.00027 0.00011
his spouse
Others(1) A 1,196,936 1,631,038 +434,102 Others(1) Long position 0.01515 0.00896
Sun Jianyi ............ Others(1) A 126,381 126,381 – – Long position 0.00117 0.00069
Xie Yonglin.......... Others(1) A 897,702 1,223,278 +325,576 Others(1) Long position 0.01137 0.00672
Cai Fangfang ....... Others(1) A 598,468 815,519 +217,051 Others(1) Long position 0.00758 0.00448
Yao Jason Bo(2) ... Interest of H 64,000 64,000 – – Long position 0.00086 0.00035
his spouse
Others(1) A 598,468 598,468 – – Long position 0.00556 0.00329
Tan Sin Yin(2) ...... Others(1) A 897,702 – -897,702 Lapse – 00000 00000
Michael Guo ........ Others A 70,811 103,368 +32,557 Others(1) Long position 0.00096 0.00057
Wang Zhiliang ..... Others(1) A 68,459 92,334 +23,875 Others(1) Long position 0.00086 0.00051
Notes:
(1) Conditional interests that can be vested in future under the Long-term Service Plan, subject to terms and conditions in the
Long-term Service Plan of Ping An Insurance (Group) Company of China, Ltd.
(2) Mr. Yao Jason Bo and Ms. Tan Sin Yin have resigned as directors of the Company on 30 May 2024.
102
Interests of Directors and Chief Executives in Associated Corporations of the Company
As of 31 December 2023, the interests and short positions of the Company’s Directors, Supervisors and
chief executives in the Company’s shares, underlying shares or debentures of the Company’s associated
corporations (as defined in the SFO), which shall have been notified to the Company and the Hong Kong
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or are recorded in the register required
to be kept under Section 352 of the SFO, or are otherwise required to be notified by the Directors,
Supervisors and chief executives to the Company and the Hong Kong Stock Exchange pursuant to the
Model Code, were as follows:
Percentage
Interests Interests of total
held at the held at the issued
beginning of end of the shares in
Associated the period period Change Reason for Nature of associated
Name corporation Capacity (shares) (shares) (shares) the change interest corporation
(%)
Xie Yonglin ..... Ping An Bank Beneficial 26,700 26,700 – – Long position 0.00014
owner
Tan Sin Yin(1) .. OneConnect Beneficial 78,000 78,000 – – Long position 0.00667
owner
Note:
(1) Ms. Tan Sin Yin have resigned as directors of the Company on 30 May 2024.
103
CORPORATE STRUCTURE
The following summarises our corporate structure of the Company as of 31 December 2023.
Registered Share
Capital (RMB, Voting
Shareholding
Name of Place of unless specified Rights
No. Subsidiary incorporation otherwise) Business Direct Indirect Ratio
1 ..... Ping An Life Shenzhen, 33,800,000,000 Life insurance 99.51% – 99.51%
Guangdong
2 ..... Ping An P&C Shenzhen, 21,000,000,000 Property and 99.55% – 99.55%
Guangdong casualty
insurance
3 ..... Ping An Bank Shenzhen, 19,405,918,198 Banking 49.56% 8.40% 58.00%
Guangdong
4 ..... Ping An Trust Shenzhen, 13,000,000,000 Trust and 99.88% – 99.88%
Guangdong Investment
5 ..... Ping An Securities Shenzhen, 13,800,000,000 Securities 40.96% 55.59% 96.62%
Co., Ltd. Guangdong investment and
brokerage
6 ..... Ping An Annuity Shanghai 11,603,419,173 Annuity insurance 94.18% 5.79% 100.00%
7 ..... Ping An Asset Shanghai 1,500,000,000 Asset management 98.67% 1.33% 100.00%
Management
8 ..... Ping An Health Shanghai 4,616,577,790 Health insurance 74.33% 0.68% 75.01%
Insurance
9 ..... China Ping An Hong Kong HKD7,085,000,000 Investment 100.00% – 100.00%
Insurance holding
Overseas
(Holdings)
Limited
10.... Ping An Financial Shanghai 14,500,000,000 Financial leasing 69.44% 30.56% 100.00%
Leasing
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TERMS AND CONDITIONS OF THE BONDS
The following, subject to completion and amendment and other than the words in italics, is the text of the
Terms and Conditions of the Bonds which will appear on the reverse of each of the definitive certificates
evidencing the Bonds:
The issue of U.S.$3,500,000,000 in aggregate principal amount of 0.875 per cent. convertible bonds due
2029 (the “Bonds”, which term shall include, unless the context requires otherwise, any further Bonds
issued in accordance with Condition 15 (Further Issues) and consolidated and forming a single series
therewith) of Ping An Insurance (Group) Company of China, Ltd. ( ) (the
“Issuer”) and the right of conversion into H Shares (as defined in Condition 5.1.5 (Meaning of “Shares”))
of the Issuer were authorised by resolutions of the board of directors of the Issuer passed on 15 July 2024.
The Bonds are constituted by a trust deed (as amended and/or supplemented from time to time, the “Trust
Deed”) dated on or about 22 July 2024 (the “Issue Date”) and made between the Issuer and The Bank of
New York Mellon, London Branch (the “Trustee”, which term shall, where the context so permits, include
all other persons for the time being acting as trustee or trustees under the Trust Deed) as trustee for the
holders of the Bonds. The Issuer has entered into a paying, conversion and transfer agency agreement (as
amended and/or supplemented from time to time, the “Agency Agreement”) dated on or about 22 July 2024
with the Trustee, The Bank of New York Mellon, London Branch as principal paying agent and principal
conversion agent (collectively in such capacities, the “Principal Agent”, which expression shall include
any additional or successor principal agent appointed from time to time in connection with the Bonds), The
Bank of New York Mellon SA/NV, Dublin Branch as registrar (the “Registrar”, which expression shall
include any successor registrar appointed from time to time in connection with the Bonds) and transfer
agent (the “Transfer Agent”, which expression shall include any additional or successor transfer agent
appointed from time to time in connection with the Bonds), and the other paying agents, transfer agents and
conversion agents appointed under it (each a “Paying Agent”, a “Transfer Agent” or a “Conversion
Agent” (as applicable) and together with the Registrar and the Principal Agent, the “Agents”) relating to
the Bonds. For the avoidance of doubt, references to the “Paying Agents”, the “Transfer Agents” or, as the
case may be, the “Conversion Agents” each include the Principal Agent. References to the “Principal
Agent”, the “Registrar” and the “Agents” below are references to the principal agent, the registrar and the
agents for the time being for the Bonds. These terms and conditions (the “Conditions”) include summaries
of, and are subject to, the detailed provisions of the Trust Deed. Copies of the Trust Deed and of the Agency
Agreement (i) are available for inspection at all reasonable times during usual business hours (being
between 9.00 a.m. (London time) and 3.00 p.m. (London time) Monday to Friday except for public
holidays) at the specified office of the Principal Agent, being at the date of the Trust Deed at 160 Queen
Victoria Street, London EC4V 4LA, United Kingdom and (ii) may be provided by email to any Bondholder,
in each case, following prior written request and proof of holding and identity satisfactory to the Principal
Agent. The Bondholders (as defined in Condition 1.3 (Title)) are entitled to the benefit of, are bound by,
and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of
those provisions of the Agency Agreement applicable to them.
All capitalised terms that are not defined in these Conditions will have the meanings given to them in the
Trust Deed.
1 Status; Form, Denomination and Title
1.1 Status
The Bonds constitute direct, unsubordinated, unconditional and (subject to the provisions of Condition
3.1 (Negative Pledge)) unsecured obligations of the Issuer and shall at all times rank pari passu and
without any preference or priority among themselves. The payment obligations of the Issuer under the
Bonds shall, save for such exceptions as may be provided by mandatory provisions of applicable law
and subject to Condition 3.1 (Negative Pledge), at all times rank at least equally with all of its other
present and future direct, unsubordinated, unconditional and unsecured obligations.
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1.2 Form and Denomination
The Bonds are issued in registered form in the specified denomination of U.S.$200,000 each and
integral multiples of U.S.$100,000 in excess thereof (each, an “Authorised Denomination”). A bond
certificate (each a “Certificate”) will be issued to each Bondholder in respect of its registered holding
of Bonds. Each Certificate will be numbered serially with an identifying number which will be
recorded on the relevant Certificate and in the register of Bondholders (the “Register”) which the
Issuer will procure to be kept by the Registrar.
Upon issue, the Bonds will be represented by a global certificate (the “Global Certificate”) registered
in the name of a nominee of, and deposited with, a common depositary for Euroclear Bank SA/NV
(“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). The Conditions are modified by
certain provisions contained in the Global Certificate.
Except in the limited circumstances described in the Global Certificate, owners of interests in Bonds
represented by the Global Certificate will not be entitled to receive definitive Certificates in respect
of their individual holdings of Bonds. The Bonds are not issuable in bearer form.
1.3 Title
Title to the Bonds passes only by transfer and registration in the Register as described in Condition
2 (Registration and Transfers of Bonds; Issue of Certificates). The holder of any Bond will (except
as otherwise required by law or as ordered by a court of competent jurisdiction) be treated as its
absolute owner for all purposes (whether or not it is overdue and regardless of any notice of
ownership, trust or any interest in it or any writing on, or the theft or loss of, the Certificate issued
in respect of it) and no person will be liable for so treating the holder. In these Conditions,
“Bondholder” and (in relation to a Bond) “holder” means the person in whose name a Bond is
registered.
2 Registration and Transfers of Bonds; Issue of Certificates
2.1 Register
The Issuer will cause the Register to be kept at the specified office of the Registrar outside the United
Kingdom and in accordance with the terms of the Agency Agreement on which shall be entered the
names and addresses of the holders of the Bonds and the particulars of the Bonds held by them and
of all transfers, redemptions and conversions of the Bonds. Each Bondholder shall be entitled to
receive only one Certificate in respect of its entire holding of Bonds.
2.2 Transfers
Subject to Conditions 2.5 (Restricted Transfer Periods) and 2.6 (Regulations) and the terms of the
Agency Agreement, a Bond may be transferred in whole or in part in an Authorised Denomination by
delivery of the Certificate issued in respect of that Bond, with the form of transfer on the back duly
completed and signed by the holder or his attorney duly authorised in writing, to the specified office
of the Registrar or of any of the Transfer Agents. No transfer of a Bond will be valid or effective
unless and until entered on the Register. A Bond may be registered only in the name of, and transferred
only to, a named person.
Transfers of interests in the Bonds evidenced by the Global Certificate will be effected in accordance
with the rules and procedures of the relevant clearing systems.
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2.3 Delivery of New Certificates
2.3.1 Each new Certificate to be issued upon a transfer of Bonds will, within seven business days of
receipt by the Registrar or, as the case may be, any Transfer Agent of the original Certificate and
the form of transfer duly completed and signed, be made available for collection at the specified
office of the Registrar or such Transfer Agent or, if so requested in the form of transfer, be
mailed by uninsured mail at the risk of the holder entitled to the Bonds (but free of charge to
the holder and at the Issuer’s expense) to the address specified in the form of transfer. The form
of transfer is available at the specified office of the Registrar and each Transfer Agent.
Except in the limited circumstances described in the Global Certificate, the Bonds will only be
issued to the Bondholders in book-entry form and owners of interests in the Bonds will not be
entitled to receive physical delivery of Certificates.
2.3.2 Where only part of a principal amount of the Bonds (being that of one or more Bonds) in respect
of which a Certificate is issued is to be transferred, converted, redeemed or repurchased, a new
Certificate in respect of the Bonds not so transferred, converted, redeemed or repurchased will,
within seven business days of delivery of the original Certificate to the Registrar or any Transfer
Agent, be made available for collection at the specified office of the Registrar or such Transfer
Agent or, if so requested in the form of transfer, be mailed by uninsured mail at the risk of the
holder of the Bonds not so transferred, converted, redeemed or repurchased (but free of charge
to the holder and at the Issuer’s expense) to the address of such holder appearing on the Register.
2.3.3 For the purposes of this Condition 2.3 (Delivery of New Certificates), “business day” shall mean
a day other than a Saturday or Sunday on which banks are open for business in the city in which
the specified office of the Registrar (if a Certificate is deposited with it in connection with a
transfer or conversion) or the Agent with whom a Certificate is deposited in connection with a
transfer or conversion, is located.
2.4 Formalities Free of Charge
Registration of a transfer of Bonds and issuance of new Certificates will be effected without charge
subject to (i) the person making such application for transfer paying or procuring the payment of any
taxes, duties and other governmental charges in connection therewith, (ii) the Registrar or the relevant
Transfer Agent (as the case may be) being satisfied with the documents of title and/or identity of the
person making the application and (iii) the Registrar or the relevant Transfer Agent (as the case may
be) being satisfied that the Regulations (as defined in Condition 2.6 (Regulations) below) have been
complied with.
2.5 Restricted Transfer Periods
No Bondholder may require the transfer of a Bond to be registered (i) during the period of seven days
ending on (and including) the dates for payment of any amount pursuant to these Conditions
(including any date of redemption pursuant to Condition 7.2 (Redemption at the Option of the Issuer)
and Condition 7.3 (Redemption for Taxation Reasons)); (ii) after a Conversion Notice (as defined in
Condition 5.2.1 (Conversion Notice)) has been delivered with respect to such Bond or (iii) after a Put
Option Notice (as defined in Condition 7.4 (Redemption at the Option of the Bondholders)) has been
deposited in respect of such Bond (iv) after a Relevant Event Put Exercise Notice (as defined in
Condition 7.5 (Redemption for Relevant Events)) has been deposited in respect of such Bond, each
such period being a “Restricted Transfer Period”.
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2.6 Regulations
All transfers of Bonds and entries on the Register will be made subject to the detailed regulations
concerning transfer of Bonds, the initial form of which is scheduled to the Agency Agreement (the
“Regulations”). The Regulations may be changed by the Issuer, with the prior written approval of the
Trustee and the Registrar, or by the Registrar, with the prior written approval of the Trustee. A copy
of the current Regulations will be made available (free of charge to the Bondholder and at the Issuer’s
expense) by the Registrar to any Bondholder following written request and satisfactory proof of
holding and identity and is available for inspection following written request and proof of holding and
identity satisfactory to the Registrar at all reasonable times during normal business hours at the
specified office of the Registrar.
3 Covenants
3.1 Negative Pledge
So long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer will not create or
permit to subsist, and the Issuer will procure that no Principal Subsidiary, other than a Listed
Subsidiary and Subsidiaries of a Listed Subsidiary (as defined below), will create, or have
outstanding, any mortgage, charge, pledge, lien or other form of encumbrance or security interest upon
the whole or any part of its undertaking, assets or revenues (including any uncalled capital), present
or future, to secure any Relevant Indebtedness (as defined below) or to secure any guarantee of or
indemnity in respect of any Relevant Indebtedness unless, at the same time or prior thereto according
to the Bonds the same security as is created or subsisting to secure any such Relevant Indebtedness,
guarantee or indemnity or such other security as either (i) the Trustee shall in its absolute discretion
deem not materially less beneficial to the interests of the Bondholders or (ii) shall be approved by an
Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.
3.2 Undertakings Relating to Foreign Debt Registration
The Issuer undertakes that it will (i) within 15 Registration Business Days after the Issue Date,
register or cause to be registered with SAFE the Bonds (the “Foreign Debt Registration”) pursuant
to the Administrative Measures for Foreign Debt Registration ( ) and its operating
guidelines, effective as of 13 May 2013 as amended from time to time (the “Foreign Debt
Registration Measures”) and if applicable, the Circular of the People’s Bank of China on Issues
Concerning the Overall Macro Prudential Management System for Cross-border Financing (
) (the “Cross-Border Financing Circular”),
(ii) use its best endeavours to complete the Foreign Debt Registration and obtain a registration record
from SAFE on or before the Registration Deadline and (iii) comply with all applicable PRC laws and
regulations in relation to the Bonds, including but not limited to the Foreign Debt Registration
Measures, the Cross-Border Financing Circular and any implementing measures promulgated
thereunder from time to time.
3.3 Notification to NDRC
The Issuer undertakes that it will within the relevant prescribed timeframes after the Issue Date file
or cause to be filed with the NDRC the requisite information and documents in respect of the Bonds
and comply with other reporting obligations in accordance with the Administrative Measures for the
Review and Registration of Medium- and Long-Term Foreign Debts of Enterprises (
( 56 )) (the “Order 56”) issued by the NDRC and
effective from 10 February 2023 and any implementation rules, reports, certificates, approvals or
guidelines as issued by the NDRC from time to time, including but not limited to, the Initial NDRC
Post-Issuance Filing (as defined below).
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3.4 CSRC Post-Issuance Filings
The Issuer undertakes to file or cause to be filed with the CSRC (as defined below) within the relevant
prescribed timeframes after the Issue Date the requisite information and documents in respect of the
Bonds in accordance with the CSRC Filing Rules (as defined below) (the “CSRC Post-Issuance
Filings”, which term for the avoidance of doubt, includes the Initial CSRC Post-Issuance Filing (as
defined below)) and comply with the continuing obligations under the CSRC Filing Rules and any
implementation rules as issued by the CSRC from time to time.
3.5 Notification of Submission of the Initial NDRC Post-Issuance Filing and the Initial CSRC Post-
Issuance Filing and the completion of the Foreign Debt Registration
The Issuer shall:
3.5.1 file or cause to be filed (i) the Initial NDRC Post-Issuance Filing with the NDRC or its
competent local counterpart of the information and documents relating to the issue of the Bonds
that are required to be filed in accordance with Order 56 within ten Registration Business Days
after the Issue Date (the “Initial NDRC Post-Issuance Filing”) and (ii) the CSRC Filing Report
and other requisite information and documents in respect of the Bonds that are required to be
filed with the CSRC within three Registration Business Days after the Issue Date in accordance
with the CSRC Filing Rules (the “Initial CSRC Post-Issuance Filing”); and
3.5.2 on or before the Registration Deadline and within ten Registration Business Days after the latest
of (i) the submission of the Initial NDRC Post-Issuance Reporting, (ii) the submission of the
Initial CSRC Post-Issuance Filing, and (iii) receipt of the registration certificate from SAFE (or
any other document evidencing the completion of the Foreign Debt Registration issued by
SAFE), provide the Trustee with (A) a certificate (substantially in the form scheduled to the
Trust Deed) in English signed by an Authorised Signatory (as defined in the Trust Deed)
confirming the submission of the Initial NDRC Post-Issuance Reporting and the Initial CSRC
Post-Issuance Filing, the completion of the Foreign Debt Registration; and (B) copies of the
relevant documents evidencing the submission of the Initial NDRC Post-Issuance Reporting and
the Initial CSRC Post-Issuance Filing and the completion of Foreign Debt Registration, each
certified in English as a true and complete copy of the original by an Authorised Signatory of
the Issuer (the items specified in (A) and (B) together, the “Registration Documents”). In
addition, the Issuer shall, within ten Registration Business Days after the Registration
Documents are delivered to the Trustee, give notice to the Bondholders (in accordance with
Condition 16 (Notices)) confirming the submission of the Initial NDRC Post-Issuance Reporting
and the Initial CSRC Post-Issuance Filing and the completion of the Foreign Debt Registration.
The Trustee shall have no obligation or duty to monitor or assist with or ensure the Initial NDRC
Post-Issuance Filing or the Initial CSRC Post-Issuance Filing is submitted or the Foreign Debt
Registration is submitted or completed within the timeframe specified in Condition 3.2 (Undertakings
Relating to Foreign Debt Registration), Condition 3.3 (Notification to NDRC) and Condition 3.4
(CSRC Post-Issuance Filings), respectively, or to verify the accuracy, validity and/or genuineness of
any documents in relation to or in connection with the Initial NDRC Post-Issuance Filing, the Initial
CSRC Post-Issuance Filing and/or the Foreign Debt Registration and/or the Registration Documents
or to translate or procure the translation into English of the documents in relation to or in connection
with the Initial NDRC Post-Issuance Filing, the Initial CSRC Post-Issuance Filing or the Foreign Debt
Registration or to give notice to the Bondholders confirming the completion of the Initial NDRC
Post-Issuance Filing, the Initial CSRC Post-Issuance Filing and the Foreign Debt Registration, and
shall not be liable to Bondholders or any other person for not doing so.
109
3.6 Definitions
For the purposes of these Conditions:
“CSRC” means the China Securities Regulatory Commission;
“CSRC Filing Rules” means the Trial Administrative Measures of Overseas Securities Offering and
Listing by Domestic Companies ( ) and supporting
guidelines issued by the CSRC on 17 February 2023 and became effective on 1 March 2023, as
amended, supplemented or otherwise modified from time to time;
“CSRC Filing Report” means the filing report of the Issuer in relation to the issuance of the Bonds
which will be submitted to the CSRC within three Registration Business Days after the Issue Date
pursuant to Articles 13 and 16 of the CSRC Filing Rules;
“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of
China;
“Listed Subsidiary” means, at any time, any Subsidiary of the Issuer the ordinary voting shares of
which are at such time listed on The Stock Exchange of Hong Kong Limited or any recognised stock
exchange;
“NDRC” means the National Development and Reform Commission of the PRC;
“person” means any individual, corporation, partnership, limited liability company, joint venture,
trust, unincorporated organisation or government or any agency or political subdivision thereof;
“PRC” means the People’s Republic of China, which shall for the purpose of these Conditions only,
exclude Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and
Taiwan;
“Relevant Indebtedness” means any present or future indebtedness having a maturity of not less than
one year incurred outside the PRC in the form of, or represented by, bonds, debentures, notes, loan
stock, bearer participation certificates, depositary receipts, certificates of deposit or other investment
securities which represent indebtedness and are for the time being, or are intended to be or capable
of being, quoted, listed, ordinarily dealt in or traded on any stock exchange or over-the-counter or
other securities market, but shall not include any future or present indebtedness denominated in RMB
and offered or sold in the PRC;
“Registration Business Day” means a day, other than a Saturday, Sunday or public holiday, on which
commercial banks are generally open for business in Beijing;
“Registration Deadline” means the day falling 90 Registration Business Days after the Issue Date;
“SAFE” means the State Administration of Foreign Exchange of the PRC or its local branch; and
“Subsidiary” or “subsidiary” means in relation to any person, (i) any company or other business
entity of which that person owns or controls (either directly or through one or more other Subsidiaries)
more than 50 per cent. of the registered share capital or issued share capital or other ownership interest
having ordinary voting power to elect directors, managers or trustees of such company or other
business entity or (ii) any company or other business entity which at any time has its accounts
consolidated with those of that person or which, under the laws of Hong Kong or the PRC, or in
accordance with generally accepted accounting principles applicable in the PRC from time to time,
should have its accounts consolidated with those of that person.
110
4 Interest
The Bonds bear interest from and including 22 July 2024 at the rate of 0.875 per cent. per annum
payable semi-annually in arrear in equal instalments of U.S.$437.5 per Calculation Amount (as
defined below) on 22 January and 22 July in each year (each an “Interest Payment Date”).
Each Bond will cease to bear interest:
(a) (subject to Condition 5.2.4 (Interest Accrual)) where the Conversion Right attached to it shall
have been exercised by a Bondholder, from and including the Interest Payment Date immediately
preceding the relevant Conversion Date (as defined below), or if none, the Issue Date; or
(b) where such Bond is redeemed or repaid pursuant to Condition 7 (Redemption, Purchase and
Cancellation) or Condition 9 (Events of Default), from the due date for redemption or repayment
thereof unless, upon due presentation thereof, payment of principal and premium (if any) is
improperly withheld or refused. In such event, such unpaid amount shall bear interest at the rate
of 2.875 per cent. per annum (both before and after judgment) until whichever is the earlier of
(A) the day on which all sums due in respect of such Bond up to that day are received by or on
behalf of the relevant holder and (B) the day falling seven days after the Trustee or the Principal
Agent has notified Bondholders of receipt of all sums due in respect of all the Bonds up to that
seventh day (except to the extent that there is failure in the subsequent payment to the relevant
holders under these Conditions).
Interest in respect of any Bond shall be calculated per U.S.$100,000 in principal amount of the Bonds
(the “Calculation Amount”). The amount of interest payable per Calculation Amount for any period
shall, save as provided above in relation to equal instalments, be equal to the product of the relevant
annual rate of interest, the Calculation Amount and the day-count fraction for the relevant period,
rounding the resulting figure to the nearest cent (half a cent being rounded upwards). If interest is
required to be calculated for a period of less than a complete Interest Period (as defined below), the
relevant day-count fraction will be determined on the basis of a 360-day year consisting of twelve
months of 30 days each and, in the case of an incomplete month, the number of days elapsed.
In these Conditions, the period beginning on and including the Issue Date and ending on but excluding
the first Interest Payment Date and each successive period beginning on and including an Interest
Payment Date and ending on but excluding the next succeeding Interest Payment Date is called an
“Interest Period”.
5 Conversion
5.1 Conversion Right
5.1.1 Conversion Right and Conversion Period: Subject to the right of the Issuer to make a Cash
Election as provided in Condition 5.2.5 (Cash Settlement) and as otherwise hereinafter provided,
Bondholders have the right to convert their Bonds into H Shares credited as fully paid at any
time during the Conversion Period referred to below.
Subject to and upon compliance with these Conditions, the right of a Bondholder to convert any
Bond into H Shares is called the “Conversion Right”. The number of H Shares to be issued on
conversion of a Bond will be determined by dividing the principal amount of the Bond to be
converted (translated into HK dollars at the fixed rate of HK$7.8079 = U.S.$1.00) (the “Fixed
Exchange Rate”) by the Conversion Price (as defined in Condition 5.1.3 (Conversion Price)) in
effect on the Conversion Date (as defined in Condition 5.2.1 (Conversion Notice)). A Conversion
Right may only be exercised in respect of an Authorised Denomination for one or more Bonds.
If more than one Bond held by the same holder is converted at any one time by the same holder,
the number of H Shares to be issued upon such conversion will be calculated on the basis of the
aggregate principal amount of the Bonds to be converted.
111
Subject to and upon compliance with these Conditions (including without limitation Condition
5.1.4 (Revival and/or survival after Default)), the Conversion Right attaching to any Bond may
be exercised, at the option of the holder thereof, at any time on or after the 41st day after the
Issue Date up to the close of business (at the place where the Certificate evidencing such Bond
is deposited for conversion) on the date falling seven working days prior to the Maturity Date
(as defined in Condition 7.1 (Maturity)) (both days inclusive) or if such Bond shall have been
called for redemption by the Issuer before the Maturity Date, then up to and including the close
of business (at the place aforesaid) on a date no later than seven working days (at the place
aforesaid) prior to the date fixed for redemption thereof; provided that no Conversion Right may
be exercised in respect of a Bond where the holder shall have exercised its right to require the
Issuer to redeem or repurchase such Bond pursuant to Condition 7.4 (Redemption at the Option
of the Bondholders) or Condition 7.5 (Redemption for Relevant Events) or during a Restricted
Conversion Period (both dates inclusive) (as defined below); provided further that the
Conversion Right is exercised subject to any applicable fiscal or other laws or regulations or as
hereafter provided in these Conditions (the “Conversion Period”).
In accordance with the below paragraphs, exercise of Conversion Rights is restricted in relation
to any Bond during the period (i) commencing on the date falling 30 days prior to a shareholders’
meeting and ending on the date of that meeting; or (ii) commencing the date falling five working
days prior to the record date set by the Issuer for the purpose of distribution of any dividend and
ending on such record date; or (iii) commencing on such date and for such period as determined
by applicable law from time to time that the Issuer is required to close its register (a “Restricted
Conversion Period”). The Issuer will give notice of any such Restricted Conversion Period to
the Bondholders and the Trustee and Agents not less than five working days prior to the
commencement of any such Restricted Conversion Period.
If the Conversion Date in respect of a Bond would otherwise fall during a Restricted Conversion
Period, such Conversion Date shall be postponed to the first H Share Stock Exchange Business
Day (as defined in Condition 5.8 (Definitions)) following the expiry of such Restricted
Conversion Period.
If the Conversion Date in respect of the exercise of any Conversion Right is postponed as a result
of the foregoing provision to a date that falls after the expiry of the Conversion Period or after
the relevant redemption date, such Conversion Date shall be deemed to be the final day of such
Conversion Period or the relevant redemption date, as the case may be.
For the purpose of this Condition 5.1.1 (Conversion Right and Conversion Period), “working
day” means a day other than a Saturday, Sunday or a public holiday on which commercial banks
and foreign exchange markets are generally open for business in the city which the specified
office of each of the Principal Agent and the Registrar is located, respectively.
5.1.2 Fractions of H Shares: Fractions of H Shares will not be issued on conversion and no cash
payments or other adjustments will be made in lieu thereof. However, if the Conversion Right
in respect of more than one Bond is exercised at any one time such that H Shares to be issued
on conversion are to be registered in the same name, the number of such H Shares to be issued
in respect thereof shall be calculated on the basis of the aggregate principal amount of such
Bonds being so converted and rounded down to the nearest whole number of H Shares.
Notwithstanding the foregoing, in the event of a consolidation or re-classification of H Shares
by operation of law or otherwise occurring after 15 July 2024 which reduces the number of H
Shares outstanding, the Issuer will upon conversion of Bonds pay in cash in U.S. dollars (by
means of a U.S. dollar cheque drawn on a bank that processes payments in U.S. dollars and
mailed directly to the address of the Bondholder or by transfer to a U.S. dollar account
maintained by the payee, in either case in accordance with instructions given by the relevant
Bondholder in the Conversion Notice) a sum equal to such portion of the principal amount of
the Bond or Bonds evidenced by the Certificate deposited in connection with the exercise of
Conversion Rights, aggregated as provided in Condition 5.1.1 (Conversion Right and
Conversion Period), as corresponds to any fraction of an H Share not issued as a result of such
consolidation or re-classification aforesaid if such sum exceeds U.S.$10.00 (which shall be
determined using the Prevailing Rate on the Conversion Date).
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5.1.3 Conversion Price: The price at which H Shares will be issued upon conversion (the “Conversion
Price”) will initially be HK$43.71 per H Share but will be subject to adjustment in the manner
provided in Condition 5.3 (Adjustments to Conversion Price).
5.1.4 Revival and/or survival after Default: Notwithstanding the provisions of Condition 5.1.1
(Conversion Right and Conversion Period), if (i) the Issuer shall default in making payment in
full in respect of any Bond which shall have been called or put for redemption on the date fixed
for redemption thereof, (ii) any Bond has become due and payable prior to the Maturity Date by
reason of the occurrence of any of the events referred to in Condition 9 (Events of Default) or
(iii) any Bond is not redeemed on the Maturity Date in accordance with Condition 7.1
(Maturity), the Conversion Right attaching to such Bond will revive and/or will continue to be
exercisable up to, and including, the close of business (at the place where the Certificate
evidencing such Bond is deposited for conversion) on the date upon which the full amount of
the moneys payable in respect of such Bond has been duly received by the Principal Agent or
the Trustee and notice of such receipt has been duly given to the Bondholders in accordance with
Condition 16 (Notices) and, notwithstanding the provisions of Condition 5.1.1 (Conversion
Right and Conversion Period), any Bond in respect of which the Certificate and Conversion
Notice are deposited for conversion prior to such date shall be converted on the relevant
Conversion Date notwithstanding that the full amount of the moneys payable in respect of such
Bond shall have been received by the Principal Agent or the Trustee before such Conversion
Date or that the Conversion Period may have expired before such Conversion Date.
5.1.5 Meaning of “Shares”: As used in these Conditions, the expression (i) “H Shares” means
ordinary foreign shares with a par value of RMB1.00 each issued by the Issuer which are listed
on the Hong Kong Stock Exchange; (ii) “A Shares” means ordinary domestic shares of
RMB1.00 each issued by the Issuer which are traded in Renminbi on the Shanghai Stock
Exchange; and (iii) “Ordinary Shares” means the H Shares, the A Shares and any fully-paid and
non-assessable shares of any class or classes of the ordinary shares of the Issuer authorised after
the date of the issue of the Bonds which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation or dissolution of the Issuer.
5.2 Conversion Procedure
5.2.1 Conversion Notice:
Conversion Rights may be exercised by a Bondholder during the Conversion Period by
delivering the relevant Certificate to the specified office of any Conversion Agent during its
usual business hours (being 9:00 a.m. (London time) to 3:00 p.m. (London time), Monday to
Friday on which commercial banks are open for business in the city of the specified office of
the Conversion Agent) accompanied by a duly completed and signed notice of conversion (a
“Conversion Notice”) in the form (for the time being current and being substantially in the form
scheduled to the Agency Agreement) obtainable from any Conversion Agent, together with (i)
the relevant Certificate; and (ii) certification by the Bondholder, in the form obtainable from any
Conversion Agent, as may be required under the laws of the PRC, Hong Kong or any jurisdiction
in which the specified office of such Conversion Agent is located. Conversion Rights shall be
exercised subject in each case to any applicable fiscal or other laws or regulations applicable in
the jurisdiction in which the specified office of the Conversion Agent to whom the relevant
Conversion Notice is delivered is located.
If such delivery is made after 3.00 p.m. (London time) on any business day or on a day which
is not a business day, in each case in the place of the specified office of the Conversion Agent,
such delivery shall be deemed for all purposes of these Conditions to have been made on the next
business day following such day. If such delivery is made during a Restricted Conversion Period,
such delivery shall be deemed for all purposes of these Conditions to have been made on the H
Share Stock Exchange Business Day following (in the place of the specified office of the
Conversion Agent) the last day of such Restricted Conversion Period unless such date shall fall
outside the Conversion Period.
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Any determination as to whether any Conversion Notice has been duly completed and properly
delivered shall be made by the relevant Conversion Agent and shall, save in the case of manifest
error, be conclusive and binding on the Issuer, the Trustee, the Agents and the relevant
Bondholder.
A Conversion Notice, once delivered, shall be irrevocable and may not be withdrawn without the
Issuer’s consent.
The conversion date in respect of a Bond (the “Conversion Date”) shall be deemed to be the H
Share Stock Exchange Business Day immediately following the date of the surrender of the
Certificate in respect of such Bond and delivery of such Conversion Notice and, if applicable,
any such certificate and/or any payment to be made or indemnity given under these Conditions
in connection with the exercise of such Conversion Right.
5.2.2 Stamp Duty etc.: A Bondholder delivering a Certificate in respect of a Bond for conversion must
pay directly to the relevant authorities or party any taxes and duties, including capital, stamp,
issue, excise, transfer, registration and other similar taxes and duties and transfer costs
(“Duties”) in any applicable jurisdiction arising on conversion (other than any Duties payable
in the PRC or Hong Kong or, if relevant, in the place of the Alternative Stock Exchange, by the
Issuer in respect of the allotment and issue of H Shares and listing of the H Shares on the Hong
Kong Stock Exchange or the Alternative Stock Exchange (as the case may be) on conversion,
such Duties being the “Issuer Duties”) (such Duties and Issuer Duties are collectively known
as “Taxes”). The Issuer will pay all other expenses arising from the issue of H Shares on
conversion of the Bonds and all charges (together, the “Conversion Expenses”) of the Agents
and the share transfer agent for the H Shares. The Bondholder (and, if different, the person to
whom the H Shares are to be issued) must declare in the relevant Conversion Notice that any
amounts payable to the relevant tax authorities or party in settlement of Duties (other than the
Issuer Duties) payable pursuant to this Condition 5.2.2 (Stamp Duty etc.) have been paid.
If the Issuer fails to pay any Issuer Duties or Conversion Expenses, the relevant holder shall be
entitled to tender and pay the same and the Issuer, as a separate and independent stipulation,
covenants to reimburse and indemnify each Bondholder in respect of any payment thereof and
any penalties payable in respect thereof.
Such Bondholder must also pay all, if any, Duties (other than Issuer Duties) imposed on it and
arising by reference to any disposal or deemed disposal of a Bond or interest therein in
connection with the exercise of Conversion Rights by it.
Neither the Trustee nor the Agents shall be responsible for determining whether such Taxes or
Conversion Expenses are payable or the amount thereof and shall not be responsible or liable for
any failure by the Issuer or any Bondholder to pay any such amount.
5.2.3 Registration:
(i) As soon as practicable, and in any event not later than seven H Share Stock Exchange
Business Days (excluding any H Share Stock Exchange Business Days that fall within a
Restricted Conversion Period) after the Conversion Date, the Issuer will, in the case of
Bonds converted on exercise of the Conversion Right and in respect of which a duly
completed Conversion Notice has been delivered and the relevant Certificate and
certification and amounts payable by the relevant Bondholder deposited or paid as required
by Conditions 5.2.1 (Conversion Notice) and 5.2.2 (Stamp Duty etc.), register the person
or persons designated for the purpose in the Conversion Notice as holder(s) of the relevant
number of H Shares in the Issuer’s H share register and will, if the Bondholder has also
requested in the Conversion Notice and to the extent permitted under applicable law and
the rules and procedures of the Central Clearing and Settlement System of Hong Kong
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(“CCASS”), take all action reasonably necessary to enable the H Shares to be delivered
through CCASS for so long as the H Shares are listed on the Hong Kong Stock Exchange;
or will make such certificate or certificates available for collection at the office of the
Issuer’s share registrar in Hong Kong (currently 17M Floor, Hopewell Centre, 183 Queen’s
Road East, Wanchai, Hong Kong) notified to Bondholders in accordance with Condition 16
(Notices) or, if so requested in the relevant Conversion Notice, cause its share registrar to
mail (at the risk, and, if sent at the request of such person otherwise than by ordinary mail,
at the expense, of the person to whom such certificate or certificates are sent) such
certificate or certificates to the person and at the place specified in the Conversion Notice,
together (in either case) with any other securities, property or cash required to be delivered
upon conversion and such assignments and other documents (if any) as may be required by
law to effect the transfer thereof.
(ii) The delivery of the H Shares to the converting Bondholder (or such person or persons
designated in the relevant Conversion Notice) in the manner contemplated in Condition
5.2.3(i) will be deemed to satisfy the Issuer’s obligation to pay any amounts under such
converted Bonds. The person or persons designated in the Conversion Notice will become
the holder of record of the number of H Shares issuable upon conversion with effect from
the date he is or they are registered as such in the Issuer’s register of members for H shares
(the “Registration Date”). The H Shares issued upon exercise of the Conversion Rights
will be fully paid up and will in all respects rank pari passu with, and within the same class
as, the H Shares in issue on the relevant Registration Date except for any right excluded
by mandatory provisions of applicable law. Save as set out in these Conditions, a holder
of H Shares issued on exercise of the Conversion Rights shall not be entitled to any rights,
distributions or other payments the record date or due date for the establishment of
entitlement for which precedes the relevant Registration Date.
(iii) If (A) the Registration Date in relation to any Bond shall be on or after the record date for
any issue, distribution, grant, offer or other event that gives rise to the adjustment of the
Conversion Price pursuant to Condition 5.3 (Adjustments to Conversion Price), and (B) the
Conversion Date in relation to such exercise shall be before the date on which such
adjustment to the Conversion Price becomes effective under the relevant Condition (any
such adjustment, a “Retroactive Adjustment”), upon the relevant adjustment to the
Conversion Price becoming effective under the relevant Condition, the Issuer shall procure
the issue to the converting Bondholder (in accordance with the instructions contained in
the Conversion Notice (subject to any applicable laws or regulations)), such additional
number of H Shares (“Additional H Shares”) as, together with the H Shares issued or to
be issued on conversion of the relevant Bond, is equal to the number of H Shares which
would have been required to be issued on conversion of such Bond if the relevant
adjustment to the Conversion Price under the relevant Condition had been made and
become effective on or immediately prior to the relevant Conversion Date and in such
event and in respect of such Additional H Shares, references in this Condition 5.2.3 (iii)
to the Conversion Date shall be deemed to refer to the date upon which the Retroactive
Adjustment becomes effective (notwithstanding that the date upon which it becomes
effective falls after the end of the Conversion Period). If the Issuer has elected to pay the
converting Bondholder cash in lieu of H Shares pursuant to the Cash Settlement Option (as
defined in Condition 5.2.5 (Cash Settlement)), the number of Additional H Shares shall be
determined by assuming that the Issuer had not elected the Cash Settlement Option. In such
case, the Issuer shall satisfy its obligations under Condition 5.2.5 (Cash Settlement) by
paying, as soon as practicable and in any event not later than ten H Share Stock Exchange
Business Days after the date of relevant adjustment of the Conversion Price under the
relevant Condition becoming effective to the converting Bondholder an aggregate amount
in U.S. dollars equivalent to the product of the Closing Price of any H Share and any such
Additional H Shares on the date the Issuer would be required to deliver such H Shares if
the Cash Settlement Option had not been exercised (which shall be determined using the
Prevailing Rate on the Conversion Date).
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5.2.4 Interest Accrual:
If any notice requiring the redemption of any Bonds is given pursuant to Condition 7.2
(Redemption at the Option of the Issuer) or Condition 7.3 (Redemption for Taxation Reasons) on
or after the 15th Hong Kong business day prior to a record date which has occurred since the
last Interest Payment Date (or in the case of the first Interest Period, since the Issue Date) in
respect of any dividend or distribution payable in respect of the H Shares where such notice
specifies a date for redemption falling on or prior to the date which is 14 days after the Interest
Payment Date immediately following such record date, interest shall (subject as hereinafter
provided) accrue on Bonds in respect of which Conversion Rights shall have been exercised and
in respect of which the Conversion Date falls after such record date and on or prior to the Interest
Payment Date immediately following such record date in each case from and including the
preceding Interest Payment Date (or, if such Conversion Date falls before the first Interest
Payment Date, from, and including, the Issue Date) to, but excluding, such Conversion Date;
provided that no such interest shall accrue on any Bond in the event that the H Shares issued on
conversion thereof shall carry an entitlement to receive such dividend or distribution. Any such
interest shall be paid not later than 14 days after the relevant Conversion Date directly by the
Issuer by transfer to a U.S. dollar account maintained by the payee, in accordance with
instructions given by the relevant Bondholder in the Conversion Notice.
5.2.5 Cash Settlement:
Notwithstanding the Conversion Right of each Bondholder in respect of each Bond, at any time
when the delivery of H Shares deliverable upon conversion of the Bond is required to satisfy the
Conversion Right in respect of a Conversion Notice, the Issuer shall have the option, in its sole
discretion, to pay to the relevant Bondholder an amount of cash equivalent to the Cash
Settlement Amount (as defined below) converted at the Prevailing Rate in order to satisfy such
Conversion Right in whole or in part (and if in part, the other part shall be satisfied by the
delivery of H Shares) (the “Cash Settlement Option”). In order to exercise the Cash Settlement
Option, the Issuer shall provide notice of the exercise of the Cash Settlement Option (the “Cash
Settlement Notice”) to the relevant Bondholder, the Trustee and the Agents as soon as
practicable but no later than the fifth H Share Stock Exchange Business Day following the date
of the Conversion Notice (the date of such Cash Settlement Notice being the “Cash Settlement
Notice Date”). The Cash Settlement Notice must specify the number of H Shares in respect of
which the Issuer will make a cash payment in the manner described in this Condition 5.2.5 (Cash
Settlement). The Issuer shall pay the Cash Settlement Amount no later than five H Share Stock
Exchange Business Days after the 20 H Share Stock Exchange Business Day period used to
determine the Cash Settlement Amount. The Cash Settlement Amount shall be paid directly by
the Issuer by means of a U.S. dollar cheque drawn on, or by transfer to a U.S. dollar account
maintained by the payee with, a bank that processes payments in U.S. dollars in accordance with
the instructions given by the relevant Bondholder in the relevant Conversion Notice. If the Issuer
exercises its Cash Settlement Option in respect of Bonds held by more than one Bondholder
which are to be converted on the same Conversion Date, the Issuer shall make the same
proportion of cash and H Shares available to such converting Bondholders but the Issuer will not
have any obligation to make the same proportion of cash and H Shares available with respect to
any conversions by holders occurring on different Conversion Dates.
For the purposes of these Conditions:
“Cash Settlement Amount” means an amount in U.S. dollars (which shall be determined by the
Issuer using the Prevailing Rate on the Cash Settlement Notice Date) equal to the product of:
(i) the number of H Shares otherwise deliverable upon exercise of the Conversion Right in
respect of the Bonds to which the Conversion Notice applies, and in respect of which the
Issuer has elected the Cash Settlement Option; and
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(ii) the arithmetic average of the Volume Weighted Average Price (as defined below) of the H
Shares for each day during the 20 H Share Stock Exchange Business Days immediately
after the Cash Settlement Notice Date. The Issuer shall provide notice of the calculation
of the Cash Settlement Amount to the Bondholders, the Trustee and the Agents no later
than the second H Share Stock Exchange Business Day after the 20 H Share Stock
Exchange Business Day period used to determine the Cash Settlement Amount following
the Cash Settlement Notice Date; and
If the Issuer is at any time otherwise (for any reason whatsoever) unable to issue sufficient H
Shares in satisfaction of the Conversion Right of any converting Bondholder, the Issuer
undertakes to exercise the Cash Settlement Option in full, or to the extent required, to satisfy the
Conversion Right of such Bondholder.
5.3 Adjustments to Conversion Price
Upon the occurrence of any of the following events described below, the Conversion Price will be
adjusted as follows:
5.3.1 Consolidation, Subdivision or Re-classification: If and whenever there shall be an alteration
to the nominal value of the H Shares as a result of consolidation, subdivision or re-classification,
the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately
before such alteration by the following fraction:
A
B
Where:
A is the nominal amount of one H Share immediately after such alteration; and
B is the nominal amount of one H Share immediately before such alteration.
Such adjustment shall become effective on the date the alteration takes effect.
5.3.2 Capitalisation of Profits or Reserves:
(i) If and whenever the Issuer shall issue Ordinary Shares of any class credited as fully paid
to the holders of such Ordinary Shares (“Ordinary Shareholders”) by way of
capitalisation of profits or reserves, including Ordinary Shares of such class paid up out of
distributable profits or reserves and/or share premium account (except any Scrip Dividend)
and which would not have constituted a Capital Distribution, the Conversion Price shall be
adjusted by multiplying the Conversion Price in force immediately before such issue by the
following fraction:
A
B
Where:
A is the aggregate nominal amount of the issued Ordinary Shares immediately before
such issue; and
B is the aggregate nominal amount of the issued Ordinary Shares immediately after
such issue.
Such adjustment shall become effective on the date of issue of such Ordinary Shares or if
a record date is fixed therefor, immediately after such record date; provided that if there
are different effective dates for different classes of Ordinary Shares, the effective date of
the H Shares shall prevail.
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(ii) In the case of an issue of Ordinary Shares of any class by way of a Scrip Dividend where
the aggregate value of such Ordinary Shares by way of a Scrip Dividend as determined by
reference to the Current Market Price on the date of announcement of the terms of such
Scrip Dividend multiplied by the number of such Ordinary Shares issued exceeds 105 per
cent. of the amount of the Relevant Cash Dividend or the relevant part thereof and which
would not have constituted a Capital Distribution, the Conversion Price shall be adjusted
by multiplying the Conversion Price in force immediately before the issue of such Scrip
Dividend by the following fraction:
A+B
A+C
Where:
A is the aggregate nominal amount of the issued Ordinary Shares of all classes
immediately before such issue;
B is the aggregate nominal amount of such Scrip Dividend multiplied by a fraction of
which (i) the numerator is the amount of the whole, or the relevant part, of the
Relevant Cash Dividend and (ii) the denominator is such aggregate Current Market
Price of the Scrip Dividend issued in lieu of the whole, or the relevant part, of the
Relevant Cash Dividend; and
C is the aggregate nominal amount of such Scrip Dividend,
or by making such other adjustment as an Independent Financial Advisor shall certify to
the Trustee is fair and reasonable.
Such adjustment shall become effective on the date of issue of such Ordinary Shares or if
a record date is fixed therefor, immediately after such record date; provided that if there
are different effective dates for different classes of Ordinary Shares, the effective date of
H Shares shall prevail.
5.3.3 Capital Distributions: If and whenever the Issuer shall pay or make any Capital Distribution
to the Ordinary Shareholders (except to the extent that the Conversion Price falls to be adjusted
under Condition 5.3.2 (Capitalisation of Profits or Reserves) above), the Conversion Price shall
be adjusted by multiplying the Conversion Price in force immediately before such Capital
Distribution by the following fraction:
A–B
A
Where:
A is the aggregate number of Ordinary Shares of all classes in issue multiplied by their
respective Current Market Price per Ordinary Share of such class on the date on which the
Capital Distribution is first publicly announced; and
B is the Fair Market Value of the aggregate Capital Distribution.
Such adjustment shall become effective on the date that such Capital Distribution is actually
made or, if a record date is fixed therefor, immediately after such record date, provided that if
there are different effective dates for different classes of Ordinary Shares, the effective date of
the H Shares shall prevail. For the purpose of the above, Fair Market Value shall (subject as
provided in the definition of “Fair Market Value” (as defined in Condition 5.8 (Definitions)))
be determined as at the date on which the Capital Distribution is first publicly announced or, if
later, the first date on which the Fair Market Value of the relevant Capital Distribution is capable
of being determined as provided herein.
In making any calculation pursuant to this Condition 5.3.3 (Capital Distributions), such
adjustments (if any) shall be made as an Independent Financial Advisor may consider
appropriate to reflect (i) any consolidation or subdivision of the Ordinary Shares, (ii) issues of
Ordinary Shares by way of capitalisation of profits or reserves, or any like or similar event, (iii)
the modification of any rights to dividends of Ordinary Shares or (iv) any change in the fiscal
year of the Issuer.
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For the avoidance of doubt, the final dividend to be paid by the Issuer in respect of the year
ended 31 December 2023 (which has been approved by the shareholders of the Issuer on 30 May
2024) will not give rise to an adjustment of the Conversion Price pursuant to this Condition
5.3.3.
5.3.4 Rights Issues of Shares or Options over Shares: If and whenever the Issuer shall issue
Ordinary Shares of one or more classes to all or substantially all Ordinary Shareholders of such
classes by way of rights, or issue or grant to all or substantially all Ordinary Shareholders of
such classes by way of rights, options, warrants or other rights to subscribe for, purchase or
otherwise acquire any Ordinary Shares of such classes, in each case at a consideration less than
95 per cent. of the Current Market Price per H Share on the date of the first public announcement
of the terms of the issues or grants, the Conversion Price shall be adjusted by multiplying the
Conversion Price in force immediately before such issues or grants by the following fraction:
A + B1 + B2
A + C1 + C2
Where:
A is the aggregate number of Ordinary Shares of all classes in issue immediately before such
announcement;
B1 is the number of Ordinary Shares of one class which the aggregate consideration (if any)
receivable for the Ordinary Shares of such class issued by way of rights or for the options
or warrants or other rights issued or granted by way of rights and for the total number of
Ordinary Shares of such class comprised therein would subscribe for, purchase or
otherwise acquire at such Current Market Price per Ordinary Share of the class;
B2 where applicable, is the number of Ordinary Shares of a second class which the aggregate
consideration (if any) receivable for the Ordinary Shares of such class issued by way of
rights or for the options or warrants or other rights issued or granted by way of rights and
for the total number of Ordinary Shares of such class comprised therein would subscribe
for, purchase or otherwise acquire at such Current Market Price per Ordinary Share of the
class;
C1 is the aggregate number of Ordinary Shares of one class issued or, as the case may be,
comprised in the issue or grant; and
C2 where applicable, is the aggregate number of Ordinary Shares of a second class issued or,
as the case may be, comprised in the issue or grant.
Such adjustment shall become effective on the date of issue of such Ordinary Shares or issue or
grant of such options, warrants or other rights (as the case may be) or where a record date is set,
the first date on which the Ordinary Shares are traded ex-rights, ex-options or ex-warrants, as
the case may be; provided that if there are different effective dates for different classes of
Ordinary Shares, the effective date of H Shares shall prevail.
5.3.5 Rights Issues of Other Securities: In respect of each class of Ordinary Shares, if and whenever
the Issuer shall issue any securities (other than Ordinary Shares or options, warrants or other
rights to subscribe for, purchase or otherwise acquire Ordinary Shares) to all or substantially all
Ordinary Shareholders of such class by way of rights, or issue or grant to all or substantially all
Ordinary Shareholders of such class by way of rights, options, warrants or other rights to
subscribe for, purchase or otherwise acquire any securities (other than Ordinary Shares or
options, warrants or other rights to subscribe for, purchase or otherwise acquire Ordinary
Shares), the Conversion Price shall be adjusted by multiplying the Conversion Price in force
immediately before such issue or grant by the following fraction:
A–B
A
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Where:
A is the aggregate Ordinary Shares of all classes in issue multiplied by their respective
Current Market Price per Ordinary Share on the date on which the terms of such issue or
grant are publicly announced; and
B is the Fair Market Value of the aggregate securities, rights, options or warrants (as the case
may be) attributable to the Ordinary Shares.
Such adjustment shall become effective on the date of issue of the securities or the issue or grant
of such rights, options or warrants (as the case may be) or where a record date is set, the first
date on which the Ordinary Shares are traded ex-rights, ex-options or ex-warrants, as the case
may be, provided that if there are different effective dates for different classes of Ordinary
Shares, the effective date of the H Shares shall prevail. For the purpose of the above, Fair Market
Value shall (subject as provided in the definition of “Fair Market Value” (as defined in
Condition 5.8 (Definitions))) be determined as at the date on which the terms of such issue or
grant is first publicly announced, or if later, the first date on which the Fair Market Value of the
aggregate rights attributable to the Ordinary Shares in relation to such issue or grant is capable
of being determined as provided herein.
5.3.6 Issues at Less than Current Market Price: If and whenever the Issuer shall issue (otherwise
than as mentioned in Condition 5.3.4 (Rights Issues of Shares or Options over Shares) above)
any Ordinary Shares (other than H Shares issued on the exercise of Conversion Rights or on the
exercise of any other rights of conversion into, or exchange or subscription for, Ordinary Shares)
or issue or grant (otherwise than as mentioned in Condition 5.3.4 (Rights Issues of Shares or
Options over Shares) above) options, warrants or other rights to subscribe for, purchase or
otherwise acquire Ordinary Shares of one or more classes, in each case at a consideration which
is less than 95 per cent. of the Current Market Price per H Share on the date of announcement
of the terms of such issues, the Conversion Price shall be adjusted by multiplying the Conversion
Price in force immediately before such issues by the following fraction:
A + B1 + B2
A + C1 + C2
Where:
A is the aggregate number of Ordinary Shares of all classes in issue immediately before the
issue of such additional Ordinary Shares of such class or the grant of such options,
warrants or other rights to subscribe for, purchase or otherwise acquire any Ordinary
Shares of such class;
B1 is the number of Ordinary Shares of one class which the aggregate consideration (if any)
receivable for the issue of such additional Ordinary Shares of such class would purchase
at the Current Market Price per Ordinary Share of such class;
B2 where applicable, is the number of Ordinary Shares of a second class which the aggregate
consideration (if any) receivable for the issue of such additional Ordinary Shares of such
class would purchase at the Current Market Price per Ordinary Share of such class;
C1 is the aggregate number of Ordinary Shares of one class issued, or as the case may be, the
maximum number of Ordinary Shares of such class to be issued on the exercise of such
options, warrants or other rights at the initial exercise price or rate; and
C2 where applicable, is the aggregate number of Ordinary Shares of a second class issued, or
as the case may be, the maximum number of Ordinary Shares of such class to be issued on
the exercise of such options, warrants or other rights at the initial exercise price or rate.
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References to additional Ordinary Shares in the above formula shall, in the case of an issue by
the Issuer of options, warrants or other rights to subscribe or purchase Ordinary Shares, mean
such Ordinary Shares to be issued assuming that such options, warrants or other rights are
exercised in full at the initial exercise price or rate on the date of issue or grant of such options,
warrants or other rights.
Such adjustment shall become effective on the date of issue of such additional Ordinary Shares
or, as the case may be, the issue or grant of such options, warrants or other rights; provided that
if there are different effective dates for different classes of Ordinary Shares, the effective date
of the H Shares shall prevail.
5.3.7 Other Issues at less than Current Market Price: Save in the case of an issue of securities
arising from a conversion or exchange of other securities in accordance with the terms applicable
to such securities themselves falling within this Condition 5.3.7 (Other Issues at less than
Current Market Price), if and whenever the Issuer or any of its Subsidiaries (otherwise than as
mentioned in Condition 5.3.4 (Rights Issues of Shares or Options over Shares), Condition 5.3.5
(Rights Issues of Other Securities) or Condition 5.3.6 (Issues at Less than Current Market
Price)), or (at the direction or request of or pursuant to any arrangements with the Issuer or any
of its Subsidiaries) any other company, person or entity shall issue any securities (other than the
Bonds, which shall be deemed to exclude any further bonds issued pursuant to Condition 15
(Further Issues)) which by their terms of issues carry rights of conversion into, or exchange or
subscription for, Ordinary Shares of one or more classes to be issued by the Issuer upon
conversion, exchange or subscription, in each case at a consideration which is less than 95 per
cent. of the Current Market Price per H Share on the date of announcement of the terms of issues
of such securities, the Conversion Price shall be adjusted by multiplying the Conversion Price
in force immediately before such issues by the following fraction:
A + B1 + B2
A + C1 + C2
Where:
A is the aggregate number of Ordinary Shares of all classes in issue immediately before such
issue;
B1 is the number of Ordinary Shares of one class which the aggregate consideration receivable
by the Issuer for the Ordinary Shares of such class to be issued on conversion or exchange
or on exercise of the right of subscription attached to such securities would purchase at
such Current Market Price per Ordinary Share of such class;
B2 where applicable, is the number of Ordinary Shares of a second class which the aggregate
consideration receivable by the Issuer for the Ordinary Shares of such class to be issued
on conversion or exchange or on exercise of the right of subscription attached to such
securities would purchase at such Current Market Price per Ordinary Share of such class;
C1 is the maximum number of Ordinary Shares of one class to be issued on conversion or
exchange of such securities or on the exercise of such rights of subscription attached
thereto at the initial conversion, exchange or subscription price or rate; and
C2 where applicable, is the maximum number of Ordinary Shares of a second class to be
issued on conversion or exchange of such securities or on the exercise of such rights of
subscription attached thereto at the initial conversion, exchange or subscription price or
rate.
Such adjustment shall become effective on the date of issue of such securities.
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5.3.8 Modification of Rights of Conversion etc.: If and whenever there shall be any modification of
the rights of conversion, exchange, subscription, purchase or acquisition attaching to any such
securities as are mentioned in Condition 5.3.7 (Other Issues at less than Current Market Price)
(other than in accordance with the terms of such securities) so that the consideration per
Ordinary Share of one or more classes (for the number of Ordinary Shares of such classes
available on conversion, exchange, subscription, purchase or acquisition following the
modification) is reduced and, in each case, is less than 95 per cent. of the Current Market Price
per H Share on the date of announcement of the proposals for such modifications, the
Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately
before such modifications by the following fraction:
A + B1 + B2
A + C 1+ C 2
Where:
A is the aggregate number of Ordinary Shares of all classes in issue immediately before such
modification;
B1 is the number of Ordinary Shares of one class which the aggregate consideration receivable
by the Issuer for the Ordinary Shares of such class to be issued on conversion or exchange
or on exercise of the right of subscription, purchase or acquisition attached to the securities
so modified would purchase at the Current Market Price per Ordinary Share of such class
or, if lower, the existing conversion, exchange subscription, purchase or acquisition price
of such securities;
B2 where applicable, is the number of Ordinary Shares of a second class which the aggregate
consideration receivable by the Issuer for the Ordinary Shares of such class to be issued
on conversion or exchange or on exercise of the right of subscription, purchase or
acquisition attached to the securities so modified would purchase at the Current Market
Price per Ordinary Share of such class or, if lower, the existing conversion, exchange
subscription, purchase or acquisition price of such securities;
C1 is the maximum number of Ordinary Shares of one class to be issued on conversion or
exchange of such securities or on the exercise of such rights of subscription, purchase or
acquisition attached thereto at the modified conversion, exchange, subscription, purchase
or acquisition price or rate but giving credit in such manner as an Independent Financial
Advisor considers appropriate (if at all) for any previous adjustment under this Condition
5.3.8 (Modification of Rights of Conversion etc.) or Condition 5.3.7 (Other Issues at less
than Current Market Price); and
C2 where applicable, is the maximum number of Ordinary Shares of a second class to be
issued on conversion or exchange of such securities or on the exercise of such rights of
subscription, purchase or acquisition attached thereto at the modified conversion,
exchange, subscription, purchase or acquisition price or rate but giving credit in such
manner as an Independent Financial Advisor considers appropriate (if at all) for any
previous adjustment under this Condition 5.3.8 (Modification of Rights of Conversion etc.)
or Condition 5.3.7 (Other Issues at less than Current Market Price).
Such adjustment shall become effective on the date of modification of the rights of conversion,
exchange, subscription, purchase or acquisition attaching to such securities.
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5.3.9 Other Offers to Ordinary Shareholders: In respect of each class of Ordinary Shares, if and
whenever the Issuer or any of its Subsidiaries or (at the direction or request of or pursuant to
any arrangements with the Issuer or any of its Subsidiaries) any other company, person or entity
issues, sells or distributes any securities in connection with an offer pursuant to which the
Ordinary Shareholders of such class generally are entitled to participate in arrangements
whereby such securities may be acquired by them (except where the Conversion Price falls to
be adjusted under Condition 5.3.4 (Rights Issues of Shares or Options over Shares), Condition
5.3.5 (Rights Issues of Other Securities), Condition 5.3.6 (Issues at Less than Current Market
Price) or Condition 5.3.7 (Other Issues at less than Current Market Price)), the Conversion
Price shall be adjusted by multiplying the Conversion Price in force immediately before such
issue by the following fraction:
A–B
A
Where:
A is the aggregate Ordinary Shares in issue multiplied by their respective Current Market
Price per Ordinary Share on the date on which the terms of such issue, sale or distribution
of securities are first publicly announced; and
B is the Fair Market Value of the portion of the aggregate rights attributable to the Ordinary
Shares.
Such adjustment shall become effective on the date of issue, sale or distribution of the securities
or, if a record date is fixed therefor, immediately after such record date or if later, the first date
upon which the Fair Market Value of the relevant securities is capable of being determined as
provided herein, provided that if there are different effective dates for different classes of
Ordinary Shares, the effective date of the H Shares shall prevail. For the purpose of the above,
Fair Market Value shall (subject as provided in the definition of “Fair Market Value” (as
defined in Condition 5.8 (Definitions))) be determined as at the date on which the terms of such
issue, sale or distribution of securities are first publicly announced or, if later, the first date on
which the Fair Market Value of the portion of the aggregate rights attributable to the Ordinary
Shares is capable of being determined as provided herein.
5.3.10 Other Events: If the Issuer determines, in its sole discretion, that an adjustment should be made
to the Conversion Price as a result of one or more events or circumstances not referred to in this
Condition 5.3 (Adjustments to Conversion Price), the Issuer shall, at its own expense, consult
an Independent Financial Advisor to determine as soon as practicable what adjustment (if any)
to the Conversion Price is fair and reasonable to take account thereof, if the adjustment would
result in a reduction in the Conversion Price, and the date on which such adjustment should take
effect and upon such determination by the Independent Financial Advisor such adjustment (if
any) shall be made and shall take effect in accordance with such determination, provided that
where the events or circumstances giving rise to any adjustment pursuant to this Condition 5.3
(Adjustments to Conversion Price) have already resulted or will result in an adjustment to the
Conversion Price or where the events or circumstances giving rise to any adjustment arise by
virtue of events or circumstances which have already given rise or will give rise to an adjustment
to the Conversion Price, such modification (if any) shall be made to the operation of the
provisions of this Condition 5.3 (Adjustments to Conversion Price) as may be advised by the
Independent Financial Advisor to be in its opinion appropriate to give the intended result.
Notwithstanding the foregoing, the per Ordinary Share value of any such adjustment shall not
exceed the per Ordinary Share value of the dilution in the Ordinary Shareholders’ interest in the
Issuer’s equity caused by such events or circumstances.
5.3.11 Further Classes of Ordinary Shares: In the event that the Issuer has more than two classes of
Ordinary Shares outstanding at any time, the formulae set out in this Condition 5.3 (Adjustments
to Conversion Price) shall be restated to take into account such further classes of Ordinary
Shares so that “B1 + B 2” and “C1 + C 2” shall become “B1 + B 2 + B 3” and “C1 + C 2 + C 3” and
“B 3” and “C 3” shall have the same meaning as “B 1” and “C 1”, respectively, but by reference to
a third class of Ordinary Shares and so on.
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5.4 Undertakings
5.4.1 The Issuer has undertaken in the Trust Deed, inter alia, that so long as any Bond remains
outstanding, save with the approval of an Extraordinary Resolution (as defined in the Trust
Deed) of the Bondholders:
(i) it will use its commercially reasonable endeavours (a) to maintain a listing for the H Shares
on the Hong Kong Stock Exchange, (b) to obtain and maintain a listing for all the H Shares
issued on the exercise of the Conversion Rights attaching to the Bonds on the Hong Kong
Stock Exchange and (c) if the Issuer, having used such endeavours, is unable to obtain or
maintain such listing, to instead use all reasonable endeavours to obtain and maintain a
listing for all the issued H Shares on such Alternative Stock Exchange as the Issuer may
from time to time determine, and will forthwith give notice to the Bondholders in
accordance with Condition 16 (Notices) of the listing or delisting of the H Shares (as a
class) by any of such stock exchange;
(ii) it will pay the expenses of the issue and delivery of, and all expenses of obtaining listing
for, H Shares arising on conversion of the Bonds (save for the Duties to be borne by any
Bondholder as described in Condition 5.2.2 (Stamp Duty etc.));
(iii) it will not make any reduction of its registered share capital or any uncalled liability in
respect thereof or of any share premium account or capital redemption reserve fund
(except, in each case, as permitted by law (including but not limited to repurchase or
cancellation of its shares (i) pursuant to any share incentive or share option schemes of the
Issuer; (ii) as a result of its shareholders’ dissent to the Issuer’s merger or segregation in
a shareholders’ meeting and request the Issuer to repurchase its shares; (iii) for the
protection of the interests of the Issuer’s shareholders; and (iv) as permitted by laws and
regulations and the Issuer’s articles of association) provided that the reduction results in
an adjustment to the Conversion Price then in effect); and
(iv) it will use all commercially reasonable endeavours to maintain the listing of the Bonds on
the Hong Kong Stock Exchange.
5.4.2 In the Trust Deed, the Issuer has undertaken with the Trustee, inter alia, that so long as any Bond
remains outstanding, save with the approval of an Extraordinary Resolution of the Bondholders:
(i) it will issue H Shares to Bondholders on exercise of Conversion Rights and ensure that it
has the ability to issue free from pre-emptive or other similar rights such number of H
Shares on exercise of any Conversion Right as would enable the Conversion Rights and all
other rights of subscription and exchange for and conversion into H Shares to be satisfied
in full and will ensure that all H Shares delivered upon conversion of the Bonds will be
duly and validly issued as fully-paid and not subject to call for further funds, in each case,
unless the Issuer has elected to exercise the Cash Settlement Option in respect of any
conversion of the Bonds; and
(ii) it will not make any offer, issue or distribution or take any action the effect of which would
be to reduce the Conversion Price below the par value of the H Shares of the Issuer
provided always that the Issuer shall not be prohibited from purchasing its H Shares to the
extent permitted by law.
5.4.3 The Issuer has also given certain other undertakings in the Trust Deed for the protection of the
Conversion Rights.
5.5 Notice of Change in Conversion Price
The Issuer shall give notice to the Hong Kong Stock Exchange, to the Trustee and each Conversion
Agent in writing and to the Bondholders in accordance with Condition 16 (Notices) of any change in
the Conversion Price. Any such notice relating to a change in the Conversion Price shall set forth the
event giving rise to the adjustment, the Conversion Price prior to such adjustment, the adjusted
Conversion Price and the effective date of such adjustment.
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5.6 Adjustment upon Change of Control
If a Change of Control (as defined in Condition 7.5.5(ii)) shall have occurred, the Issuer shall give
notice of that fact to the Bondholders (the “Change of Control Notice”) in accordance with Condition
16 (Notices) and to the Trustee and the Agents in writing within 14 days after it becomes aware of such
Change of Control. Following the giving of a Change of Control Notice, upon any exercise of
Conversion Rights such that the relevant Conversion Date falls within the period of 30 days following
the later of (i) the occurrence of the relevant Change of Control and (ii) the date on which the Change
of Control Notice is given to Bondholders (such period, the “Change of Control Conversion
Period”), the Conversion Price shall be adjusted in accordance with the following formula:
NCP = OCP/(1 + (CP x c/t))
Where:
NCP = the Conversion Price after such adjustment;
OCP = the Conversion Price before such adjustment. For the avoidance of doubt, OCP for the
purposes of this Condition 5.6 (Adjustment upon Change of Control) shall be the
Conversion Price applicable on the relevant Conversion Date in respect of any
conversion pursuant to this Condition 5.6 (Adjustment upon Change of Control);
Conversion Premium (“CP”) = 25.0 per cent. expressed as a fraction;
c = the number of days from and including the first day of the Change of Control
Conversion Period to but excluding the Maturity Date; and
t = the number of days from and including the Issue Date to but excluding the Maturity
Date,
provided that the Conversion Price shall not be reduced pursuant to this Condition 5.6 (Adjustment
upon Change of Control) below the level permitted by applicable laws and regulations from time to
time (if any).
If the last day of a Change of Control Conversion Period shall fall during a Restricted Transfer Period
or a Restricted Conversion Period, as the case may be, the Change of Control Conversion Period shall
be extended such that its last day will be the fifteenth day following the last day of the Restricted
Transfer Period or the Restricted Conversion Period, as the case may be.
On the H Share Stock Exchange Business Day immediately following the last day of the Change of
Control Conversion Period, the Conversion Price shall be re-adjusted to the Conversion Price in force
immediately before the adjustment to the Conversion Price during the Change of Control Conversion
Period.
5.7 Provisions Relating to Changes in Conversion Price
5.7.1 Minor Adjustments: On any adjustment, the resultant Conversion Price, if not an integral
multiple of one Hong Kong cent, shall be rounded down to the nearest Hong Kong cent. No
adjustment shall be made to the Conversion Price if such adjustment (rounded down if
applicable) would be less than one per cent. of the Conversion Price then in effect. Any
adjustment not required to be made, and/or any amount by which the Conversion Price has been
rounded down, shall be carried forward and taken into account in any subsequent adjustment,
and such subsequent adjustment shall be made on the basis that the adjustment not required to
be made had been made at the relevant time and/or, as the case may be, that the relevant rounding
down had not been made. Notice of any adjustment shall be given by the Issuer to the
Bondholders in accordance with Condition 16 (Notices) and to the Trustee and the Agents in
writing, in each case promptly after the determination thereof.
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5.7.2 Decision of an Independent Financial Advisor: If any doubt shall arise as to whether an
adjustment falls to be made to the Conversion Price or as to how an adjustment to the Conversion
Price under Condition 5.3 (Adjustments to Conversion Price) or Condition 5.6 (Adjustment upon
Change of Control) should be made, and following consultation between the Issuer and an
Independent Financial Advisor, a written opinion of such Independent Financial Advisor in
respect thereof shall be conclusive and binding on the Issuer, the Bondholders and the Trustee,
save in the case of manifest error. Notwithstanding the foregoing, the per H Share value of any
such adjustment shall not exceed the per H Share value of the dilution in the shareholders’
interest in the Issuer’s equity caused by such events or circumstances.
5.7.3 Minimum Conversion Price: Notwithstanding the provisions of this Condition 5 (Conversion),
the Issuer undertakes that: (i) the Conversion Price shall not in any event be reduced to below
the nominal or par value of the H Shares as a result of any adjustment hereunder unless under
applicable law then in effect the Bonds may be converted at such reduced Conversion Price into
legally issued, fully paid and non-assessable H Shares; and (ii) it shall not take any action, and
shall procure that no action is taken, that would otherwise result in an adjustment to the
Conversion Price to below such nominal or par value or any minimum level permitted by
applicable laws or regulations.
5.7.4 Reference to “fixed”: Any references herein to the date on which a consideration is “fixed” shall,
where the consideration is originally expressed by reference to a formula which cannot be
expressed as an actual cash amount until a later date, be construed as a reference to the first day
on which such actual cash amount can be ascertained.
5.7.5 Multiple Events: Where more than one event which gives or may give rise to an adjustment to
the Conversion Price occurs within such a short period of time that, in the opinion of an
Independent Financial Advisor, the foregoing provisions would need to be operated subject to
some modification in order to give the intended result, such modification shall be made to the
operation of the foregoing provisions as may be advised by such Independent Financial Advisor
to be in its opinion appropriate in order to give such intended result.
5.7.6 Upward/Downward Adjustment: No adjustment involving an increase in the Conversion Price
will be made, except in the case of a consolidation or re-classification of the H Shares as referred
to in Condition 5.3.1 (Consolidation, Subdivision or Re-classification). The Issuer may at any
time and for a specified period of time only, following notice being given to the Trustee in
writing and to the Bondholders in accordance with Condition 16 (Notices), reduce the
Conversion Price, subject to Condition 5.7.3 (Minimum Conversion Price).
5.7.7 Trustee Not Obliged to Monitor or Make Calculations: Neither the Trustee nor any Agent shall
be under any duty to monitor whether any event or circumstance has happened or exists which
may require an adjustment to be made to the Conversion Price or to make any calculation or
determination (or verification thereof) in connection with the Conversion Price and none of them
will be responsible or liable to Bondholders or any other person for any loss arising from any
failure by it to do so or for any delay by the Issuer or any Independent Financial Advisor in
making any calculation or determination or any erroneous calculation or determination in
connection with the Conversion Price.
5.7.8 Employee Share Option Schemes: No adjustment will be made to the Conversion Price when
Ordinary Shares or other securities (including rights or options) are issued, offered, exercised,
allotted, appropriated, modified or granted to, or for the benefit of, employees (including
directors) of the Issuer or any of its Subsidiaries pursuant to any employee share scheme or plan
(and which employee share scheme or plan is in compliance with, if applicable, the Rules
Governing the Listing of Securities on the Hong Kong Stock Exchange or, if applicable, the
Stock Listing Rules of the Shanghai Stock Exchange or, if relevant, the listing rules of the
Alternative Stock Exchange (“Share Scheme Options”) unless any issue or grant of Share
Scheme Options (which, but for this provision, would have required adjustment pursuant to
Condition 5 (Conversion)) would result in the total number of Ordinary Shares which may be
issued upon exercise of all Share Scheme Options granted during the 12-month period up to and
including the date of such issue or grant representing, in aggregate, more than 2.0 per cent. of
the average of the issued and outstanding Ordinary Shares during such 12-month period. For the
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avoidance of doubt, any Ordinary Shares issued in excess thereof, and only such Ordinary Shares
issued in excess thereof, shall be subject to adjustment to the Conversion Price and taken into
account in determining such adjustment as set out in Condition 5.3 (Adjustments to Conversion
Price).
5.7.9 Consideration Receivable: For the purpose of any calculation of the consideration receivable or
price pursuant to Condition 5.3.4 (Rights Issues of Shares or Options over Shares), Condition
5.3.6 (Issues at Less than Current Market Price), Condition 5.3.7 (Other Issues at less than
Current Market Price) and Condition 5.3.8 (Modification of Rights of Conversion etc.), the
following provisions shall apply:
(i) the aggregate consideration receivable or price for Ordinary Shares of a class issued for
cash shall be the amount of such cash;
(ii) (a) the aggregate consideration receivable for Ordinary Shares of a class to be issued on
the conversion, exercise or exchange of any options, warrants or other rights or securities
(or following any modification thereof) shall be deemed to be the consideration received
or receivable by the Issuer for any such options, warrants or other rights or securities (or
following any modification thereof); (b) the aggregate consideration receivable for
Ordinary Shares of a class to be issued on the exercise of rights of subscription attached
to any such securities (or following any modification thereof) shall be deemed to be that
part (which may be the whole) of the consideration received or receivable by the Issuer for
such securities (or following any modification thereof) which is attributed by the Issuer to
such rights of subscription or, if no part of such consideration is so attributed, to the Fair
Market Value of such rights of subscription as at the date of the announcement of the terms
of issue or modification of such securities, plus in the case of each of (a) and (b) above,
the additional minimum consideration (if any) to be received by the Issuer on the
conversion, exercise or exchange of such options, warrants or other rights or securities (or
following any modification thereof), or on the exercise of such rights of subscription; and
(c) the consideration per Ordinary Share of a class receivable by the Issuer on the
conversion, exercise or exchange of, or on the exercise of such rights of subscription
attached to, such options, warrants or other rights or securities (or following any
modification thereof) shall be the aggregate consideration referred to in (a) or (b) above
(as the case may be) divided by the number of Ordinary Shares of such class to be issued
on such conversion or exchange or exercise at the initial conversion, exchange or
subscription price or rate;
(iii) if the consideration or price determined pursuant to (i) or (ii) above of this Condition 5.7.9
(Consideration Receivable) (or any component thereof) shall be expressed in a currency
other than HK dollars, it shall be converted into HK dollars at the Prevailing Rate on the
relevant date;
(iv) in determining the consideration or price pursuant to the above, no deduction shall be made
for any commissions or fees (howsoever described) or any expenses paid or incurred for
any underwriting, placing or management of the issue of the relevant Ordinary Shares of
a class or securities or options, warrants or rights, or otherwise in connection therewith;
(v) the consideration or price shall be determined as provided above on the basis of the
consideration or price received, receivable, paid or payable, regardless of whether all or
part thereof is received, receivable, paid or payable by or to the Issuer or another entity;
and
(vi) if as part of the same transaction, Ordinary Shares of a class shall be issued or issuable for
a consideration receivable in more than one or in different currencies then the
consideration receivable per Share shall be determined by dividing the aggregate
consideration (determined as aforesaid and converted if and to the extent not in HK dollars,
into HK dollars at the Prevailing Rate as aforesaid) by the aggregate number of Ordinary
Shares so issued.
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5.8 Definitions
For the purposes of these Conditions:
“Alternative Stock Exchange” means, at any time, in the case of the H Shares, if they are not at that
time listed and traded on the Hong Kong Stock Exchange, the principal stock exchange or securities
market on which such H Shares are then listed or quoted or dealt in;
“Closing Price” means, in respect of an Ordinary Share of a class for any Trading Day, the closing
market price quoted by the principal stock exchange or securities market on which the Ordinary
Shares of such class are then listed, admitted to trading or quoted or dealt in and, in the case of the
A Shares, shall (unless otherwise determined at the relevant time) mean the Shanghai Stock Exchange
and, in the case of the H Shares, shall (unless otherwise determined at the relevant time) mean the
Hong Kong Stock Exchange;
“Current Market Price” means, in respect of an Ordinary Share of a class on a particular date, the
average of the daily Closing Price on each of the 20 consecutive Trading Days ending on and including
the Trading Day immediately preceding such date and (if necessary) translated into HK dollars at the
Prevailing Rate as at the relevant date; provided that:
(A) for the purposes of determining the Current Market Price pursuant to Conditions 5.3.4 (Rights
Issues of Shares or Options over Shares) or 5.3.6 (Issues at Less than Current Market Price) in
circumstances where the relevant event relates to an issue of Ordinary Shares, if at any time
during the said 20 Trading Day-period (which may be on each of such 20 Trading Days) the
Ordinary Shares of such class shall have been quoted ex-dividend (or ex- any other entitlement)
and/or during some other part of that period (which may be on each of such 20 Trading Days)
the Ordinary Shares of such class shall have been quoted cum-dividend (or cum- any other
entitlement) then:
(i) if the Ordinary Shares of such class to be issued or transferred and delivered do not rank
for the dividend (or entitlement) in question, the Closing Price on the dates on which the
Ordinary Shares of such class shall have been based on a price cum-dividend (or cum-any
other entitlement) shall for the purpose of this definition be deemed to be the amount
thereof reduced by an amount equal to the Fair Market Value of any such dividend or
entitlement per Ordinary Shares of such class; or
(ii) if the Ordinary Shares of such class to be issued or transferred and delivered rank for the
dividend or entitlement in question, the Closing Price on the dates on which the Ordinary
Shares of such class shall have been based on a price ex-dividend (or ex-any other
entitlement) shall for the purpose of this definition be deemed to be the amount thereof
increased by the Fair Market Value of any such dividend or entitlement per Ordinary
Shares of such class,
(B) for the purpose of determining the Current Market Price of any Ordinary Shares of any class
which are to be issued or may be issued pursuant to a Scrip Dividend pursuant to Condition
5.3.2(ii), if on any day during the said 20 Trading Day-period the Volume Weighted Average
Price of the Ordinary Shares of such class shall have been based (A) on a price cum the Relevant
Cash Dividend (and/or any other dividend or other entitlement which the Ordinary Shares of
such class that may be issued pursuant to terms of such Scrip Dividend do not rank for), the
Volume Weighted Average Price of an Ordinary Share of such class on any such day shall for
the purposes of this definition be deemed to be the amount thereof reduced by an amount equal
to the Fair Market Value of the Relevant Cash Dividend (and/or such other dividend or other
entitlement) (as at the date of first public announcement of the terms of such Relevant Cash
Dividend) per Ordinary Share of such class entitled to the Relevant Cash Dividend (and/or such
other dividend or other entitlement) or (B) on a price ex-the Relevant Cash Dividend, the Volume
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Weighted Average Price of an Ordinary Share of such class on any such day shall for the
purposes of this definition be deemed to be the amount thereof (x) multiplied by the sum of one
and the number of Ordinary Shares of such class which are to be issued or may be issued
pursuant to such Scrip Dividend per Ordinary Share of such class entitled to the Relevant Cash
Dividend and (y) reduced by the Fair Market Value of the Relevant Cash Dividend (as at the date
of first public announcement of the terms of such Relevant Cash Dividend) per Ordinary Share
of such class entitled to the Relevant Cash Dividend; and
(C) for any other purpose, if any day during the said 20 Trading Day-period was the ex-date in
relation to any dividend (or any other entitlement) the Volume Weighted Average Prices that
shall have been based on a price cum-such dividend (or cum-such entitlement) shall for the
purpose of this definition be deemed to be the amount thereof reduced by an amount equal to
the Fair Market Value of any such dividend (or other entitlement) per Ordinary Share of such
class as at the date of first public announcement of the terms of such dividend (or other
entitlement);
“Capital Distribution” means, on a per Ordinary Share basis,
(i) any distribution of assets in specie by the Issuer for any financial period whenever paid or made
and however described (and for these purposes a distribution of assets in specie includes,
without limitation, an issue of Ordinary Shares or other securities credited as fully or partly paid
by way of capitalisation of reserves, but excludes any Ordinary Shares credited as fully paid to
the extent an adjustment to the Conversion Price is made in respect thereof under Condition
5.3.2(i) and a Scrip Dividend adjusted for under Condition 5.3.2(ii)); and
(ii) any cash dividend or distribution on a gross basis (including, without limitation, the relevant
cash amount of a Scrip Dividend) of any kind by the Issuer for any financial period (whenever
paid and however described), translated into HK dollars at the Prevailing Rate as at the effective
date of the relevant adjustment to the Conversion Price,
provided that a purchase or redemption of Ordinary Shares by or on behalf of the Issuer (or a
purchase of Ordinary Shares by or on behalf of a Subsidiary of the Issuer) shall not constitute
a Capital Distribution, unless the weighted average price (before expenses) on any one day in
respect of such purchases exceeds the Current Market Price of the Ordinary Shares by more than
five per cent. either (a) on that date, or (b) where an announcement has been made of the
intention to purchase Ordinary Shares at some future date at a specified price, on the Trading
Day immediately preceding the date of such announcement and, if in the case of either (a) or (b)
of this definition, the relevant day is not a Trading Day, the immediately preceding Trading Day,
in which case such purchase or redemption shall be deemed to constitute a Capital Distribution
in an amount equal to the amount by which the aggregate consideration paid (before expenses)
in respect of such Ordinary Shares purchased or redeemed exceeds the product of 105 per cent.
of such Current Market Price and the number of Ordinary Shares so purchased or redeemed;
“Fair Market Value” means, with respect to any asset, security, option, warrant or other right on any
date, the fair market value of that asset, security, option, warrant or other right as determined by an
Independent Financial Advisor on the basis of commonly accepted market valuation method and
taking into account such factors as it considers appropriate, provided that an Independent Financial
Advisor will not be required to determine the fair market value where (i) the Capital Distribution is
paid in cash, in which case the fair market value of such cash Capital Distribution per Ordinary Share
of the relevant class shall be the amount of such cash Capital Distribution per Ordinary Share of such
class determined as at the date of announcement of such cash Capital Distribution and (ii) any other
amounts are paid in cash, in which case the fair market value of such cash amount shall be the amount
of cash, and (iii) options, warrants or other rights or securities are or will upon issuance be publicly
traded in a market of adequate liquidity (as determined by such Independent Financial Advisor), the
fair market value of such options, warrants or other rights or securities shall equal the arithmetic mean
of the daily closing prices of such options, warrants or other rights or securities during the period of
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five trading days on the relevant market commencing on the first such trading day such options,
warrants or other rights or securities are publicly traded. Such amounts, if expressed in a currency
other than HK dollars shall be translated into HK dollars (a) in the case of any cash Capital
Distribution, at the average benchmark exchange rate between Renminbi and HK dollars expressed to
be used in respect of such cash Capital Distribution and (b) in any other case at the Prevailing Rate
on such date. In addition, in the case of provisos (i) and (ii) above of this definition, the Fair Market
Value shall be determined on a gross basis and disregarding any withholding or deduction required to
be made for or on account of tax and disregarding any associated tax credit;
“Hong Kong Stock Exchange” means The Stock Exchange of Hong Kong Limited or any successor
thereto;
“H Share Stock Exchange Business Day” means any day (other than a Saturday or Sunday) on which
the Hong Kong Stock Exchange or the Alternative Stock Exchange (as the case may be) is open for
the business of dealing in securities;
“Independent Financial Advisor” means an independent investment bank or licensed financial
advisor or institution of international repute (acting as an expert) selected and appointed at its own
cost by the Issuer and notified in writing to the Trustee. The Trustee shall not be responsible for or
under any obligation to appoint an Independent Financial Advisor and shall have no responsibility or
liability for verifying any calculation, determination, certification, advice or opinion made, given or
reached by it;
“Prevailing Rate” means, in respect of any currency on any day, the spot exchange rate between the
relevant currencies prevailing as at or about 12:00 noon (Hong Kong time) on that date as appearing
on or derived from the Relevant Page or, if such a rate cannot be determined at such time, the rate
prevailing as at or about 12:00 noon (Hong Kong time) on the immediately preceding day on which
such rate can be so determined, provided that in the case of any cash Capital Distribution in respect
of the H Shares, the “Prevailing Rate” shall be deemed to be the average benchmark exchange rate
between Renminbi and HK dollars, calculated in the manner as announced by the Issuer on the Hong
Kong Stock Exchange from time to time;
“Relevant Cash Dividend” means the aggregate cash dividend or distribution declared by the Issuer,
including any cash dividend in respect of which there is any Scrip Dividend;
“Relevant Page” means the relevant Bloomberg BFIX page (or its successor page) or, if there is no
such page, on the relevant Reuters HKDFIX page (or its successor page) or such other information
service provider that displays the relevant information;
“Scrip Dividend” means Ordinary Shares of any class issued in lieu of the whole or any part of any
Relevant Cash Dividend being a dividend which the Ordinary Shareholders concerned would or could
otherwise have received and which would not have constituted a Capital Distribution (and for the
avoidance of doubt, no adjustment is to be made under Condition 5.3.3 (Capital Distributions) in
respect of the amount by which the Current Market Price of the Ordinary Shares exceeds the Relevant
Cash Dividend or the relevant part thereof but without prejudice to any adjustment required in such
circumstances to be made under Condition 5.3.2 (Capitalisation of Profits or Reserves));
“Shanghai Stock Exchange” means The Shanghai Stock Exchange;
“Trading Day” means in respect of an Ordinary Share of a class, a day when the principal stock
exchange of such Ordinary Share is open for dealing business and, in the case of the A Shares, shall
(unless otherwise determined at the relevant time) mean the Shanghai Stock Exchange and, in the case
of the H Shares, shall (unless otherwise determined at the relevant time) mean the Hong Kong Stock
Exchange; provided that for the purposes of any calculation where a Closing Price is required, if no
Closing Price is reported for one or more consecutive dealing days, such day or days will be
disregarded in any relevant calculation and shall be deemed not to have been dealing days when
ascertaining any period of dealing days; and
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“Volume Weighted Average Price” means, in relation to an H Share for any H Share Stock Exchange
Business Day, the order book volume-weighted average price of an H Share for such H Share Stock
Exchange Business Day appearing on or derived from Bloomberg screen page “2318 HK Equity VAP”
(or its successor page) or, if not available on any of such screens, from such other source as shall be
determined in good faith and in a commercially reasonable manner, using a volume-weighted average
method, to be appropriate by an Independent Financial Advisor, provided that for any H Share Stock
Exchange Business Day where such price is not available or cannot otherwise be determined as
provided above, the Volume Weighted Average Price of an H Share in respect of such H Share Stock
Exchange Business Day shall be the Volume Weighted Average Price, determined as provided above,
on the immediately preceding H Share Stock Exchange Business Day on which the same can be so
determined.
References to any issue or offer or grant to Ordinary Shareholders “as a class” or “by way of rights”
shall be taken to be references to an issue or offer or grant to all or substantially all Ordinary
Shareholders, other than Ordinary Shareholders by reason of the laws of any territory or requirements
of any recognised regulatory body or any other stock exchange or securities market in any territory
or in connection with fractional entitlements, it is determined not to make such issue or offer or grant.
6 Payments
6.1 Principal
Payment of principal, premium and interest will be made by transfer to the registered account of the
Bondholder except in the case of any amount payable by the Issuer pursuant to Condition 5
(Conversion), where any amounts payable to a Bondholder will be made by U.S. dollar cheque drawn
on a bank that processes payments in U.S. dollars and mailed directly to the address of the Bondholder
or by transfer to a U.S. dollar account maintained by the payee, in either case in accordance with
instructions given by the relevant Bondholder in the Conversion Notice. Such payment will only be
made after surrender of the relevant Certificate at the specified office of any of the Agents.
Interest on Bonds due on an Interest Payment Date will be paid on the due date for the payment of
interest to the holder shown on the Register at the close of business on the fifteenth day before the
due date for the payment of interest (the “Interest Record Date”). Payments of interest on each Bond
will be made by transfer to the registered account of the Bondholder.
If an amount which is due on the Bonds is not paid in full, the Registrar will annotate the Register
with a record of the amount (if any) in fact paid.
So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on
behalf of Euroclear or Clearstream (each, a “relevant clearing system”), each payment in respect of
the Global Certificate will be made to the person shown as the holder thereof in the Register at the
close of business (in the relevant clearing system) on the Clearing System Business Day before the due
date for such payment, where “Clearing System Business Day” means a weekday (Monday to Friday,
inclusive) except December 25 and January 1.
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6.2 Registered Accounts
For the purposes of this Condition 6 (Payments), a Bondholder’s registered account means the U.S.
dollar account maintained by or on behalf of it with a bank that processes payments in U.S. dollars,
details of which appear on the Register at the close of business on the second Payment Business Day
(as defined in Condition 6.6 (Payment Business Day)) before the due date for payment, and a
Bondholder’s registered address means its address appearing on the Register at that time.
6.3 Fiscal Laws
All payments are subject in all cases to (i) any applicable fiscal or other laws and regulations in the
place of payment, but without prejudice to the provisions of Condition 8 (Taxation) and (ii) any
withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”) or otherwise imposed pursuant to Sections
1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations
thereof, or (without prejudice to the provisions of Condition 8 (Taxation)) any law implementing an
intergovernmental approach thereto. No commissions or expenses shall be charged to the Bondholders
in respect of such payments
6.4 Payment Initiation
Payment instructions (for value on the due date or, if that is not a Payment Business Day, for value
on the first following day which is a Payment Business Day) will be initiated on the due date for
payment (or, if it is not a Payment Business Day, the immediately following Payment Business Day)
or, in the case of a payment of principal, if later, on the Payment Business Day on which the relevant
Certificate is surrendered at the specified office of an Agent.
6.5 Delay in Payment
Bondholders will not be entitled to any interest or other payment for any delay after the due date in
receiving the amount due if the due date is not a Payment Business Day or if the Bondholder is late
in surrendering its Certificate (if required to do so).
6.6 Payment Business Day
In this Condition 6 (Payments), “Payment Business Day” means a day other than a Saturday or
Sunday on which commercial banks and foreign exchange markets are open for business in New York
City and the city in which the specified office of the Principal Agent is located and, in the case of the
surrender of a Certificate, in the place where the Certificate is surrendered.
6.7 Rounding
When making payments to Bondholders, fraction of one cent will be rounded to the nearest cent (half
a cent being rounded upwards).
6.8 Appointment of Agents
The initial Agents and their initial specified offices are listed below. The Issuer reserves the right at
any time, with the prior written approval of the Trustee, to vary or terminate the appointment of any
Agent and appoint additional or replacement Agents provided that the Issuer shall at all times maintain
(i) a Principal Agent, (ii) a Registrar, (iii) a Transfer Agent, (iv) a Conversion Agent and (v) such other
agents as may be required by the stock exchange on which the Bonds may be listed, in each case, as
approved in writing by the Trustee.
Notice of any changes in any Agent or their specified offices will promptly be given by the Issuer to
the Bondholders in accordance with Condition 16 (Notices).
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7 Redemption, Purchase and Cancellation
7.1 Maturity
Unless previously redeemed, converted or purchased and cancelled as provided herein, the Issuer will
redeem each Bond at its principal amount, together with accrued and unpaid interest thereon on 22
July 2029 (the “Maturity Date”). The Issuer may not redeem the Bonds at its option prior to that date
except as provided in Condition 7.2 (Redemption at the Option of the Issuer) or Condition 7.3
(Redemption for Taxation Reasons) below (but without prejudice to Condition 9 (Events of Default)).
7.2 Redemption at the Option of the Issuer
7.2.1 The Issuer may, having given not less than 30 nor more than 60 days’ notice (an “Optional
Redemption Notice”) to the Bondholders, the Trustee and the Principal Agent (which notice will
be irrevocable), redeem all but not some only of the Bonds at their principal amount, together
with accrued and unpaid interest thereon to but excluding the date fixed for redemption:
(i) at any time after 5 August 2027 but prior to the Maturity Date, provided that no such
redemption may be made unless the Closing Price of an H Share translated into U.S. dollars
at the Prevailing Rate applicable to each H Share Stock Exchange Business Day, for any
20 H Share Stock Exchange Business Days within a period of 30 consecutive H Share
Stock Exchange Business Days, the last of such H Share Stock Exchange Business Day
shall occur not more than 10 days prior to the date upon which notice of such redemption
is given, was, for each such 20 H Share Stock Exchange Business Days, at least 130 per
cent. of the Conversion Price (translated into U.S. dollars at the Fixed Exchange Rate) then
in effect. If there shall occur an event giving rise to a change in the Conversion Price
during any such 30 consecutive H Share Stock Exchange Business Day period, appropriate
adjustments for the relevant days approved by an Independent Financial Advisor shall be
made for the purpose of calculating the Closing Price of the H Shares for such days;
(ii) if at any time the aggregate principal amount of the Bonds outstanding, is less than 10 per
cent. of the aggregate principal amount originally issued (including any Bonds issued
pursuant to Condition 15 (Further Issues)).
Upon the expiry of the Optional Redemption Notice, the Issuer will be bound to redeem the
relevant Bonds at their principal amount together with accrued and unpaid interest thereon to but
excluding the date fixed for redemption.
7.2.2 Redemption under this Condition 7.2 (Redemption at the Option of the Issuer) may not occur
within seven days of the end of a Restricted Transfer Period but otherwise may occur when the
Conversion Right is expressed in these Conditions to be exercisable.
7.2.3 The Trustee and the Agents shall have no obligation to confirm whether the circumstances giving
rise to a right for the Issuer to redeem under this Condition 7.2 (Redemption at the Option of the
Issuer) have in any case arisen and shall not be liable to the Bondholders or any parties for not
doing so.
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7.3 Redemption for Taxation Reasons
7.3.1 At any time the Issuer may, having given not less than 30 nor more than 60 days’ notice to the
Trustee, the Principal Agent and the Bondholders (which notice shall be irrevocable) redeem all
but not some only of the Bonds at their principal amount (the “Tax Redemption Date”), together
with interest accrued and unpaid thereon to but excluding the date fixed for redemption, if the
Issuer satisfies the Trustee immediately prior to the giving of such notice that (i) the Issuer has
or will become obliged to pay Additional Tax Amounts as provided or referred to in Condition
8 (Taxation) as a result of any change in, or amendment to, the laws or regulations of the PRC
or Hong Kong or, in each case, any political subdivision or any authority thereof or therein
having power to tax, or any change in the general application or official interpretation of such
laws or regulations, which change or amendment becomes effective on or after 15 July 2024, and
(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,
provided that no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuer would be obliged to pay such Additional Tax Amounts were a
payment in respect of the Bonds then due. Prior to the publication of any notice of redemption
pursuant to this Condition 7.3.1, the Issuer shall deliver to the Trustee (a) a certificate signed by
two directors of the Issuer, each of whom are also Authorised Signatories of the Issuer, stating
that the obligation referred to in (i) above of this Condition 7.3.1 cannot be avoided by the Issuer
having taken reasonable measures available to it and (b) an opinion of independent legal or tax
advisors of recognised standing to the effect that such change or amendment has occurred
(irrespective of whether such amendment or change is then effective) and stating that the Issuer
has or will become obliged to pay such Additional Tax Amounts as a result of such change or
amendment, and the Trustee shall be entitled to accept such certificate and opinion as sufficient
evidence thereof, in which event the same shall be conclusive and binding on the Bondholders.
7.3.2 On the Tax Redemption Date, the Issuer shall redeem the Bonds at their principal amount
together with interest accrued and unpaid to but excluding the Tax Redemption Date, provided
that redemption under this Condition 7.3 (Redemption for Taxation Reasons) may not occur
within seven days of the end of a Restricted Transfer Period, but otherwise may occur when the
Conversion Right is expressed in these Conditions to be exercisable.
7.3.3 If the Issuer gives a notice of redemption pursuant to this Condition 7.3 (Redemption for
Taxation Reasons), each Bondholder will have the right to elect that his Bond(s) shall not be
redeemed and that the provisions of Condition 8 (Taxation) shall not apply in respect of any
payment of principal or interest to be made in respect of such Bond(s) which falls due after the
relevant Tax Redemption Date whereupon no Additional Tax Amounts shall be payable in respect
thereof pursuant to Condition 8 (Taxation) and payment of all amounts shall be made subject to
the deduction or withholding of the taxation required to be withheld or deducted by the
government of the PRC or Hong Kong or, in each case, any political subdivision or any authority
thereof or therein having power to tax. For the avoidance of doubt, any Additional Tax Amounts
which had been payable in respect of the Bonds as a result of the laws or regulations of the
government of the PRC or Hong Kong or, in each case, any authority thereof or therein having
power to tax prior to 15 July 2024, will continue to be payable to such Bondholders. To exercise
such right, the holder of the relevant Bond must complete, sign and deposit at the specified office
of any Paying Agent during normal business hours (being between 9.00 a.m. (London time) and
3.00 p.m. (London time) Monday to Friday except for public holidays) a duly completed and
signed notice of election, in the form for the time being current, obtainable from the specified
office of any Paying Agent, together with the Certificate evidencing the Bonds on or before the
day falling 10 days prior to the Tax Redemption Date. Such notice of election, once delivered,
shall be irrevocable and may not be withdrawn without the Issuer’s consent.
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7.4 Redemption at the Option of the Bondholders
The holder of each Bond will have the right at such holder’s option, to require the Issuer to redeem
all or some only of that holder’s Bonds on 22 July 2027 (the “Put Option Date”) at their principal
amount together with interest accrued and unpaid to but excluding the Put Option Date. To exercise
such right, the holder of the relevant Bond must complete, sign and deposit at the specified office of
any Paying Agent during normal business hours (being between 9.00 a.m. (London time) and 3.00 p.m.
(London time) Monday to Friday except for public holidays) a duly completed and signed notice (the
“Put Option Notice”), substantially in the form scheduled to the Agency Agreement, obtainable from
the specified office of any Paying Agent, together with the Certificate evidencing the Bonds to be
redeemed not earlier than 60 days and not later than 30 days prior to the Put Option Date.
A Put Option Notice, once delivered, shall be irrevocable (and may not be withdrawn unless the Issuer
consents to such withdrawal) and the Issuer shall redeem the Bonds the subject of a Put Option Notice
delivered as aforesaid on the Put Option Date.
7.5 Redemption for Relevant Events
7.5.1 Following the occurrence of a Relevant Event (as defined in Condition 7.5.5(vi)), the holder of
each Bond will have the right at such holder’s option, to require the Issuer to redeem all or some
only of such holder’s Bonds on the Relevant Event Put Date (as defined below) at their principal
amount together with interest accrued and unpaid to but excluding the Relevant Event Put Date.
To exercise such right, the holder of the relevant Bond must complete, sign and deposit at the
specified office of any Paying Agent during normal business hours (being between 9.00 a.m.
(London time) and 3.00 p.m. (London time) Monday to Friday except for public holidays) a duly
completed and signed notice of redemption, substantially in the form scheduled to the Agency
Agreement, obtainable from the specified office of any Paying Agent (a “Relevant Event Put
Exercise Notice”) together with the Certificate evidencing the Bonds to be redeemed by not later
than 30 days following a Relevant Event, or, if later, 30 days following the date upon which
notice thereof is given to Bondholders by the Issuer in accordance with Condition 16 (Notices).
The “Relevant Event Put Date” shall be the fourteenth day after the expiry of such period of
30 days as referred to above in this Condition 7.5.1.
7.5.2 A Relevant Event Put Exercise Notice, once delivered, shall be irrevocable and may not be
withdrawn without the Issuer’s consent. The Issuer shall redeem the Bonds which form the
subject of the Relevant Event Put Exercise Notices delivered as aforesaid (subject to delivery of
the relevant Certificates) on the Relevant Event Put Date.
7.5.3 None of the Trustee or the Agents shall be required to monitor or take any steps to ascertain
whether a Relevant Event or any event which could lead to the occurrence of a Relevant Event
has occurred and shall not be liable to Bondholders or any other person for not doing so.
7.5.4 Not later than 14 days after becoming aware of a Relevant Event, the Issuer shall procure that
notice regarding the Relevant Event shall be delivered to Bondholders (in accordance with
Condition 16 (Notices)) and to the Trustee and the Principal Agent in writing stating:
(i) the Relevant Event Put Date;
(ii) the date of such Relevant Event and, briefly, the events causing such Relevant Event;
(iii) the date by which the Relevant Event Put Exercise Notice must be given;
(iv) the redemption amount and the method by which such amount will be paid;
(v) the names and addresses of all Paying Agents;
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(vi) briefly, the Conversion Right and the then current Conversion Price;
(vii) the procedures that Bondholders must follow and the requirements that Bondholders must
satisfy in order to exercise their rights under this Condition 7.5 (Redemption for Relevant
Events) or their Conversion Right; and
(viii) that a Relevant Event Put Exercise Notice, once validly given, may not be withdrawn
without the Issuer’s consent.
7.5.5 For the purposes of this Condition 7.5 (Redemption for Relevant Events):
(i) “control” means the acquisition or control of more than 50 per cent. of the voting rights
of the registered share capital of the Issuer or the right to appoint and/or remove all or the
majority of the members of the Issuer’s board of directors or other governing body,
whether obtained directly or indirectly, and whether obtained by ownership of share
capital, the possession of voting rights, contract or otherwise;
(ii) a “Change of Control” occurs when:
(a) any person or persons, acting together acquires control of the Issuer; or
(b) the Issuer consolidates with or merges into or sells or transfers all or substantially all
of its assets to any other person or persons acting together, unless the consolidation,
merger, sale or transfer will not result in any person acquiring control over the Issuer
or the successor entity.
(iii) a “Delisting” occurs when the H Shares cease to be listed or admitted to trading on the
Hong Kong Stock Exchange or the Alternative Stock Exchange (as the case may be);
(iv) an “H Share Suspension in Trading” means the suspension in trading of the H Shares for
a period of 30 consecutive H Share Stock Exchange Business Days;
(v) a “person” includes any individual, company, corporation, firm, partnership, joint venture,
undertaking, association, organisation, trust, state or agency of a state (in each case
whether or not being a separate legal entity) but does not include the Issuer’s board of
directors or any other governing board and does not include the Issuer’s wholly-owned
direct or indirect Subsidiaries;
(vi) a “Relevant Event” means the occurrence of either (a) a Change of Control in the Issuer;
(b) a Delisting or (c) an H Share Suspension in Trading; and
(vii) “voting rights” means the right generally to vote at general meetings of shareholders of
the Issuer (irrespective of whether or not, at the time, stock of any other class or classes
shall have, or might have, voting power by reason of the happening of any contingency).
7.6 Purchases
The Issuer or any of its Subsidiaries may, subject to applicable laws and regulations, at any time and
from time to time purchase Bonds at any price in the open market or otherwise. The Bonds so
acquired, while held by or on behalf of the Issuer or any such Subsidiary, shall not entitle them to
convert the Bonds in accordance with these Conditions nor shall such Bonds be deemed to be
outstanding for the purposes of, among other things, calculating quorums at meetings of the
Bondholders and exercising any voting rights with respect to such Bonds and Conditions 9 (Events of
Default) and 13 (Enforcement).
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7.7 Cancellation
All Bonds which are repurchased, redeemed or converted or purchased by or on behalf of the Issuer
will forthwith be cancelled. Certificates in respect of all Bonds cancelled will be forwarded to or to
the order of the Registrar and such Bonds may not be reissued or resold. For the avoidance of doubt,
all or any Bonds which are purchased by or on behalf of the Issuer’s Subsidiaries may be resold in
any manner and at any price in compliance with relevant laws and regulations (including any
applicable rules of the relevant stock exchange).
7.8 Redemption Notices
All notices to Bondholders given by or on behalf of the Issuer pursuant to this Condition 7
(Redemption, Purchase and Cancellation) will be irrevocable and will be given in accordance with
Condition 16 (Notices) specifying: (i) the Conversion Price as at the date of the relevant notice; (ii)
the last day on which Conversion Rights may be exercised; (iii) the principal and/or premium (if any)
together with accrued and unpaid interest up to but excluding the relevant redemption date payable;
(iv) the date fixed for redemption; (v) the manner in which redemption will be effected; and (vi) the
aggregate principal amount of the Bonds outstanding as at the latest practicable date prior to the
publication of the notice.
If more than one notice of redemption is given (being a notice given by either the Issuer or a
Bondholder pursuant to these Conditions), the first in time shall prevail.
Neither the Trustee nor any of the Agents shall be responsible for calculating or verifying the
calculations of any amount payable on redemption of the Bonds pursuant to this Condition 7
(Redemption, Purchase and Cancellation) and none of them shall be liable to the Bondholders or any
other person for not doing so.
8 Taxation
8.1 All payments made by or on behalf of the Issuer in respect of the Bonds will be made free from any
restriction or condition and will be made without deduction or withholding for or on account of any
present or future taxes, duties, assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by or on behalf of the PRC or Hong Kong or, in each case, any
authority thereof or therein having power to tax, unless deduction or withholding of such taxes, duties,
assessments or governmental charges is compelled by law. Where such withholding or deduction is
made by the Issuer by or within the PRC up to and including the aggregate rate applicable on 15 July
2024 (the “Applicable Rate”), the Issuer will increase the amounts paid by it to the extent required,
so that the net amount received by Bondholders equals the amounts which would otherwise have been
receivable by them had no such withholding or deduction been required. If the Issuer is required to
make a deduction or withholding in respect of PRC tax in excess of the Applicable Rate, or any Hong
Kong deduction or withholding is required, in such event the Issuer shall pay such additional amounts
(“Additional Tax Amounts”) as will result in receipt by the Bondholders of such amounts as would
have been received by them had no such withholding or deduction been required, except that no
Additional Tax Amounts shall be payable in respect of any Bond:
8.1.1 to a holder (or to a third party on behalf of a holder) who is subject to such taxes, duties,
assessments or governmental charges in respect of such Bond by reason of his having some
connection with the PRC or Hong Kong, as the case may be, otherwise than merely by holding
the Bond or by the receipt of amounts in respect of the Bond or where the withholding or
deduction could be avoided by the holder making a declaration of non-residence or other similar
claim for exemption to the appropriate authority which such holder is legally capable and
competent of making but fails to do so; or
8.1.2 where the withholding or deduction could be avoided by the holder or beneficial owner making
a declaration of non-residence or other similar claim for exemption to the appropriate authority
or any other person which such holder is legally capable and competent of making but fails to
do so; or
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8.1.3 (in the case of a payment of principal) if the Certificate in respect of such Bond is surrendered
more than 30 days after the Relevant Date except to the extent that the holder would have been
entitled to such additional amount on surrendering the relevant Certificate for payment on the
last day of such period of 30 days.
8.2 “Relevant Date” means whichever is the later of (i) the date on which such payment first becomes
due and (ii) if the full amount payable has not been received by the Trustee or the Principal Agent on
or prior to such due date, the date on which, the full amount having been so received, notice to that
effect shall have been given to the Bondholders and payment made.
8.3 References in these Conditions to principal, premium and interest shall be deemed also to refer to any
additional amounts or premiums which may be payable under these Conditions or any undertaking or
covenant given in addition thereto or in substitution therefor pursuant to the Trust Deed.
8.4 Neither the Trustee nor any Agent shall be responsible for paying any tax, duty, charges, withholding
or other payment referred to in this Condition 8 (Taxation) or for determining whether such amounts
are payable or the amount thereof, and none of them shall be responsible or liable for any failure by
the Issuer, any Bondholder or any third party to pay such tax, duty, charges, withholding or other
payment in any jurisdiction or to provide any notice or information to the Trustee or any Agent that
would permit, enable or facilitate the payment of any principal, premium (if any), interest or other
amount under or in respect of the Bonds without deduction or withholding for or on account of any
tax, duty, charge, withholding or other payment imposed by or in any jurisdiction.
9 Events of Default
The Trustee at its discretion may, and if so requested in writing by the holders of not less than 25 per
cent. in principal amount of the Bonds then outstanding or if so directed by an Extraordinary
Resolution shall (subject in any such case to being indemnified and/or secured and/or pre-funded to
its satisfaction), give notice to the Issuer that the Bonds are, and they shall accordingly thereby
become, immediately due and repayable at their principal amount together with any accrued and
unpaid interest up to but excluding the date of payment (subject as provided below and without
prejudice to the right of Bondholders to exercise the Conversion Right in respect of their Bonds in
accordance with Condition 5 (Conversion)) if any of the following events (each an “Event of
Default”) has occurred:
9.1 Non-Payment: the Issuer (i) fails to pay the principal or premium (if any) interest on any of the Bonds
when due and such failure continues for a period of seven days or (ii) fails to pay interest on any of
the Bonds when due and such failure to pay interest continues for a period of 14 days; or
9.2 Default on Conversion: failure by the Issuer to deliver the H Shares, unless such failure is due to a
technical or administrative error and is remedied by the Issuer within three H Share Stock Exchange
Business Days or pay the Cash Settlement Amount in U.S. dollars in respect of such H Shares as and
when such H Shares are required to be delivered or such Cash Settlement Amount in U.S. dollars is
required to be paid, as the case may be, following conversion of a Bond; or
9.3 Breach of Other Obligations: the Issuer does not perform or comply with one or more of its other
obligations in the Bonds or the Trust Deed which default is in the opinion of the Trustee incapable of
remedy or, if capable of remedy in the opinion of the Trustee, is not remedied within 30 days after
written notice of such default shall have been given to the Issuer by the Trustee; or
9.4 Insolvency: the Issuer or any Principal Subsidiary is (or is, or could be, deemed by law or a court to
be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend
payment of all or a substantial part of (or of a particular type of) its debts, proposes or makes any
agreement for the deferral, rescheduling or other readjustment of all or a substantial part of (or of a
particular type of) its debts, proposes or makes a general assignment or an arrangement or composition
with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is
agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of
the Issuer or any Principal Subsidiary; or
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9.5 Cross-Acceleration: (i) any other present or future indebtedness of the Issuer or any of its Principal
Subsidiaries for or in respect of moneys borrowed or raised becomes due and payable prior to its stated
maturity by reason of any actual or potential default, event of default or the like (howsoever
described), or (ii) any such indebtedness is not paid when due or, as the case may be, within any
applicable grace period and in each case, such default continues for more than 10 days after the
expiration of any grace period or extension of time for payment applicable thereto; provided that any
such Event of Default shall be deemed cured and not continuing upon payment of such indebtedness,
rescission of such declaration of acceleration, or waiver or with consent of the applicable lender, or
(iii) the Issuer or any of its Principal Subsidiaries fails to pay when due any amount payable by it
under any present or future guarantee for, or indemnity in respect of, any present or future
indebtedness in respect of moneys borrowed or raised, provided that the aggregate amount of the
relevant indebtedness, guarantees and indemnities in respect of which one or more of the events
mentioned above in this Condition 9.5 (Cross-Acceleration) have occurred equals or exceeds
U.S.$200 million or its equivalent (as determined on the basis of the middle spot rate for the relevant
currency against the U.S. dollar as quoted by any leading bank on the day on which such indebtedness
become due and payable or is not paid or any such amount become due and payable or is not paid
under any such guarantee or indemnity); or
9.6 Enforcement Proceedings: a distress, attachment, execution or other legal process is levied, enforced
or sued out on or against any material part of the property, assets or revenues of the Issuer or any of
its Principal Subsidiaries and is not discharged or stayed within 60 days; or
9.7 Winding-up: an order is made or an effective resolution passed for the winding-up or dissolution,
judicial management or administration of the Issuer or any Principal Subsidiary, or the Issuer or any
Principal Subsidiary ceases or threatens to cease to carry on all or substantially all of its business or
operations, except for the purpose of and followed by a reconstruction, amalgamation, reorganisation,
merger or consolidation (i) on terms approved by an Extraordinary Resolution of the Bondholders, or
(ii) in the case of a Principal Subsidiary, whereby the undertaking and assets of such Principal
Subsidiary are transferred to or otherwise vested in the Issuer or another Principal Subsidiary; or
9.8 Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present or future, created
or assumed by the Issuer or any of its Principal Subsidiaries on any material part of their respective
property, assets or revenues becomes enforceable and any step is taken to enforce it (including the
taking of possession or the appointment of a receiver, manager or other similar person) and is not
discharged within 90 days; or
9.9 Illegality: it is or will become unlawful for the Issuer to perform or comply with any one or more of
its obligations under any of the Bonds or the Trust Deed; or
9.10 Authorisation and Consents: any action, condition or thing (including the obtaining or effecting of any
necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration)
at any time required to be taken, fulfilled or done by the Issuer in order (i) to enable the Issuer lawfully
to enter into, exercise its rights and perform and comply with its obligations under the Bonds and the
Trust Deed, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make
the Bonds and the Trust Deed admissible in evidence in the courts of the PRC or Hong Kong is not
taken, fulfilled or done; or
9.11 Nationalisation: any step is taken by any person with a view to the seizure, compulsory acquisition,
expropriation or nationalisation of all or a substantial part of the assets of the Issuer or any Principal
Subsidiary; or
9.12 Analogous Event: any event occurs which under the laws of any relevant jurisdiction has an analogous
effect to any of the events referred to in any of Conditions 9.6 (Enforcement Proceedings) to 9.8
(Security Enforced) (both inclusive) or Condition 9.11 (Nationalisation).
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The Trustee and the Agents shall not be bound to take any steps to ascertain whether any Event of
Default or any condition, event or act which with the giving of notice and/or the lapse of time and/or
fulfilment of any other conditions and/or the making of any determination would constitute an Event
of Default has happened and none of them shall be responsible or liable to Bondholders or any other
person for not doing so.
9.13 For purposes of this Condition 9 (Events of Default), “Principal Subsidiary” means any Subsidiary
of the Issuer:
(i) whose total revenue (consolidated in the case of a Subsidiary which itself has Subsidiaries) as
shown by its latest audited income statement is at least 10 per cent. of the consolidated total
revenue as shown by the latest published audited income statement of the Issuer and its
consolidated Subsidiaries; or
(ii) whose total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) as
shown by its latest audited balance sheet are at least 10 per cent. of the consolidated total assets
of the Issuer and its Subsidiaries as shown by the latest published audited consolidated balance
sheet of the Issuer and its Subsidiaries, including the investment of the Issuer and its
consolidated Subsidiaries in each Subsidiary whose accounts are not consolidated with the
consolidated audited accounts of the Issuer and of associated companies and after adjustment for
minority interests;
provided that, in relation to paragraphs (i) and (ii) above of this definition:
(a) in the case of a corporation or other business entity becoming a Subsidiary after the end
of the financial period to which the latest consolidated audited accounts of the Issuer
relate, the reference to the then latest consolidated audited accounts of the Issuer and its
Subsidiaries for the purposes of the calculation above shall, until consolidated audited
accounts of the Issuer for the financial period in which the relevant corporation or other
business entity becomes a Subsidiary are published, be deemed to be a reference to the then
latest consolidated audited accounts of the Issuer and its Subsidiaries adjusted to
consolidate the latest audited accounts (consolidated in the case of a Subsidiary which
itself has Subsidiaries) of such Subsidiary in such accounts;
(b) if at any relevant time in relation to the Issuer or any Subsidiary which itself has
Subsidiaries, no consolidated accounts are prepared and audited, total revenue or total
assets of the Issuer and/or any such Subsidiary shall be determined on the basis of pro
forma consolidated accounts prepared for this purpose by or on behalf of the Issuer;
(c) if at any relevant time in relation to any Subsidiary, no accounts are audited, its total assets
(consolidated, if appropriate) shall be determined on the basis of pro forma accounts
(consolidated, if appropriate) of the relevant Subsidiary prepared for this purpose by or on
behalf of the Issuer; and
(d) if the accounts of any Subsidiary (not being a Subsidiary referred to in proviso (i) above)
are not consolidated with those of the Issuer, then the determination of whether or not such
Subsidiary is a Principal Subsidiary shall be based on a pro forma consolidation of its
accounts (consolidated, if appropriate) with the consolidated accounts (determined on the
basis of the foregoing) of the Issuer; or
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(iii) to which is transferred the whole or substantially the whole of the assets of a Subsidiary which
immediately prior to such transfer was a Principal Subsidiary, whereupon the Principal
Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Principal
Subsidiary and the Subsidiary to which the assets are so transferred shall immediately become
a Principal Subsidiary, provided that on or after the date on which the first published audited
accounts (consolidated, if appropriate) of the Issuer prepared as of a date later than such transfer
are issued, whether or not such transferor Subsidiary or transferee Subsidiary would continue to
be a Principal Subsidiary shall be determined on the basis of such accounts by virtue of the
provisions of (i) or (ii) above;
A certificate signed by an Authorised Signatory of the Issuer stating that, in their opinion, a Subsidiary
is or is not, or was or was not, a Principal Subsidiary shall, in the absence of manifest error, be
conclusive and binding on all parties.
10 Prescription
Claims in respect of amounts due in respect of the Bonds will become prescribed and void unless made
within 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date
in respect thereof.
11 Meetings of Bondholders, Modification and Waiver
11.1 Meetings
The Trust Deed contains provisions for convening meetings of Bondholders to consider any matter
affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of
the Bonds or the provisions of the Trust Deed. Such a meeting may be convened by the Issuer or the
Trustee and shall be convened by the Trustee if requested in writing to do so by Bondholders holding
not less than 10 per cent. in principal amount of the Bonds for the time being outstanding and if it is
indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The
quorum at any such meeting for passing an Extraordinary Resolution will be two or more persons
holding or representing over 50 per cent. in principal amount of the Bonds for the time being
outstanding or, at any adjournment of such meeting, two or more persons being or representing
Bondholders whatever the principal amount of the Bonds so held or represented unless the business
of such meeting includes consideration of proposals, inter alia, (i) to modify the due date for any
payment in respect of the Bonds or the dates on which interest is payable in respect of the Bonds, (ii)
to reduce or cancel the amount of principal, premium, interest or any other amount payable in respect
of the Bonds or to change the method of calculation of interest, (iii) to change the currency of payment
of the Bonds, (iv) to modify or cancel the Conversion Rights (except by unilateral and unconditional
reduction in the Conversion Price) or the put options specified in Condition 7 (Redemption, Purchase
and Cancellation) or (v) to modify the provisions concerning the quorum required at any meeting of
the Bondholders or the majority required to pass an Extraordinary Resolution including this proviso,
in which case the necessary quorum for passing an Extraordinary Resolution will be two or more
persons holding or representing not less than 66 per cent., or at any adjourned such meeting not less
than 25 per cent., in principal amount of the Bonds for the time being outstanding. An Extraordinary
Resolution passed at any meeting of Bondholders will be binding on all Bondholders, whether or not
they are present at the meeting. The Trust Deed provides that a written resolution signed by or on
behalf of the holders of not less than 90 per cent. of the aggregate principal amount of Bonds
outstanding shall be as valid and effective as a duly passed Extraordinary Resolution.
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11.2 Modification and Waiver
The Trustee may (but shall not be obliged to) agree, without the consent of the Bondholders, to (i) any
modification (except as mentioned in the Trust Deed) to, or the waiver or authorisation of any breach
or proposed breach of, the Bonds, the Agency Agreement or the Trust Deed which is not, in the
opinion of the Trustee, materially prejudicial to the interests of the Bondholders or (ii) any
modification to the Bonds, the Agency Agreement or the Trust Deed which, in the Trustee’s opinion,
is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory
provisions of law. Any such modification, waiver or authorisation will be binding on the Bondholders
and, unless the Trustee agrees otherwise, any such modification, waiver or authorisation will be
notified by the Issuer to the Bondholders as soon as practicable thereafter.
11.3 Interests of Bondholders
In connection with the exercise of its functions, rights, powers and discretions (including but not
limited to those in relation to any proposed modification, authorisation or, waiver) the Trustee shall
have regard to the interests of the Bondholders as a class and shall not have regard to the consequences
of such exercise for individual Bondholders and the Trustee shall not be entitled to require on behalf
of any Bondholder, nor shall any Bondholder be entitled to claim, from the Issuer or the Trustee any
indemnification or payment in respect of any tax consequences of any such exercise upon individual
Bondholders except to the extent provided for in Condition 8 (Taxation) and/or any undertakings given
in addition thereto or in substitution therefor pursuant to the Trust Deed.
12 Replacement of Certificates
If any Certificate is mutilated, defaced, destroyed, stolen or lost, it may be replaced at the specified
office of the Registrar or any Transfer Agent, subject to all applicable laws and stock exchange
requirements, upon payment by the claimant of such costs as may be incurred in connection therewith
and on such terms as to evidence and such indemnity and/or security as the Issuer and/or such Agent
may require. Mutilated or defaced Certificates must be surrendered before replacements will be
issued.
13 Enforcement
At any time when the Bonds become due and payable, the Trustee may, at its discretion and without
further notice, take such steps and/or actions and/or institute such proceedings against the Issuer as
it may think fit to enforce the terms of the Trust Deed and the Bonds, but it need not take any such
steps and/or actions and/or institute any such proceedings unless (i) it shall have been so directed by
an Extraordinary Resolution or shall have been so requested in writing by the holders of not less than
25 per cent. in principal amount of the Bonds then outstanding and (ii) it shall have been indemnified
and/or secured and/or pre-funded to its satisfaction. No Bondholder may proceed directly against the
Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable period
and such failure is continuing.
14 Indemnification of the Trustee
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility including without limitation from taking steps and/or actions and/or instituting
proceedings to enforce payment unless indemnified and/or secured and/or prefunded of its satisfaction
and entitling the Trustee to be paid or reimbursed for any fees, costs, expenses, indemnity payments
and for liabilities incurred by it, in priority to the claims of the Bondholders. The Trustee and its
affiliates are entitled to enter into business transactions with the Issuer and any entity related (directly
or indirectly) to the Issuer without accounting for any profit.
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The Trustee may rely without liability to Bondholders or any other person on any report, confirmation
or certificate from or any advice or opinion of any legal counsel, accountants, financial advisers,
financial institution or any other expert, whether or not obtained by or addressed to it and whether
their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto
entered into by the Trustee or any other person or in any other manner) by reference to a monetary
cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such
report, confirmation, certificate, advice or opinion, in which case such report, confirmation,
certificate, advice or opinion shall be binding on the Issuer and the Bondholders.
Whenever the Trustee is required or entitled by the terms of the Trust Deed or these Conditions to
exercise any discretion or power, take any action, make any decision or give any direction, the Trustee
is entitled, prior to exercising any such discretion or power, taking any such action, making any such
decision or giving any such direction, to seek directions or clarifications of any directions from the
Bondholders by way of Extraordinary Resolution, and the Trustee shall not be responsible for any loss
or liability incurred by the Issuer, the Bondholders or any other person as a result of any delay in it
exercising such discretion or power, taking such action, making such decision or giving such direction
or clarifications of any directions as a result of seeking such direction from the Bondholders or in the
event that no direction is given to the Trustee by the Bondholders.
None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer and
any other person appointed by the Issuer in relation to the Bonds of the duties and obligations on their
part expressed in respect of the same and, unless it has written notice from the Issuer to the contrary,
the Trustee and each Agent shall be entitled to assume that the same are being duly performed. None
of the Trustee or any Agent shall be liable to any Bondholder or any other person for any action taken
by the Trustee or such Agent in accordance with the instructions of the Bondholders. The Trustee shall
be entitled to rely on any direction, request or resolution of Bondholders given by holders of the
requisite principal amount of Bonds outstanding or passed at a meeting of Bondholders convened and
held in accordance with the Trust Deed. Neither the Trustee nor any of the Agents shall be under any
obligation to ascertain whether any Event of Default or Potential Event of Default has occurred or
monitor compliance by the Issuer with the provisions of the Trust Deed, the Agency Agreement or
these Conditions and none of them shall be responsible or liable to the Issuer, the Bondholders or any
other person for not doing so. Each of the Trustee and the Agents shall be entitled to assume that no
Event of Default or Potential Event of Default has occurred until it has received written notice to the
contrary from the Issuer.
Each Bondholder shall be solely responsible for making and continuing to make its own independent
appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and
nature of the Issuer and its Subsidiaries, and the Trustee shall not at any time have any responsibility
for the same and each Bondholder shall not rely on the Trustee in respect thereof.
15 Further Issues
The Issuer may from time to time, without the consent of the Bondholders, create and issue further
bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for
the issue date and the timing for complying with the requirements set out in these Conditions in
relation to the Initial NDRC Post-Issuance Filing, the CSRC Post-Issuance Filings and the Foreign
Debt Registration) and so that such further issue shall be consolidated and form a single series with
the Bonds. Such further bonds shall be constituted by a deed supplemental to the Trust Deed.
16 Notices
All notices to Bondholders shall be validly given if mailed to them at their respective addresses in the
register of Bondholders maintained by the Registrar or published in a leading newspaper having
general circulation in Asia and, so long as the Bonds are listed on the Hong Kong Stock Exchange and
the rules of that stock exchange so require, published in a leading newspaper having general
circulation in Hong Kong (which is expected to be the South China Morning Post). Any such notice
shall be deemed to have been given on the later of the date of such publication and the seventh day
after being so mailed, as the case may be.
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As long as the Bonds are represented by the Global Certificate and the Global Certificate is held on
behalf of Euroclear or Clearstream or an alternative clearing system, notices to Bondholders may be
given by delivery of the relevant notice to Euroclear or Clearstream or the alternative clearing system,
for communication by it to entitled accountholders in substitution for notification as required by the
Conditions and such delivery shall be deemed to have been given on the date of delivery to such
clearing system.
17 Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce any term or condition of the Bonds under the Contracts
(Rights of Third Parties) Act 1999 but this is without prejudice to the rights of Bondholders as
contemplated in Condition 13 (Enforcement).
18 Governing Law and Jurisdiction
18.1 Governing Law
The Bonds, the Trust Deed and the Agency Agreement and any non-contractual obligations arising out
of or in connection with them are governed by, and shall be construed in accordance with, English law.
18.2 Jurisdiction
The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes which may arise out
of or in connection with the Bonds, the Trust Deed and the Agency Agreement and accordingly any
legal action or proceedings arising out of or in connection with the Bonds, the Agency Agreement
and/or the Trust Deed (“Proceedings”) may be brought in such courts. Pursuant to the Trust Deed, the
Issuer has irrevocably submitted to the jurisdiction of such courts.
18.3 Waiver of Immunity
The Issuer has waived any right to claim sovereign or other immunity from jurisdiction or execution
and any similar defence, and has irrevocably consented to the giving of any relief or the issue of any
process, including, without limitation, the making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any order or judgment made or given in
connection with any Proceedings.
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DIVIDENDS
Subject to the laws of the PRC and the Articles of Association of the Company, the Company shall distribute
dividends to shareholders on a yearly basis in a specific proportion out of the distributable profit realised
for the year. The Company may distribute dividends in cash or in shares. Under favourable circumstances,
the Company may distribute interim dividends. Subject to the laws of the PRC, the Company may exercise
the power to forfeit unclaimed dividends, provided that it does so only after the expiration of the applicable
relevant period. When distributing dividends to shareholders, the Company shall withhold and turn over the
tax payable on the dividend income of shareholders based on the amount distributed and in accordance with
PRC tax laws.
Dividends or other distributions of the Company shall be declared and calculated in Renminbi. Where the
Company makes payment to holders of foreign investment shares in foreign currency, the foreign currency
shall be arranged in accordance with the relevant state foreign exchange regulations.
The board of directors has recommended the payment of the 2023 interim dividend of RMB0.93 (2022:
RMB0.92) per share (tax inclusive). The board of directors has recommended the payment of a final
dividend of RMB1.5 (2022: RMB1.5) per share (tax inclusive) in respect of the year ended 31 December
2023. The dividend has been approved by the Shareholders at the 2023 annual general meeting of the
Company.
The table below sets forth certain information on dividends paid by the Company on its shares in respect
of the years indicated:
Cash dividend payout
ratio based on operating
profit attributable to
shareholders of the
Cash dividend per share Cash dividend amount parent company
(RMB) (RMB million) (%)
2023......................................... 2.43 44,002 37.3
2022* ....................................... 2.42 43,820 29.5
* For 2022, the cash dividend payout ratio based on restated operating profit attributable to shareholders of the parent company
was 29.8%.
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DESCRIPTION OF THE SHARES
The following information is a summary of certain provisions of the Articles of Association currently
effective and certain other information concerning the Company. This summary does not purport to be
complete and is qualified in its entirety by reference to the Articles of Association and the Company Law.
Any provision of the Articles of Association may be varied by special resolution passed at a general meeting
of shareholders of the Issuer as approved by the relevant competent authority according to the applicable
laws and rules. Certain amendments on the Articles of Association of the Company have been approved by
the shareholders of the Company on 30 May 2024 and the effectiveness of which are still subject to the
approval of NFRA. For more details of such amendments please visit the website of the Hong Kong Stock
Exchange at http://www.hkexnews.hk and the website of the Company at www.pingan.cn (the other contents
of these websites do not form part of this Offering Circular).
General
The Company was founded on 21 March 1988 and was established as a joint stock limited company in the
PRC on 16 January 1997 in accordance with the provisions set out in the Company Law. The H Shares of
the Company were listed on the Hong Kong Stock Exchange on 24 June 2004 and the A Shares of the
Company were subsequently listed on The Shanghai Stock Exchange on 1 March 2007.
Shareholder Eligibility
According to Article 63 of the Articles of Association, investor whose shareholding ratio reaches 5% or
more of the issued shares of the Company by means of trading through the stock exchanges, shall notify
the Company within five days after the occurrence of the fact and the Company will correspondingly apply
for the approval by the NFRA. The NFRA shall have the right to request the investor who do not meet the
relevant qualification requirements to transfer the shares.
Share Capital
As of the date of this Offering Circular, the total share capital of the Company was RMB18,210,234,607
shares with a par value of RMB1.00 each, which can be categorized as follows:
Approximate
percentage of the
Description of Shares Number of shares total share capital
Domestic shares (A Shares)* ........................................................... 10,762,657,695 59.10%
Overseas listed foreign shares (H Shares) ....................................... 7,447,576,912 40.90%
Total................................................................................................ 18,210,234,607 100%
* Including 102,592,612 A Shares in the repurchased securities account of the Company, which were repurchased by the Company
pursuant to the repurchase resolutions considered and approved by the board of directors of the Company, accounting for
approximately 0.56% of the total share capital of the Company as of the date of this Offering Circular.
Ranking
Both holders of H Shares and A Shares of the Company are regarded as holders of ordinary shares under
the Articles of Association and shall enjoy and bear the same rights and obligations.
Issue of Shares
The Company may, based on its operational and development requirements, increase its capital in
accordance with the relevant provisions of the Articles of Association. The Company may increase its
capital by the following methods: (i) by offering new shares to non-specified persons (including to issue
new shares to the general public and strategic investors); (ii) by placing new shares to existing shareholders;
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(iii) by allotting bonus issue to existing shareholders; (iv) by capitalizing its capital reserve; (v) by issuing
convertible bonds; (vi) by formulating employee shareholding schemes in accordance with the law and issue
shares to the employee shareholding schemes; (vii) by any other methods which is permitted by laws and
administrative regulations.
The increase of capital of the Company by way of issuing new shares shall be carried out in accordance with
the procedures provided for in relevant laws and administrative regulations and after having been approved
in accordance with the Articles of Association.
Dividends
According to the Articles of Association of the Company, the accumulated profit to be distributed in cash
for any three consecutive years shall not be less than 30% of the average annual distributable profit realised
in the three years, provided that the annual distributable profits of the Company (namely profits after tax
of the Company after covering the losses and making contributions to the revenue reserve) are positive in
value and such distributions are in compliance with the prevailing laws and regulations and the
requirements of regulatory authorities for solvency ratio. The annual dividends shall be passed by
shareholders in general meeting, and the amount of dividends to be distributed shall be proposed by the
board of directors of the Company.
Dividends may be distributed in the form of cash or Shares.
The Company shall appoint recipient agents on behalf of the shareholders of overseas listed foreign shares.
Recipient agents shall receive on behalf of the relevant shareholders dividends distributed and other monies
payable by the Company in respect of the overseas listed foreign shares. The receiving agent appointed by
the Company shall comply with the laws and the requirements of the stock exchange where the shares of
the Company are listed. The receiving agent appointed by the Company on behalf of holders of H Shares
shall be a trust company registered in accordance with the Trustee Ordinance of Hong Kong.
Dividends or other distributions of the Company shall be declared and calculated in Renminbi. Where the
Company makes payment to holders of foreign investment shares in foreign currency, the foreign currency
shall be arranged in accordance with the relevant state foreign exchange regulations. When distributing
dividends, the Company shall withhold on behalf of the shareholders the tax payable on dividend income
in accordance with PRC tax law.
Shareholders’ Meetings
Shareholders’ general meetings shall be divided into annual general meetings and extraordinary general
meetings. Shareholders’ general meetings shall be convened by the board of directors. Annual general
meetings shall be convened once every year and shall be held within six months after the end of the
preceding financial year.
Upon the occurrence of any of the following events, the board of directors shall convene an extraordinary
general meeting within two months thereof:
(i) the number of directors falls short of the minimum number required by the Company Law or is less
than two-thirds of the number required by the Articles of Association;
(ii) the unrecovered losses of the Company amount to one-third of the total amount of its paid-up share
capital;
(iii) upon request by shareholders individually or collectively holding more than 10% of the Company’s
share;
(iv) it is deemed necessary by the board of directors or it is proposed by the supervisory committee;
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(v) as proposed by more than half and no less than two of the independent directors;
(vi) any other circumstances required by the laws, administrative regulations, departmental rules and the
Articles of Association.
When the Company convenes an annual general meeting, a written notice to notify all registered
shareholders must be given no later than 20 days before the meeting; when the Company convenes an
extraordinary general meeting, a written notice to notify all registered shareholders must be given no later
than 15 days before the meeting. Such notice shall contain the matters to be considered at the meeting as
well as the date and venue of the meeting.
When the general meeting is held, the board of directors, the supervisory committee and the shareholders
individually or collectively holding more than 3% of the Company’s shares shall have the right to put
forward a proposal in writing to the Company, and the Company shall incorporate those matters in the
proposal which fall within the scope of the duties of the general meeting into the agenda of such meeting.
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PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM
The Global Certificate contains provisions which apply to the Bonds in respect of which the Global
Certificate is issued, some of which modify the effect of the Conditions set out in this Offering Circular.
Terms defined in the Conditions have the same meaning in the paragraphs below. The following is a
summary of those provisions:
Meetings
For the purposes of any meeting of Bondholders, the registered holder of the Bonds represented by the
Global Certificate will be treated as being two persons for the purposes of any quorum requirements of a
meeting of Bondholders and, at any such meeting, as having one vote in respect of each US$100,000 in
principal amount of Bonds for which the Global Certificate is issued. The Trustee may allow a person with
an interest in the Bonds in respect of which the Global Certificate has been issued to attend and speak at
a meeting of Bondholders on confirmation of entitlement and appropriate proof of his identity and interest.
Cancellation
Cancellation of any Bond by the Issuer following its redemption, conversion or purchase by the Issuer and
its Subsidiaries will be effected by a reduction in the principal amount of the Bonds in the register of
Bondholders.
Trustee’s Powers
In considering the interests of Bondholders while the Global Certificate is registered in the name of a
nominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in the
circumstances, but without being obliged to do so, (a) have regard to any information as may have been
made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its
accountholders (either individually or by way of category) with entitlements in respect of the Bonds and
(b) consider such interests on the basis that such accountholders were the holders of the Bonds in respect
of which the Global Certificate is issued.
Conversion
Subject to the requirements of Euroclear and Clearstream or any other clearing system (an “Alternative
Clearing System”) as shall have been selected by the Issuer and approved by the Trustee, the Principal
Agent and the Registrar on behalf of which the Bonds evidenced by the Global Certificate may be held, the
Conversion Rights attaching to the Bonds in respect of which the Global Certificate is issued may be
exercised by the presentation thereof to, or to the order of the Principal Agent of one or more Conversion
Notices duly completed by or on behalf of a holder of a book-entry interest in such Bonds. Deposit of the
Global Certificate with the Principal Agent together with the relevant Conversion Notice(s) shall not be
required. The exercise of the Conversion Right shall be notified by the Principal Agent to the Registrar and
the holder of the Global Certificate.
Payment
So long as the Bonds are represented by the Global Certificate and such Global Certificate is held on behalf
of a clearing system, the Issuer has promised, inter alia, to pay interest in respect of the Bonds from the
Issue Date at the rates, on the dates for payment, and in accordance with the method of calculation provided
for in the Terms and Conditions, save that the calculation is made in respect of the total aggregate amount
of the Bonds represented by the Global Certificate.
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Payments of principal, premium and interest in respect of Bonds represented by the Global Certificate will
be made without presentation or, if no further payment falls to be made in respect of the Bonds, against
presentation and surrender of the Global Certificate to or to the order of the Principal Agent or such other
Paying Agent as shall have been notified to the Bondholders for such purpose. Such payment will be made
to, or to the order of, the person whose name is entered on the Register at the close of business (in the
relevant clearing system) on the Clearing System Business Day before the due date for such payment, where
“Clearing System Business Day” means a weekday (Monday to Friday, inclusive) except 25 December and
1 January.
Calculation of Interest
So long as the Bonds are represented by a Global Certificate and such Global Certificate is held on behalf
of a clearing system, the Issuer has promised, inter alia, to pay interest in respect of such Bonds from the
Issue Date in arrear at the rates, on the dates for payment, and in accordance with the method of calculation
provided for in the Conditions, save that the calculation is made in respect of the total aggregate amount
of the Bonds represented by such Global Certificate.
Notices
So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf
of Euroclear or Clearstream or any Alternative Clearing System, notices to Bondholders may be given by
delivery of the relevant notice to Euroclear or Clearstream or the Alternative Clearing System, for
communication by it to entitled accountholders in substitution for notification as required by the
Conditions.
Bondholder’s Redemption
The Bondholder’s redemption options in Condition 7.4 (Redemption at the Option of the Bondholders) and
Condition 7.5 (Redemption for Relevant Events) of the Terms and Conditions may be exercised by the
holder of the Global Certificate giving notice to the Principal Agent of the principal amount of Bonds in
respect of which the option is exercised within the time limits specified in the Terms and Conditions.
Redemption at the Option of the Issuer
The options of the Issuer provided for in Condition 7.2 (Redemption at the Option of the Issuer) and
Condition 7.3 (Redemption for Taxation Reasons) of the Terms and Conditions shall be exercised by the
Issuer giving notice to the Trustee and the Bondholders within the time limits set out in and containing the
information required by the Terms and Conditions.
Bondholder’s Tax Option
The option of Bondholders not to have the Bonds redeemed as provided in Condition 7.3 (Redemption for
Taxation Reasons) of the Terms and Conditions shall be exercised by depositing at the specified office of
any Paying Agent a duly completed and signed notice of election, in the form for the time being current,
obtainable from the specified office of any Paying Agent together with the Certificate evidencing the Bonds
within the time limits set out in the Terms and Conditions.
Exchange of Bonds Represented by Global Certificates
Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to have
title to the Bonds registered in their names and to receive individual definitive Certificates if either
Euroclear or Clearstream or any other clearing system as shall have been selected by the Issuer and
approved by the Trustee, the Principal Agent and the Registrar (on behalf of which the Bonds evidenced by
the Global Certificate may be held) is closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or
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does in fact do so. In such circumstances, the Issuer will at its own expense cause sufficient individual
definitive Certificates to be executed and delivered to the Registrar for completion, authentication and
despatch to the relevant holders of the Bonds. A person with an interest in the Bonds in respect of which
the Global Certificate is issued must provide the Registrar with a written order containing instructions and
such other information as the Issuer and the Registrar may require to complete, execute and deliver such
individual definitive Certificates.
Transfers
Transfers of interests in the Bonds will be effected through the records of Euroclear and Clearstream (or
any Alternative Clearing System) and their respective participants in accordance with the rules and
procedures of Euroclear and Clearstream (or such Alternative Clearing System) and their respective direct
and indirect participants.
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TAXATION
The following summary of certain PRC, Hong Kong and European Union tax consequences of the purchase,
ownership and disposition of Bonds and Shares is based upon applicable laws, regulations, rulings and
decisions as of the date of this Offering Circular, all of which are subject to change (possibly with
retroactive effect). This discussion does not purport to be a comprehensive description of all the tax
considerations that may be relevant to a decision to purchase, own or dispose of the Bonds or the Shares
and does not purport to deal with consequences applicable to all categories of investors, some of which may
be subject to special rules. Persons considering the purchase of Bonds should consult their own tax advisors
concerning the tax consequences of the purchase, ownership and disposition of Bonds and Shares, including
such possible consequences under the laws of their country of citizenship, residence or domicile.
Persons considering the purchase of the Bonds should consult their own tax advisors concerning the
possible tax consequences of the purchase, ownership and disposition of the Bonds.
PRC
The following summary describes the principal PRC tax consequences of ownership of the Bonds by
beneficial owners who, or which, are not residents of Mainland China for PRC tax purposes (the “non-PRC
Holders”). In considering whether to invest in the Bonds, investors should consult their individual tax
advisors with regard to the application of PRC tax laws to their particular situations as well as any tax
consequences arising under the laws of any other tax jurisdiction.
Taxation of the Bonds
EIT Tax
The Issuer is considered a PRC tax resident enterprise for the purpose of the PRC EIT Law and is subject
to enterprise income tax at a rate of 25 per cent. on its income sourced from both within and outside the
PRC. On that basis, Holders will be subject to withholding tax, income tax and other taxes or duties imposed
by relevant government authorities in the PRC in respect of the holding of the Bonds or any repayment of
principal, and premium (if any) and interest (if any) made thereon, as further described below.
Pursuant to the PRC EIT Law and the PRC IIT Law as amended, and their implementation rules, any
non-PRC resident enterprise without an establishment within the PRC or whose income has no actual
connection to its establishment inside the PRC or any non-PRC resident individual who is not residing in
the PRC or who has resided in the PRC for less than 183 days with a tax year, must pay income tax on the
PRC-sourced income, unless a preferential rate is provided by tax treaties or arrangements entered into
between the country or region where the non-resident is established or tax resided and the PRC, and such
income tax must be withheld at source by the PRC payer. Accordingly, the Issuer must withhold income tax
from the payments of redemption premium (if any) and interest (if any) on the Bonds to any non-PRC
resident enterprise Holder at the rate of 10% and any non-PRC resident individual Holder at the rate of 20%.
Under the PRC EIT Law and its implementation rules, any gains realised on the transfer of the Bonds by
non-PRC resident enterprise Holders may be subject to PRC enterprise income tax if such gains are
regarded as PRC-sourced income. If the gains derived from the disposal of the Bonds issued by a PRC
enterprise and held by non-PRC resident enterprise Holders are regarded as PRC-sourced income, such gain
will be subject to PRC enterprise income tax. However, it is not clear under the PRC laws whether the gains
realised on the transfer of the Bonds are PRC-sourced for PRC tax purposes. Therefore, there is uncertainty
as to whether gains realised on the transfer of the Bonds by non-PRC individual Holders will be subject to
PRC individual income tax.
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In addition, under the PRC IIT Law, individuals who do not have a domicile in the PRC and have not resided
in the PRC, or individuals who do not have a domicile in the PRC but have resided in the PRC for less than
183 days cumulatively within a tax year, shall be deemed as non-resident individuals. Income derived by
non-resident individuals from China shall be subject to individual income tax pursuant to the provisions of
the PRC IIT Law. There is uncertainty as to whether gains realised on the transfer of the Bonds by
individual holders who are not PRC citizens or residents will be subject to PRC individual income tax.
Any PRC tax on interest, redemption premium or transfers of Bonds will apply at a rate of 10 per cent. in
the case of non-PRC enterprises without an establishment within the PRC or whose income has no actual
connection to its establishment inside the PRC and 20 per cent. in the case of non-PRC individuals unless
there is an applicable tax treaty or arrangement that reduces or exempts such income tax.
The conversion of the Bonds without converting due interests into shares by non-PRC Holders is not subject
to PRC income tax.
VAT
On 23 March 2016, the Ministry of Finance and the SAT issued Circular on the Comprehensively Launching
of the Pilot Scheme for the Conversion of Business Tax into Value-added Tax (
) (“Circular 36”) which confirms that business tax will be completely replaced by VAT
from 1 May 2016. Since then, the income derived from the provision of financial services which attracted
business tax will be entirely replaced by, and subject to, VAT.
According to Circular 36, the entities and individuals providing the services within the PRC shall be subject
to VAT. The services are treated as being provided within the PRC where either the service provider or the
service recipient is located in the PRC. The services subject to VAT include the provision of financial
services such as the provision of loans. It is further clarified under Circular 36 that the “loans” refers to the
activity of lending capital for another’s use and receiving the interest income thereon. Based on the
definition of “loans” under Circular 36, the issuance of Bonds is likely to be treated as the holders of the
Bonds providing loans to the Issuer, which thus shall be regarded as financial services subject to VAT.
Further, given that the Issuer is located in the PRC, the holders of the Bonds would be regarded as providing
the financial services within the PRC and consequently, the holders of the Bonds shall be subject to VAT
at the rate of 6 per cent. for payments of interest and certain other amounts on the Bonds paid by the Issuer
to Bondholders that are non-resident enterprises or individuals. Given that the Issuer pays interest income
to Bondholders who are located outside of the PRC, the Issuer, acting as the obligatory withholder in
accordance with applicable law, shall withhold VAT from the payment of interest income to Bondholders
who are located outside of the PRC.
However, there is uncertainty as to whether gains derived from a sale or exchange of Bonds consummated
outside of the PRC between non-PRC resident Bondholders will be subject to VAT. VAT is unlikely to be
applicable to any transfer of Bonds between entities or individuals located outside of the PRC and therefore
unlikely to be applicable to gains realised upon such transfers of Bonds, but there is uncertainty as to the
applicability of VAT if either the seller or buyer of Bonds is located inside the PRC. Circular 36 together
with other laws and regulations pertaining to VAT are relatively new, and the interpretation and enforcement
of such laws and regulations involve uncertainties.
Taxation of the H Shares
Taxation of Dividends on H Shares
According to the Notice Regarding Questions on Withholding Enterprise Income Tax When PRC Resident
Enterprises Distribute Dividends to Non-resident Enterprise Shareholders of H Shares (Guoshuihan [2008]
No. 897) ( H (
[2008]897 )) issued by the SAT, which became effective on 6 November 2008, PRC issuers should
withhold enterprise income tax at a rate of 10% when they distribute dividends to non-resident enterprise
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shareholders of H Shares. Non-resident enterprise investors in H-shares can file an application with the PRC
tax authorities to apply any tax treatments in accordance with applicable tax agreements (or arrangements).
Such investors will be required to provide materials proving that they are the beneficial owners that meet
the requirements of any such tax treatments.
According to the PRC IIT Law as amended, and its implementation rules, dividends paid by PRC companies
to individual shareholders are generally subject to a PRC withholding tax levied at a flat rate of 20%.
Pursuant to the Notice on Matters Concerning the Levy and Administration of Individual Income Tax
following the Repeal of Guo Shui Fa [1993] No. 45 (Guo Shui Han [2011] No. 348) (
[1993]045 ( [2011]348 )) issued by the SAT, if a
domestic non-foreign-invested enterprise issues its shares in Hong Kong, its non PRC resident individual
shareholders may be entitled to preferential tax treatments in accordance with the applicable tax treaties and
arrangements. Generally, the distribution of dividends by a domestic non-foreign-invested enterprise whose
shares are issued and listed in Hong Kong is subject to a withholding individual income tax of 10% and
there is no need to apply to the PRC tax authorities to qualify for this rate. If the tax rate specified in the
relevant tax treaty or arrangement is lower than 10%, an individual shareholder who receives dividends may
apply to the PRC tax authorities for a refund of the excess amount withheld. In accordance with the PRC
laws, if an individual shareholder is a resident of a country which has entered into a tax treaty with the PRC
and the agreed tax rate is higher than 10% but lower than 20%, his dividend will be subject to income tax
at the agreed tax rate. If an individual shareholder is a resident of a country which has not entered into a
tax treaty with the PRC, his dividend will be subject to income tax at a tax rate of 20%. The Issuer will
withhold tax from any dividend payment at the applicable tax rate (which may be higher than 10% if the
relevant individual shareholders and the tax rate applicable to such shareholder can be identified by the
Issuer).
Taxation of Capital Gains related to transfer of H Shares
According to the PRC EIT Law and its implementation rules, a non-resident enterprise without an
establishment within the PRC or whose income has no actual connection to its establishment inside the PRC
is generally subject to enterprise income tax at a rate of 10% with respect to its PRC-sourced income,
including the gains derived from the disposal of equity interests in a PRC enterprise. Such tax may be
reduced or eliminated under applicable tax treaties.
According to the PRC IIT Law and its implementation rules, individuals are subject to individual income
tax at the rate of 20% on gains realised on the sale of equity interests in PRC resident enterprises. Under
the Circular Declaring that Individual Income Tax Continues to Be Exempted over Income of Individuals
from Transfer of Shares (Cai Shui Zi [1998] No. 61) (
( [1998]61 )) issued by the MOF and the SAT on 30 March 1998, from 1
January 1997, income of individuals from the transfer of shares in listed enterprises continues to be
exempted from individual income tax. After the latest amendment to the PRC IIT Law, the SAT has not
explicitly stated whether it will continue to exempt individual income tax on income derived by individuals
from the transfer of listed shares. However, on 31 December 2009, the MOF, the SAT and the CSRC jointly
issued the Circular on Related Issues on Collection of Individual Income Tax over the Income Received
by Individuals from Transfer of Listed Shares Subject to Sales Limitation (Cai Shui [2009] No. 167) (
( [2009]167 )) and Supplementary
Notice of the Circular on Related Issues on Collection of Individual Income Tax over the Income Received
by Individuals from Transfer of Listed Shares Subject to Sales Limitation (Cai Shui [2010] No. 70) (
( [2010]70 )), which provides that
individuals’ income from transferring listed shares on certain domestic exchanges generally will continue
to be exempted from the individual income tax. The aforementioned provision has not expressly provided
that individual income tax shall be collected from non-PRC resident individuals on gains from the sale of
shares of PRC resident enterprises listed on overseas stock exchanges. However, there is no assurance that
the PRC tax authorities will not change these practices, which could result in levying income tax on
non-PRC resident individuals on gains from the sale of H Shares.
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Tax Arrangements and Treaties
According to the Arrangement between the Mainland of China and the Hong Kong Special Administrative
Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (
) with respect to taxes on income, the PRC tax authorities
may impose tax on dividends payable by a PRC company to a Hong Kong resident, but such tax shall not
exceed 10% of the gross amount of dividends payable, and in the case where a Hong Kong resident
beneficially owns at least 25% equity interest in a PRC company, such tax shall not exceed 5% of the gross
amount of dividends payable by the PRC company.
Stamp duty
Except for the PRC stamp duty on booking capital account ( ) which must be paid by the
Issuer as a result of the issuance of H Shares on the conversion of the Bonds, no PRC stamp duty will be
chargeable upon the issue or transfer of the Bonds or H Shares (if the register of the Holders is maintained
outside the PRC and the issue or transfer of the Bonds or H Shares are made outside of the PRC).
Hong Kong
Withholding Tax
No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Bonds
or in respect of any capital gains arising from the sale of the Bonds.
No tax is payable in Hong Kong by withholding or otherwise in respect of payments of dividends on the
A Shares and H Shares.
Profits Tax
Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong
Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business
(excluding profits arising from the sale of capital assets).
Interest on the Bonds may be deemed to be profits arising in or derived from Hong Kong from a trade,
profession or business carried on in Hong Kong in the following circumstances:
(i) interest on the Bonds is derived from Hong Kong and is received by or accrues to a corporation
carrying on a trade, profession or business in Hong Kong;
(ii) interest on the Bonds is derived from Hong Kong and is received by or accrues to a person, other than
a corporation, carrying on a trade, profession or business in Hong Kong and is in respect of the funds
of that trade, profession or business;
(iii) interest on the Bonds is received by or accrues to a financial institution (as defined in the Inland
Revenue Ordinance (Cap. 112) of Hong Kong (the “IRO”)) and arises through or from the carrying
on by the financial institution of its business in Hong Kong; or
(iv) interest on the Bonds is received by or accrues to a corporation, other than a financial institution, and
arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing
business (within the meaning of section 16(3) of the IRO).
Sums received by or accrued to a financial institution by way of gains or profits arising through or from
the carrying on by the financial institution of its business in Hong Kong from the sale, disposal or
redemption of Bonds will be subject to Hong Kong profits tax. Sums received by or accrued to a
corporation, other than a financial institution, by way of gains or profits arising through or from the carrying
on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section
16(3) of the IRO) from the sale, disposal or other redemption of Bonds will be subject to Hong Kong profits
tax.
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Sums derived from the sale, disposal or redemption of Bonds will be subject to Hong Kong profits tax where
received by or accrued to a person, other than a financial institution, who carries on a trade, profession or
business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of such
sums will generally be determined by having regard to the manner in which the Bonds are acquired and
disposed of.
In addition, with effect from 1 January 2024, pursuant to various foreign-sourced income exemption
legislation in Hong Kong (the “FSIE Amendments”), certain specified foreign-sourced income (including
interest, dividend, disposal gain or intellectual property income, in each case, arising in or derived from a
territory outside Hong Kong) accrued to an MNE entity (as defined in the FSIE Amendments) carrying on
a trade, profession or business in Hong Kong is regarded as arising in or derived from Hong Kong and
subject to Hong Kong profits tax when it is received in Hong Kong. The FSIE Amendments also provide
for relief against double taxation in respect of certain foreign-sourced income and transitional matters.
In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be
available. Investors are advised to consult their own tax advisors to ascertain the applicability of any
exemptions to their individual position.
Stamp Duty
No Hong Kong stamp duty will be chargeable upon the issue or transfer of a Bond.
FATCA
Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA, a
“foreign financial institution” may be required to withhold on certain payments it makes (“foreign passthru
payments”) to persons that fail to meet certain certification, reporting, or related requirements. The Issuer
may be a foreign financial institution for these purposes. A number of jurisdictions have entered into, or
have agreed in substance to, intergovernmental agreements with the United States to implement FATCA
(“IGAs”), which modify the way in which FATCA applies in their jurisdictions. Under the provisions of
IGAs as currently in effect, a foreign financial institution in an IGA jurisdiction would generally not be
required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the
application of the FATCA provisions and IGAs to instruments such as the Bonds, including whether
withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments
such as the Bonds, are uncertain and may be subject to change. Even if withholding would be required
pursuant to FATCA or an IGA with respect to payments on instruments such as the Bonds, such withholding
would not apply prior to the date that is two years after the date on which final regulations defining foreign
passthru payments are published in the U.S. Federal Register, and Notes characterised as debt (or which are
not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued
on or prior to the date that is six months after the date on which final regulations defining “foreign passthru
payments” are filed with the U.S. Federal Register generally would be “grandfathered” for purposes of
FATCA withholding unless materially modified after such date. Holders should consult their own tax
advisers regarding how these rules may apply to their investment in the Bonds.
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SUBSCRIPTION AND SALE
The Issuer has entered into a subscription agreement with the Managers dated 15 July 2024 (the
“Subscription Agreement”) pursuant to which, and subject to certain conditions contained therein, the
Issuer has agreed to sell to the Managers, and the Managers have agreed to severally, but not jointly,
subscribe and pay for the aggregate principal amount of the Bonds set forth opposite its name below.
Principal amount
of the Bonds to be
subscribed
(US$)
Morgan Stanley Asia Limited ........................................................................................ 2,450,000,000
J.P. Morgan Securities (Asia Pacific) Limited .............................................................. 1,050,000,000
China PA Securities (Hong Kong) Company Limited.................................................... 0
Total.............................................................................................................................. 3,500,000,000
The Subscription Agreement provides that the Issuer will indemnify the Managers and their affiliates
against certain liabilities in connection with the offer and sale of the Bonds. The Subscription Agreement
provides that the obligations of the Managers are subject to certain conditions precedent and entitles the
Managers to terminate it in certain circumstances prior to payment being made to the Issuer.
The Managers and their respective affiliates are full service financial institutions engaged in various
activities, which may include securities trading, commercial and investment banking, financial advisory,
investment management, principal investment, hedging, financing and brokerage activities (“Banking
Services or Transactions”). The Managers and their respective affiliates may have, from time to time,
performed, and may in the future perform, various Banking Services or Transactions with the Issuer for
which they have received, or will receive, fees and expenses.
In connection with the offering of the Bonds, the Managers and/or their respective affiliates, or affiliates
of the Issuer, may act as investors and place orders, receive allocations and trade the Bonds for their own
account and such orders, allocations or trading of the Bonds may be material. Such entities may hold or sell
such Bonds or purchase further Bonds for their own account in the secondary market or deal in any other
securities of the Issuer, and therefore, they may offer or sell the Bonds or other securities otherwise than
in connection with the offering of the Bonds. Accordingly, references herein to the offering of the Bonds
should be read as including any offering of the Bonds to the Managers and/or their respective affiliates, or
affiliates of the Issuer as investors for their own account. Such entities are not expected to disclose such
transactions or the extent of any such investment, otherwise than in accordance with any applicable legal
or regulatory requirements. If such transactions occur, the trading price and liquidity of the Bonds may be
impacted.
Furthermore, it is possible that a significant proportion of the Bonds may be initially allocated to, and
subsequently held by, a limited number of investors. If this is the case, the trading price and liquidity of
trading in the Bonds may be constrained. The Issuer and the Managers are under no obligation to disclose
the extent of the distribution of the Bonds amongst individual investors, otherwise than in accordance with
any applicable legal or regulatory requirements.
In the ordinary course of their various business activities, the Managers and their respective affiliates make
or hold a broad array of investments and actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for their own account and for the accounts of
their customers, and may at any time hold long and short positions in such securities and instruments. Such
investment and securities activities may involve securities and instruments of the Issuer, including the
Bonds and could adversely affect the trading price and liquidity of the Bonds. The Managers and their
affiliates may make investment recommendations and/or publish or express independent research views
(positive or negative) in respect of the Bonds or other financial instruments of the Issuer, and may
recommend to their clients that they acquire long and/or short positions in the Bonds or other financial
instruments of the Issuer.
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Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the
Hong Kong SFC Code of Conduct – Important Notice to CMIs (including private banks)
This notice to CMIs (including private banks) is a summary of certain obligations the SFC Code imposes
on CMIs, which require the attention and cooperation of other CMIs (including private banks). Certain
CMIs may also be acting as OCs for this offering and are subject to additional requirements under the SFC
Code.
Prospective investors who are the directors, employees or major shareholders of the Issuer, a CMI or its
group companies would be considered under the SFC Code as having an Association with the Issuer, the
CMI or the relevant group company. CMIs should specifically disclose whether their investor clients have
any Association when submitting orders for the Bonds. In addition, private banks should take all reasonable
steps to identify whether their investor clients may have any Associations with the Issuer or any CMI
(including its group companies) and inform the Managers accordingly.
CMIs are informed that the marketing and investor targeting strategy for this offering includes institutional
investors, long-only/outright investors, sovereign wealth funds, pension funds, hedge funds, corporates,
private banks/broking companies, family offices and high net worth individuals, index funds, fundamental
hedge funds, China funds, private equity funds, venture capital funds, in each case, subject to the selling
restrictions set out elsewhere in this Offering Circular.
CMIs should ensure that orders placed are bona fide, are not inflated and do not constitute duplicated orders
(i.e. two or more corresponding or identical orders placed via two or more CMIs). CMIs should enquire with
their investor clients regarding any orders which appear unusual or irregular. CMIs should disclose the
identities of all investors when submitting orders for the Bonds (except for omnibus orders where
underlying investor information may need to be provided to any OCs when submitting orders). Failure to
provide underlying investor information for omnibus orders, where required to do so, may result in that
order being rejected. CMIs should not place “X-orders” into the order book.
CMIs should segregate and clearly identify their own proprietary orders (and those of their group
companies, including private banks as the case may be) in the order book and book messages.
CMIs (including private banks) should not offer any rebates to prospective investors or pass on any rebates
provided by the Issuer. In addition, CMIs (including private banks) should not enter into arrangements
which may result in prospective investors paying different prices for the Bonds.
The SFC Code requires that a CMI disclose complete and accurate information in a timely manner on the
status of the order book and other relevant information it receives to targeted investors for them to make
an informed decision. In order to do this, those Managers in control of the order book should consider
disclosing order book updates to all CMIs.
When placing an order for the Bonds, private banks should disclose, at the same time, if such order is placed
other than on a “principal” basis (whereby it is deploying its own balance sheet for onward selling to
investors). Private banks who do not provide such disclosure are hereby deemed to be placing their order
on such a “principal” basis. Otherwise, such order may be considered to be an omnibus order pursuant to
the SFC Code.
In relation to omnibus orders, when submitting such orders, CMIs (including private banks) that are subject
to the SFC Code should disclose underlying investor information in respect of each order constituting the
relevant omnibus order (failure to provide such information may result in that order being rejected).
Underlying investor information in relation to omnibus orders should consist of:
The name of each underlying investor;
A unique identification number for each investor;
Whether an underlying investor has any “Associations” (as used in the SFC Code);
Whether any underlying investor order is a “Proprietary Order” (as used in the SFC Code);
Whether any underlying investor order is a duplicate order.
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Underlying investor information in relation to omnibus order should be sent to:
omnibus_equity@morganstanley.com; Asian_ECM_Syndicate@jpmorgan.com; mego.my.cheng@pingan.com.hk;
Zack.ZX.Li@pingan.com.
To the extent information being disclosed by CMIs and investors is personal and/or confidential in nature,
CMIs (including private banks) agree and warrant: (A) to take appropriate steps to safeguard the
transmission of such information to any OCs; and (B) that they have obtained the necessary consents from
the underlying investors to disclose such information to any OCs. By submitting an order and providing
such information to any OCs, each CMI (including private banks) further warrants that it and the underlying
investors have understood and consented to the collection, disclosure, use and transfer of such information
by any OCs and/or any other third parties as may be required by the SFC Code, including to the Issuer,
relevant regulators and/or any other third parties as may be required by the SFC Code, for the purpose of
complying with the SFC Code, during the bookbuilding process for this offering. CMIs that receive such
underlying investor information are reminded that such information should be used only for submitting
orders in this offering. The Managers may be asked to demonstrate compliance with their obligations under
the SFC Code, and may request other CMIs (including private banks) to provide evidence showing
compliance with the obligations above (in particular, that the necessary consents have been obtained). In
such event, other CMIs (including private banks) are required to provide the relevant Manager with such
evidence within the timeline requested.
General
The distribution of this Offering Circular or any offering material and the offering, sale or delivery of the
Bonds is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this
Offering Circular or any offering material are advised to consult with their own legal advisers as to what
restrictions may be applicable to them and to observe such restrictions. This Offering Circular may not be
used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not
authorised. No action has been taken or will be taken in any jurisdiction that would permit a public offering
of the Bonds, or possession or distribution of this Offering Circular or any amendment or supplement
thereto or any other offering or publicity material relating to the Bonds, in any country or jurisdiction where
action for that purpose is required.
United States
The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be
registered under the U.S. Securities Act and, subject to certain exceptions, may not be offered or sold within
the United States.
The Bonds are being offered and sold outside of the United States in reliance on Regulation S.
In addition, until 40 days after the commencement of the offering of the Bonds, an offer or sale of the Bonds
or Shares within the United States by any dealer (whether or not participating in the offering) may violate
the registration requirements of the Securities Act.
Prohibition of Sales to EEA Retail Investors
Each of the Managers has represented and agreed that it has not offered, sold or otherwise made available
and will not offer, sell or otherwise make available any Bonds to any retail investor in the European
Economic Area. For the purposes of this provision, the expression “retail investor” means a person who
is one (or more) of the following:
(a) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID
II”); or
(b) a customer within the meaning of Directive (EU) 2016/97 (as amended or superseded, the “Insurance
Distribution Directive”), where that customer would not qualify as a professional client as defined
in point (10) of Article 4(1) of MiFID II.
159
Prohibition of Sales to UK Retail Investors
Each of the Managers has represented and agreed that it has not offered, sold or otherwise made available
and will not offer, sell or otherwise make available any Bonds to any retail investor in the United Kingdom.
For the purposes of this provision, the expression “retail investor” means a person who is one (or more)
of the following:
(a) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part
of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); or
(b) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the
“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97,
where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1)
of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA.
United Kingdom
Each Manager has represented and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.
Hong Kong
Each Manager has represented and agreed that:
(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any
Bonds other than (a) to “professional investors” as defined in the SFO and any rules made under the
SFO; or (b) in other circumstances which do not result in the document being a “prospectus” as
defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong
Kong (“C(WUMP)O”) or which do not constitute an offer to the public within the meaning of the
C(WUMP)O; and
(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its
possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Bonds, which is directed at, or the contents of which are likely
to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities
laws of Hong Kong) other than with respect to Bonds which are or are intended to be disposed of only
to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules
made under the SFO.
160
Singapore
Each Manager has acknowledged that this Offering Circular has not been registered as a prospectus with
the Monetary Authority of Singapore. Accordingly, each Manager has represented and agreed that it has not
offered or sold any Bonds or caused the Bonds to be made the subject of an invitation for subscription or
purchase and will not offer or sell any Bonds or cause the Bonds to be made the subject of an invitation
for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this
Offering Circular or any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of the Bonds, whether directly or indirectly, to any person in Singapore other than
(i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act 2001 of Singapore,
as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA or (ii) to an
accredited investor (as defined in Section 4A of the SFA) pursuant to and in accordance with the conditions
specified in Section 275 of the SFA.
Japan
The Bonds have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial
Instruments and Exchange Act. Accordingly, none of the Bonds nor any interest therein may be offered or
sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used
herein means any person resident in Japan, including any corporation or other entity organised under the
laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit
of, a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise
in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations
and ministerial guidelines of Japan in effect at the relevant time.
PRC
Each of the Managers has represented, warranted and agreed that the Bonds are not being offered or sold
and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong
Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws or
other relevant regulations of the PRC.
161
GENERAL INFORMATION
1. Clearing Systems: The Bonds have been accepted for clearance through Euroclear and Clearstream
under Common Code number 285974623 and the International Securities Identification Number for
the Bonds is XS2859746237.
2. Legal Entity Identifier: The Issuer’s Legal Entity Identifier is 529900M9MC28JLN35U89.
3. Listing of Bonds: Application will be made to the Hong Kong Stock Exchange for the listing of, and
permission to deal in, the Bonds issued to Professional Investors only. It is expected that dealing in,
and listing of, the Bonds on the Hong Kong Stock Exchange will commence on 23 July 2024.
3. Listing of the H Shares: Application will be made to the Hong Kong Stock Exchange for the listing
of, and permission to deal in, the H Shares arising on conversion of the Bonds. It is expected that
dealing in, and listing of, such H Shares on the Hong Kong Stock Exchange will commence when they
are issued.
4. Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations in
connection with the issue and performance of the Bonds. The issue of the Bonds was approved by the
resolutions of the board of directors of the Issuer on 15 July 2024 and authorised by the Shareholders
at the annual general meeting of the Issuer on 30 May 2024. The H Shares to be issued upon
conversion of the Bonds are to be issued pursuant to the general mandate to the Directors of the Issuer
at its annual general meeting held on 30 May 2024.
5. No Material Adverse Change: There has been no adverse change, nor any development reasonably
likely to involve an adverse change, in the financial or trading position, condition (financial or
otherwise), general affairs or prospects of the Issuer or the Group since 31 December 2023.
6. Litigation: Neither the Issuer nor any member of the Group is involved in any litigation or arbitration
proceedings which are material in the context of the issue of the Bonds nor, so far as the Issuer is
aware, is any such litigation or arbitration pending or threatened.
7. Available Documents: Copies of the Trust Deed, the Agency Agreement and the Articles of
Association of the Issuer will be available for inspection from the Issue Date at the Issuer’s principal
place of business in Hong Kong at 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong
during normal business hours and (with respect to the Trust Deed and the Agency Agreement) at the
specified office for the time being of the Principal Agent (at all reasonable times during usual business
hours (being 9:00 a.m. to 3:00 p.m., Monday to Friday other than public holidays) following prior
written request and proof of holding and identity to the satisfaction of the Principal Agent), so long
as any of the Bonds is outstanding.
8. Consolidated Financial Statements: The Issuer’s audited consolidated financial statements as at and
for the years ended 31 December 2022 and 2023, which are included in this Offering Circular, have
been audited by Ernst & Young, the independent auditors of the Issuer. The Issuer’s financial results
as at and for the three months ended 31 March 2024, which are included in the section entitled “Recent
Development” of this Offering Circular, have not been audited or reviewed by the independent
auditors.
9. Auditor’s Consent: The independent auditors of the Issuer have agreed to the reproduction in this
Offering Circular of, and all references to, (i) their name and (ii) their audit reports on the
consolidated financial statements of the Issuer as at and for the years ended 31 December 2022 and
2023.
162
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statement as of and for the Year ended 31 December 2023
Independent Auditor’s Report (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
Consolidated Statement of Changes in Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-15
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-16
Audited Consolidated Financial Statement as of and for the Year ended 31 December 2022
Independent Auditor’s Report(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-177
Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-185
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-186
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-187
Consolidated Statement of Changes in Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-189
Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-190
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-191
Note:
(1) The independent auditor’s reports on the Company’s consolidated financial statements as at and for the years ended
31 December 2022 and 2023 set out herein are reproduced from the Company’s annual reports as at and for the years ended
31 December 2022 and 2023. Page references contained in such independent auditor’s reports refer to pages set out in such
annual reports.
F-1
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of Ping An Insurance (Group) Company of China,
Ltd. (the “Company”) and its subsidiaries (the “Group”) set out on pages 188 to 354, which comprise
the consolidated statement of financial position as at 31 December 2023, and the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including material accounting policy information.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 December 2023, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting
Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and have been
properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by
the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code
of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
180 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-2
F-2
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks
of material misstatement of the consolidated financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion
on the accompanying consolidated financial statements.
Key audit matter How our audit addressed the key audit matter
Valuation of insurance contract liabilities
As at 31 December 2023, the Group’s insurance With the support of our internal experts, we
contract liabilities amounted to RMB4,159,801 performed the following audit procedures:
million, representing 40% of total liabilities. We
identified the valuation of insurance contract – Reviewed the Group’s accounting policies in
liabilities as a key audit matter, as it requires relation to the valuation of insurance contract
significant estimates and judgements. liabilities.
The valuation of insurance contract liabilities – Evaluated and tested the design and operating
involves significant judgement and estimates over effectiveness of key controls over the valuation
the eligibility for the measurement approach, the of insurance contract liabilities.
determination of coverage unit and the uncertain
future cash flows. – Evaluated and tested the design and operating
effectiveness of the related IT systems and
controls over the valuation of insurance contract
FINANCIAL STATEMENTS
liabilities, including IT general controls, data
transmission and computational logic of the
related systems.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 181
F-3
F-3
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Valuation of insurance contract liabilities (continued)
Complex actuarial models and actuarial – Evaluated the reasonableness of key judgements
assumptions with highly judgemental nature and assumptions.
are used to support the valuation of insurance
contract liabilities. Key assumptions include – Assessed the appropriateness of the valuation
mortality, morbidity, lapse rates, discount rates, approaches of insurance contract liabilities.
expenses, claim ratios, policy dividends and risk Performed independent recalculation on
adjustment for non-financial risk, etc. insurance contract liabilities of selected typical
insurance products or groups of insurance
Relevant disclosures are included in Note 2.(28), contracts.
Note 3.(4), Note 3.(5), Note 3.(6), Note 3.(7), Note
43 and Note 49.(1) to the consolidated financial – Tested the completeness and accuracy of
statements. the underlying data used in the valuation of
insurance contract liabilities.
– Evaluated the overall reasonableness of the
insurance contract liabilities by performing
movement analysis and assessing the impact of
changes in assumptions.
182 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-4
F-4
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Impairment assessment of loans and advances to
customers, financial assets at amortized cost and
debt financial assets at fair value through other
comprehensive income
As at 31 December 2023, the Group’s loans We evaluated and tested the design and operating
and advances to customers, financial assets effectiveness of key controls over the approval
at amortized cost and debt financial assets at process, post approval credit management, credit
fair value through other comprehensive income rating system, collateral monitoring, deferred
represented 29%, 11% and 23% of total assets and principal and interest payments as well as impairment
the amounts of expected credit loss provision for assessment of loans and advances to customers,
loans and advances to customers, financial assets financial assets at amortized cost and debt financial
at amortized cost and debt financial assets at fair assets at fair value through other comprehensive
value through other comprehensive income were income, including relevant data quality and
RMB100,045 million, RMB46,977 million and RMB8,818 information systems.
million respectively.
We adopted a risk-based sampling approach in our
We identified the impairment assessment of credit review procedures on loans and advances to
loans and advances to customers, financial assets customers, financial assets at amortized cost and
at amortized cost and debt financial assets at debt financial assets at fair value through other
fair value through other comprehensive income comprehensive income. We assessed the debtors’
as a key audit matter, as it involves significant repayment capacity and evaluated the Group’s
management judgements and assumptions. credit rating, taking into consideration post lending
or investing investigation reports, debtors’ financial
The Group uses a number of models and information, collateral valuation reports and other
assumptions in the measurement of expected available information.
credit losses, for example:
With the support of our internal experts, we
– Significant increase in credit risk – The evaluated and tested the important parameters of the
selection of criteria for identifying significant expected credit loss model, management’s significant
FINANCIAL STATEMENTS
increase in credit risk is highly dependent on judgements and related assumptions, mainly focusing
judgement and may have a significant impact on the following aspects.
on the expected credit losses for loans and
advances to customers, financial assets at 1) Expected credit loss model:
amortized cost and debt financial assets
at fair value through other comprehensive – In response to the macroeconomic changes, we
income with longer remaining periods to assessed the reasonableness of the expected
maturity. credit loss model methodology and related
parameters, including probability of default, loss
given default, exposure at default, and significant
increase in credit risk.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 183
F-5
F-5
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Impairment assessment of loans and advances to
customers, financial assets at amortized cost and
debt financial assets at fair value through other
comprehensive income (continued)
– Models and parameters – Inherently complex – Assessed the forward-looking information
models are used to measure expected credit management used to determine expected credit
losses. Modelled parameters have numerous losses, including the forecasts of macroeconomic
inputs and the parameter estimation involves variables and the assumptions and weightings of
many judgements and assumptions. multiple macroeconomic scenarios.
– Forward-looking information – Expert – Evaluated the models and the related
judgement is used to create macroeconomic assumptions used in individual impairment
forecasts and to consider the impact on assessment and analysed the amount, timing and
expected credit losses under multiple likelihood of management’s estimated future cash
economic scenarios given different weights. flows, especially cash flows from collateral.
– Individual impairment assessment – 2) Design and operating effectiveness of key
Identifying credit impaired loans and controls:
advances to customers, financial assets at
amortized cost and debt financial assets – Evaluated and tested the data and processes
at fair value through other comprehensive used to determine expected credit losses,
income requires consideration of a range including business data, internal credit rating
of factors, and individual impairment data, macroeconomic data, as well as impairment
assessments are dependent upon estimates system computational logic, inputs and interfaces
of future cash flows. among relevant systems.
Relevant disclosures are included in Note 2.(12), – Evaluated and tested key controls over expected
Note 3.(3), Note 24, Note 26, Note 27 and Note credit loss models, including approval of
49.(3) to the consolidated financial statements. model changes, ongoing monitoring of model
performance, model validation and parameter
calibration.
We evaluated and tested the design and operating
effectiveness of internal controls related to
disclosures of credit risk and impairment allowance.
184 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-6
F-6
OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The directors of the Company are responsible for the other information. The other information comprises
the information included in the Annual Report, other than the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial statements
that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements
of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors of the Company are responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors of the Company either
intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.
The directors of the Company are assisted by the Audit and Risk Management Committee in discharging
their responsibilities for overseeing the Group’s financial reporting process.
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 185
F-7
F-7
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
186 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-8
F-8
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
We communicate with the Audit and Risk Management Committee regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Audit and Risk Management Committee with a statement that we have complied with
relevant ethical requirements regarding independence and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit and Risk Management Committee, we determine those
matters that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Benny Bing Yin
Cheung.
Ernst & Young
Certified Public Accountants
Hong Kong
21 March 2024
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 187
F-9
F-9
Consolidated Income Statement
For the year ended 31 December 2023
(in RMB million) Notes 2023 2022
(Restated)
Insurance revenue 6 536,440 525,981
Interest revenue from banking operations 7 227,552 228,784
Interest revenue from non-banking operations 8 118,503 115,933
Fees and commission revenue from non-insurance
operations 9 45,806 45,982
Investment income 10 33,324 (2,311)
Share of profits and losses of associates and joint ventures 1,434 10,165
Other revenues and other gains 11 68,804 60,652
Total revenue 1,031,863 985,186
Insurance service expenses 12 (440,178) (422,221)
Allocation of reinsurance premiums paid (14,179) (14,919)
Less: Amount recovered from reinsurer 10,448 10,605
Net insurance finance expenses for insurance contracts
issued 43 (123,959) (99,933)
Less: Net reinsurance finance income for reinsurance
contracts held 542 564
Interest expenses on banking operations 7 (108,605) (97,688)
Fees and commission expenses on non-insurance operations 9 (8,773) (9,928)
Net impairment losses on financial assets 13 (77,744) (80,553)
Net impairment losses on other assets 14 (1,327) (1,367)
Foreign exchange gains/(losses) 120 3,144
General and administrative expenses 15 (83,877) (79,815)
Changes in insurance premium reserves (230) (78)
Interest expenses on non-banking operations (24,346) (22,698)
Other expenses 15 (39,638) (27,964)
Total expenses (911,746) (842,851)
Profit before tax 15 120,117 142,335
Income tax 16 (10,843) (7,518)
Profit for the year 109,274 134,817
Attributable to:
– Owners of the parent 85,665 111,008
– Non-controlling interests 23,609 23,809
109,274 134,817
Earnings per share attributable to ordinary equity holders
of the parent: RMB RMB
– Basic 18 4.84 6.36
– Diluted 18 4.74 6.27
188 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-10
F-10
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(in RMB million) 2023 2022
(Restated)
Profit for the year 109,274 134,817
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Changes in the fair value of debt instruments at fair value through
other comprehensive income 91,144 13,944
Credit risks provision of debt instruments at fair value through
other comprehensive income (314) 1,530
Insurance finance expenses for insurance contracts issued (117,017) (36,851)
Reinsurance finance income for reinsurance contracts held 240 10
Reserve from cash flow hedging instruments 358 (350)
Exchange differences on translation of foreign operations 812 3,914
Share of other comprehensive income of associates and joint
ventures (579) 35
Items that will not be reclassified to profit or loss:
Changes in the fair value of equity instruments at fair value through
other comprehensive income 17,575 6,254
Insurance finance expenses for insurance contracts issued (11,062) (4,413)
Share of other comprehensive income of associates and joint
ventures (16) 59
Other comprehensive income for the year, net of tax (18,859) (15,868)
Total comprehensive income for the year 90,415 118,949
Attributable to:
– Owners of the parent 66,819 94,484
– Non-controlling interests 23,596 24,465
90,415 118,949
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 189
F-11
F-11
Consolidated Statement of Financial Position
As at 31 December 2023
(in RMB million) Notes 31 December 2023 31 December 2022 1 January 2022
(Restated) (Restated)
Assets
Cash and amounts due from banks and other
financial institutions 19 804,077 774,841 592,151
Balances with the Central Bank 20 270,976 281,115 308,348
Financial assets purchased under reverse
repurchase agreements 21 167,660 91,514 61,583
Accounts receivable 35,636 36,118 26,628
Derivative financial assets 22 44,978 29,278 30,957
Insurance contract assets 43 3 – –
Reinsurance contract assets 22,215 20,615 19,926
Finance lease receivable 23 180,674 186,858 200,701
Loans and advances to customers 24 3,318,122 3,238,054 2,980,975
Financial assets at fair value through profit or loss 25 1,803,047 1,640,519 1,445,641
Financial assets at amortized cost 26 1,243,353 1,124,035 1,064,246
Debt financial assets at fair value through other
comprehensive income 27 2,637,008 2,500,790 2,265,326
Equity financial assets at fair value through other
comprehensive income 28 264,877 264,771 277,883
Investments in associates and joint ventures 29 258,877 280,793 284,061
Statutory deposits for insurance operations 30 14,903 14,444 12,606
Investment properties 31 121,406 114,763 86,041
Property and equipment 32 50,401 53,657 49,758
Intangible assets 33 99,078 99,411 68,462
Right-of-use assets 34 9,794 12,580 14,185
Deferred tax assets 46 101,337 89,321 64,289
Other assets 35 134,995 156,463 140,312
Total assets 11,583,417 11,009,940 9,994,079
Equity and liabilities
Equity
Share capital 36 18,210 18,280 18,280
Reserves 37 263,752 268,724 267,475
Treasury shares 40 (5,001) (10,996) (9,895)
Retained profits 37 622,050 593,183 540,629
Equity attributable to owners of the parent 899,011 869,191 816,489
Non-controlling interests 37 329,953 316,805 265,449
Total equity 1,228,964 1,185,996 1,081,938
190 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-12
F-12
(in RMB million) Notes 31 December 2023 31 December 2022 1 January 2022
(Restated) (Restated)
Liabilities
Due to banks and other financial institutions 41 963,718 923,088 797,646
Financial liabilities at fair value through profit or
loss 48,619 84,659 57,376
Derivative financial liabilities 22 44,531 39,738 35,049
Assets sold under agreements to repurchase 42 241,803 271,737 127,718
Accounts payable 8,858 10,349 6,663
Income tax payable 7,117 16,076 16,247
Insurance contract liabilities 43 4,159,801 3,671,177 3,340,870
Reinsurance contract liabilities 53 105 –
Customer deposits and payables to brokerage
customers 44 3,534,539 3,431,999 3,002,049
Bonds payable 45 964,007 931,098 1,097,523
Lease liabilities 34 10,234 13,013 14,208
Deferred tax liabilities 46 14,148 14,217 13,605
Other liabilities 47 357,025 416,688 403,187
Total liabilities 10,354,453 9,823,944 8,912,141
Total equity and liabilities 11,583,417 11,009,940 9,994,079
The financial statements on pages 188 to 354 were approved and authorized for issue by the Board of
Directors on 21 March 2024 and were signed on its behalf.
MA Mingzhe XIE Yonglin
Director Director
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 191
F-13
F-13
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
For the year ended 31 December 2023
Reserves
Insurance
finance Exchange
Financial expenses differences
assets at for insurance Surplus on translation Non-
Share Share FVOCI contracts reserve General of foreign Treasury Retained controlling Total
(in RMB million) capital premium reserves issued Others funds reserves operations shares profits interests equity
As at 31 December 2022 18,280 118,095 (30,778) – 39,099 12,164 115,104 2,046 (10,996) 595,661 316,623 1,175,298
Changes in accounting policies – – 115,744 (84,153) (21,361) – 2,764 – – (2,478) 182 10,698
As at 1 January 2023 18,280 118,095 84,966 (84,153) 17,738 12,164 117,868 2,046 (10,996) 593,183 316,805 1,185,996
Profit for the year – – – – – – – – – 85,665 23,609 109,274
Other comprehensive income for the year – – 107,935 (127,456) (80) – – 755 – – (13) (18,859)
Total comprehensive income for the year – – 107,935 (127,456) (80) – – 755 – 85,665 23,596 90,415
Dividends declared (Note 17) – – – – – – – – – (44,002) – (44,002)
Appropriations to general reserves – – – – – – 12,485 – – (12,485) – –
Disposal of equity investments at fair value through
other comprehensive income – – 2,998 (2,687) – – – – – (311) – –
Dividend paid to non-controlling interests – – – – – – – – – – (7,023) (7,023)
Equity transactions with non-controlling interests – – – – (106) – – – – – (1,817) (1,923)
Contributions from non-controlling interests – – – – – – – – – – 48 48
Key Employee Share Purchase Plan (Note 38) – – – – (30) – – – – – – (30)
Long-term Service Plan (Note 39) – – – – (3,979) – – – – – – (3,979)
Cancellation of repurchased shares (Note 36) (70) (5,925) – – – – – – 5,995 – – –
Other equity instruments issued/redeemed by
subsidiaries – – – – – – – – – – (2,675) (2,675)
Others – 11,569 – – (451) – – – – – 1,019 12,137
As at 31 December 2023 18,210 123,739 195,899 (214,296) 13,092 12,164 130,353 2,801 (5,001) 622,050 329,953 1,228,964
For the year ended 31 December 2022 (Restated)
Reserves
Insurance
finance Exchange
Financial expenses differences
assets at for insurance Surplus on translation Non-
Share Share FVOCI contracts reserve General of foreign Treasury Retained controlling Total
(in RMB million) capital premium reserves issued Others funds reserves operations shares profits interests equity
As at 31 December 2021 18,280 111,598 (36,413) – 47,302 12,164 101,108 (1,573) (9,895) 569,834 265,318 1,077,723
Changes in accounting policies – – 99,124 (41,884) (25,964) – 2,013 – – (29,205) 131 4,215
As at 1 January 2022 18,280 111,598 62,711 (41,884) 21,338 12,164 103,121 (1,573) (9,895) 540,629 265,449 1,081,938
Profit for the year – – – – – – – – – 111,008 23,809 134,817
Other comprehensive income for the year – – 21,161 (41,062) (242) – – 3,619 – – 656 (15,868)
Total comprehensive income for the year – – 21,161 (41,062) (242) – – 3,619 – 111,008 24,465 118,949
Dividends declared (Note 17) – – – – – – – – – (43,820) – (43,820)
Appropriations to general reserves – – – – – – 14,747 – – (14,747) – –
Disposal of equity investments at fair value through
other comprehensive income – – 1,094 (1,207) – – – – – 113 – –
Dividend paid to non-controlling interests – – – – – – – – – – (6,585) (6,585)
Acquisition of subsidiaries – – – – – – – – – – 42,437 42,437
Equity transactions with non-controlling interests – – – – 96 – – – – – (2,959) (2,863)
Contributions from non-controlling interests – – – – – – – – – – 916 916
Key Employee Share Purchase Plan (Note 38) – – – – 85 – – – – – – 85
Long-term Service Plan (Note 39) – – – – (4,113) – – – – – – (4,113)
Acquisition of shares – – – – – – – – (1,101) – – (1,101)
Other equity instruments issued/redeemed by
subsidiaries – – – – – – – – – – (7,164) (7,164)
Others – 6,497 – – 574 – – – – – 246 7,317
As at 31 December 2022 18,280 118,095 84,966 (84,153) 17,738 12,164 117,868 2,046 (10,996) 593,183 316,805 1,185,996
192 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-14
F-14
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
(in RMB million) Notes 2023 2022
(Restated)
Net cash flows from operating activities 53 360,403 476,776
Cash flows from investing activities
Purchases of property and equipment, intangibles and other
long-term assets (7,810) (8,871)
Proceeds from disposal of property and equipment,
intangibles and other long-term assets, net 1,068 568
Proceeds from disposal of investments 1,756,672 2,012,393
Purchases of investments (2,066,919) (2,406,664)
Acquisition of subsidiaries, net – (37,620)
Disposal of subsidiaries, net 65 507
Interest received 139,390 146,953
Dividends received 73,533 76,974
Net cash flows used in investing activities (104,001) (215,760)
Cash flows from financing activities
Capital injected into subsidiaries by non-controlling interests 2,999 3,104
Proceeds from bonds issued 1,064,814 773,258
(Decrease)/increase in assets sold under agreements to
repurchase of insurance operations, net (81,822) 118,241
Proceeds from borrowings 107,295 186,022
Repayment of borrowings (1,202,227) (1,206,226)
Interest paid (22,380) (28,218)
Dividends paid (50,707) (49,582)
(Decrease)/increase in insurance placements from banks
and other financial institutions, net (5,166) 2,266
Payment of acquisition of shares – (1,101)
Payment of shares purchased for Long-term Service Plan (4,451) (4,439)
FINANCIAL STATEMENTS
Repayment of lease liabilities (5,522) (6,533)
Payment of redemption for other equity instruments by
subsidiaries (5,650) (10,100)
Others (19,239) (7,565)
Net cash flows used in financing activities (222,056) (230,873)
Net increase in cash and cash equivalents 34,346 30,143
Net foreign exchange differences 1,924 8,580
Cash and cash equivalents at the beginning of the year 444,202 405,479
Cash and cash equivalents at the end of the year 52 480,472 444,202
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 193
F-15
F-15
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
1. CORPORATE INFORMATION
Ping An Insurance (Group) Company of China, Ltd. (the “Company”) was registered in Shenzhen, the
People’s Republic of China (the “PRC”) on 21 March 1988. The business scope of the Company includes
investing in insurance enterprises, supervising and managing various domestic and overseas businesses of
subsidiaries, conducting insurance funds investment, domestic and overseas insurance and other business
approved by regulators. The Company and its subsidiaries are collectively referred to as the Group. The
Group mainly provides integrated financial products and services and is engaged in life insurance, property
and casualty insurance, trust, securities, banking and other businesses.
The registered office address of the Company is 47th, 48th, 109th, 110th, 111th and 112th Floors, Ping An
Finance Center, No. 5033 Yitian Road, Futian District, Shenzhen, Guangdong Province, China.
These consolidated financial statements are presented in millions of Renminbi (“RMB”) unless otherwise
stated.
2. MATERIAL ACCOUNTING POLICIES
(1) BASIS OF PREPARATION
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRSs”), amendments to IFRSs and interpretations issued by the International
Accounting Standards Board (“IASB”), also comply with the applicable disclosure provisions of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the applicable
disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the
historical cost convention, except for some financial instruments, insurance contract assets or liabilities and
reinsurance contract assets or liabilities.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements are disclosed in
Note 3.
(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES
Changes in accounting policies
The Group adopted International Financial Reporting Standard 17 Insurance Contracts (“IFRS 17”) on 1
January 2023 and restated the comparative information in accordance with IFRS 17. The adoption of IFRS 17
has brought about major changes in the recognition for insurance revenue and insurance service expenses,
the measurement of insurance contract liabilities and the presentation of financial statements. The new
accounting policies in relation to insurance contracts are set out in Note 2.(28).
194 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-16
F-16
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES (CONTINUED)
Changes in accounting policies (Continued)
In accordance with IFRS 17, the Group is not required to disclose the amount of the adjustment for each
financial statement line item affected for the current period and each prior period presented. Therefore,
the Group has only summarized the impact of the adoption of IFRS 17 on key financial indicators for the
comparative period, as disclosed below:
Before the adoption After the adoption
of IFRS 17 Impact of the of IFRS 17
31 December 2022 adoption of IFRS 17 31 December 2022
Total assets 11,137,168 (127,228) 11,009,940
Total liabilities 9,961,870 (137,926) 9,823,944
Equity attributable to owners of the parent 858,675 10,516 869,191
The Group has adopted IFRS 9 Financial Instruments before 1 January 2023. In accordance with IFRS 17, the
Group reassessed its business models for managing financial assets and redetermined the classification
of financial assets held for activities related to insurance contracts based on the measurement models of
the insurance contracts on 1 January 2023. For financial assets derecognized between 1 January 2022 and
31 December 2022, the Group has applied the classification overlay to reclassify them item-by-item based
on same classification method, and adjusted the comparative information. The major changes in the above
reclassification of financial assets were disclosed as follows:
Before reclassification Impact of the After reclassification
31 December 2022 reclassification 31 December 2022
Financial assets at amortized cost 3,004,502 (1,880,467) 1,124,035
Debt financial assets at fair value through other
comprehensive income 467,031 2,033,759 2,500,790
In accordance with IFRS 17, considering that retrospective approach is impracticable for some of the
FINANCIAL STATEMENTS
groups of insurance contracts, the Group has applied the modified retrospective approach or the fair value
approach on the transition date.
(3) ISSUED BUT NOT YET EFFECTIVE STANDARDS, AMENDMENTS AND INTERPRETATIONS
The Group has not adopted the following revised IFRSs that have been issued but are not yet effective.
Effective for annual periods
Standards/Amendments Content beginning on or after
Amendments to IAS 1 Classification of Liabilities as 1 January 2024
Current or Non-current
Amendments to IFRS 16 Lease Liability in a Sale and 1 January 2024
Leaseback
These amendments are not expected to have any significant impact on the Group’s financial statements.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 195
F-17
F-17
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(4) BUSINESS COMBINATIONS AND GOODWILL
Business combinations that are not under common control are accounted for using the acquisition method.
The cost of an acquisition is measured at the acquisition date fair value which is the sum of the acquisition
date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners
of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For
each business combination, the Group elects whether to measure the non-controlling interests in the
acquiree that are present ownership interests and entitle their holders to a proportionate share of net
assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable
net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related
costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition
date. Contingent consideration classified as an asset or a liability that is a financial instrument and within
the scope of IFRS 9 is measured at fair value with changes in fair value either recognized in profit or loss or
as a change to other comprehensive income. If the contingent consideration is not within the scope of IFRS
9, it is measured in accordance with the appropriate IFRSs. Contingent consideration that is classified as
equity is not remeasured and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred,
the amount recognized for non-controlling interests and any fair value of the Group’s previously held equity
interests in the acquiree over the net identifiable assets acquired and liabilities assumed. If the sum of this
consideration and the amount recognized for non-controlling interests and any fair value of the Group’s
previously held equity interests in the acquiree is lower than the fair value of the net assets acquired, the
difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill
is tested for impairment annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31
December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units,
that are expected to benefit from the synergies of the combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
cash-generating units) to which the goodwill relates. Where the recoverable amount of the
cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss
is recognized. An impairment loss recognized for goodwill is not reversed in subsequent periods.
Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and
part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss on the disposal.
Goodwill disposed of in these circumstances is measured based on the relative value of the operation
disposed of and the portion of the cash-generating unit retained.
196 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-18
F-18
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(5) BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial statements
of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from
intra-group transactions and dividends, are eliminated on consolidation in full, unless the transaction
provides evidence of an impairment of the transferred asset.
Total comprehensive income within a subsidiary is still attributed to the non-controlling interest even if it
results in a deficit balance. If the Group loses control over a subsidiary, it:
(a) Derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) Derecognizes the carrying amount of any non-controlling interest;
(c) Derecognizes the cumulative translation differences recorded in equity;
(d) Recognizes the fair value of the consideration received;
(e) Recognizes the fair value of any investment retained;
(f) Recognizes any surplus or deficit in profit or loss; and
(g) Reclassifies the Group’s share of components previously recognized in other comprehensive income to
profit or loss or retained earnings, as appropriate.
FINANCIAL STATEMENTS
(6) SUBSIDIARIES
A subsidiary is an entity (including structured entities) over which the Company has control. The Company
controls an entity when the Company has power over an entity, is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect these returns through its power
over the entity. The results of subsidiaries are included in the Company’s income statement to the extent
of dividends received and receivable. The Company’s investments in subsidiaries are stated at cost less any
impairment losses.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 197
F-19
F-19
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(7) STRUCTURED ENTITIES
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant
factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks
only, and the relevant activities are directed by means of contractual or related arrangements.
The Group determines whether it is an agent or a principal in relation to those structured entities in which
the Group acts as an asset manager on management’s judgement. If an asset manager is agent, it acts
primarily on behalf of others and so does not control the structured entity. It may be principal if it acts
primarily for itself, and therefore controls the structured entity.
The Group has determined that all of its fund products, trust products, debt investment plans, equity
investment plans and asset funding plans, which are not controlled by the Group, are unconsolidated
structured entities. Fund products, trust products, equity investment plans and asset funding plans are
managed by affiliated or unaffiliated trust companies or asset managers and invest the funds raised in
bonds, stocks and loans or equities of other companies. Debt investment plans are managed by affiliated
or unaffiliated asset managers and its major investment objectives are infrastructure funding projects. Fund
products, trust products, debt investment plans, equity investment plans and asset funding plans finance
their operations by issuing beneficiary certificates which entitle the holders to agreed stake according
to contractual terms in the respective fund products’, trust products’, debt investment plans’, equity
investment plans’ and asset funding plans’ income.
The Group holds beneficiary certificates in its fund products, trust products, debt investment plans, equity
investment plans and asset funding plans.
(8) ASSOCIATES
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has a long-term
interest of generally not less than 20% of the equity voting rights and over which it is in a position to
exercise significant influence.
The Group’s investments in associates are stated in the consolidated statement of financial position at
the Group’s share of net assets under the equity method of accounting, less any impairment losses. The
Group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of
post-acquisition movements in other comprehensive income is recognized in other comprehensive income
with a corresponding adjustment to the carrying amount of the investment. When the Group’s share
of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group does not recognize further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from
transactions between the Group and its associates are eliminated to the extent of the Group’s investments
in the associates, except where unrealized losses provide evidence of an impairment of the asset
transferred. Goodwill arising from the acquisition of associates is included in the carrying amount of the
investment and is neither amortized nor individually tested for impairment.
The financial statements of the associates are prepared for the same reporting period as the Group. Where
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognize
impairment losses on the Group’s investments in its associates. The Group determines at each reporting
date whether there is any objective evidence that the investment in the associate is impaired. If this is the
case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value and recognizes the amount in the income statement.
198 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-20
F-20
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(8) ASSOCIATES (CONTINUED)
Upon loss of significant influence over the associate, the Group measures and recognizes any remaining
investment at its fair value. Any differences between the carrying amount of the associate upon loss of
significant influence and the fair value of the remaining investment, as well as the gain on disposal of the
associates, are recognized in profit or loss.
The results of associates are included in the Group’s income statement to the extent of dividends received
and receivable. The Group’s investments in associates are treated as non-current assets and are stated at
cost less any impairment losses.
(9) JOINT VENTURES
The Group has assessed the nature of its joint ventures and determined them to be joint ventures. The
Group has rights to the net assets of these joint ventures. The Group’s investments in its joint ventures are
accounted for using the equity method of accounting, less any impairment losses. Refer to Note 2.(8) for
details of the equity method of accounting.
(10) FOREIGN CURRENCIES
These financial statements are presented in RMB, which is the Company’s functional and presentation
currency. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
Foreign currency transactions recorded by the entities in the Group are initially recorded using their
respective functional currency rates prevailing at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated at the functional currency rates of exchange
ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items
are recognized in the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
FINANCIAL STATEMENTS
the exchange rates as at the dates of initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was determined.
The gain or loss on change arising on translation of a non-monetary item measured at fair value is treated
in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference
on the item whose fair value gain or loss is recognized in other comprehensive income or profit or loss is
also recognized in profit or loss and other comprehensive income, respectively).
The functional currency of most of overseas subsidiaries is the Hong Kong dollar. At the end of the
reporting period, the assets and liabilities of these overseas subsidiaries are translated into the presentation
currency of the Company at the exchange rates prevailing at the end of the reporting period and their
income statements are translated into RMB at the average exchange rate for the year. The resulting
exchange differences are recognized in other comprehensive income and accumulated in the exchange
differences on translation of foreign operations reserve. On disposal of a foreign operation, the component
of other comprehensive income relating to that particular foreign operation is recognized in the income
statement.
For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are
translated into RMB at the exchange rates for their functional and currencies ruling at the dates of the
cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are
translated into RMB at the weighted average exchange rate for the year.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 199
F-21
F-21
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(11) CASH AND CASH EQUIVALENTS
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash on
hand, demand deposits, current accounts with the Central Bank and short term highly liquid investments
including assets purchased under reverse repurchase agreements and others which are readily convertible
into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short
maturity of generally within three months when acquired.
(12) FINANCIAL ASSETS
Recognition
The Group shall recognize a financial asset or a financial liability in its statement of financial position when,
and only when, it becomes a party to the contractual provisions of the instrument.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs that are incremental and directly attributable
to the acquisition or issue of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Classification and measurement
The Group classifies its financial assets in the following measurement categories, which depends on the
Group’s business model for managing the financial assets and the contractual terms of the cash flows:
(a) those to be measured at amortized cost (“AC”);
(b) those to be measured at fair value through other comprehensive income (“FVOCI”); or
(c) those to be measured at fair value through profit or loss (“FVPL”).
The Group determines the classification of debt investments according to its business model and the
contractual cash flow characteristics of the financial assets. The debt investments shall be classified as
FVPL if the cash flows characteristics cannot pass the test on solely payments of principal and interest on
the principal amount. Otherwise, the classification of debt investments will depend on the business model
provided the fair value option is not elected. Investments in equity instruments are classified as FVPL in
general, except those designated as at FVOCI.
200 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-22
F-22
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Classification and measurement (Continued)
Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s
perspective, such as loans, government and corporate bonds, etc. Subsequent measurement of
debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its
debt instruments:
(a) Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest, and that are not designated at FVPL are measured
at amortized cost. Interest income from these financial assets is included in the interest revenue
using the effective interest rate method. Any gain or loss arising from derecognition or impairment is
recognized directly in profit or loss. Such assets held by the Group mainly include cash and amounts
due from banks and other financial institution, balances with the Central Bank, accounts receivable,
finance lease receivable, financial assets at AC, loans and advances to customers measured at AC, etc.
(b) FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, and that are not
designated at FVPL are measured at FVOCI. Movements in the carrying amount are taken through
other comprehensive income, except for the recognition of impairment gains or losses, interest income
and foreign exchange gains and losses on the instrument’s amortized cost which are recognized
in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously
recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income
from these financial assets is included in the interest revenue using the effective interest rate method.
Such assets held by the Group mainly include debt financial assets at FVOCI and loans and advances
to customers measured at FVOCI, etc.
FINANCIAL STATEMENTS
(c) FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. The
gains or losses from fair value changes on the debt investments measured at FVPL are recognized
in profit or loss. The Group also irrevocably designate financial assets at fair value through profit or
loss if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being
measured on different bases.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has
elected to present fair value gains and losses on equity investments in other comprehensive income, there
is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition
of the investment. Dividends, representing a return on such investments, continue to be recognized in
profit or loss when the Group’s right to receive payments is established.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 201
F-23
F-23
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Impairment
Expected credit loss refers to the weighted average amount of credit loss of financial instruments based
on the probability of default. Credit loss refers to the difference between all contractual cash flows that are
due to the entity in accordance with the contract and all the cash flows that the entity expects to receive,
discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or
originated credit-impaired financial assets).
The Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortized cost and FVOCI, and with the exposure arising from loan commitments
and financial guarantee contracts that are not accounted for as “insurance contracts”. A number of
significant judgements are required in measuring the expected credit loss (“ECL”), such as:
(a) Choosing appropriate models and assumptions for the measurement of ECL including exposure at
default (EAD), probability of default (PD), loss given default (LGD), etc.;
(b) Determining criteria for significant changes in credit risk;
(c) Forward-looking information.
For the financial instruments subject to ECL measurement, the Group assesses the significant increase in
credit risk since initial recognition or whether an instrument is considered to be credit impaired, outlines a
“three-stage” model expected credit loss models are established and staging definition are set for each of
these financial assets class. Incorporating forward-looking information, expected credit losses for financial
assets are recognized into the different stages and measured the impairment provisions respectively.
Stage 1: A financial instrument that is not credit-impaired on initial recognition is classified in “Stage
1” and has its credit risk continuously monitored by the Group. The impairment provisions are
measured at an amount equal to the 12-month expected credit losses for the financial assets
which are not considered to have significantly increased in credit risk since initial recognition;
Stage 2: If a significant increase in credit risk (“SICR”) since initial recognition is identified, the financial
instrument is moved to “Stage 2” but is not yet deemed to be credit-impaired. The impairment
provisions are measured based on expected credit losses on a lifetime basis;
Stage 3: If the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”.
The impairment provisions are measured based on expected credit losses on lifetime basis.
For the financial instruments at Stage 1 and Stage 2, the interest income is calculated based on its gross
carrying amount (i.e., amortized cost) before adjusting for impairment provision using the effective interest
method. For the financial instruments at Stage 3, the interest income is calculated based on the carrying
amount of the asset, net of the impairment provision, using the effective interest method. Financial assets
that are originated or purchased credit impaired are financial assets that are impaired at the time of initial
recognition, and the impairment provision for these assets is the expected credit loss for the entire lifetime
since initial recognition as purchased or originated credit-impaired financial assets.
The Group recognizes or reverses the impairment provision through profit or loss. For debt instruments
measured at FVOCI, impairment gains or losses are included in the net impairment losses on financial
instruments and correspondingly reduce the accumulated changes in fair value included in the other
comprehensive income reserves of equity.
202 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-24
F-24
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Impairment (Continued)
For account receivables, the Group refers to historical experience of credit loss, combines with current
situation and forward-looking information, formulate the lifetime expected credit loss of the financial
assets.
For loan commitments’ the loss allowance is recognized as a provision. However, for contracts that include
both a loan and an undrawn commitment and the Group cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit
losses on the undrawn commitment are recognized together with the loss allowance for the loan. To
the extent that the combined expected credit losses exceed the gross carrying amount of the loan, the
expected credit losses are recognized as a provision.
Derecognition
Financial assets are derecognized when:
(a) the contractual rights to receive the cash flows from the financial assets have expired;
(b) they have been transferred and the Group transfers substantially all the risks and rewards of
ownership;
(c) they have been transferred and the Group neither transfers nor retains substantially all the risks and
rewards of ownership and the Group has not retained control.
When the equity financial assets measured at FVOCI are derecognized, the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to retained profits. When
the other financial assets are derecognized, the cumulative gain or loss previously recognized in other
comprehensive income is reclassified from equity to profit or loss.
FINANCIAL STATEMENTS
The Group writes off financial assets, in whole or in part, when it has exhausted all practical recovery
efforts and has concluded there is no expectation of recovery. Indicators that there is no reasonable
expectation of recovery include (i) ceasing enforcement activity and (ii) where the Group’s recovery
method is foreclosing on collateral and the value of the collateral is such that there is no reasonable
expectation of recovering in full.
(13) FINANCIAL LIABILITIES
At initial recognition, the Group classifies a financial liability at fair value through profit or loss or other
financial liabilities. The Group measures a financial liability at its fair value plus, in the case of a financial
liability not at fair value through profit or loss, transaction costs that are incremental and directly
attributable to the acquisition or issue of the financial liability. Transaction costs of financial liabilities
carried at FVPL are expensed in profit or loss.
When a financial liability (or part of it) is extinguished, the Group derecognizes the financial liability (or
part of it). The difference between the carrying amount of the derecognized liability and the consideration
is recognized in profit or loss.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 203
F-25
F-25
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(13) FINANCIAL LIABILITIES (CONTINUED)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and other
financial liabilities designated as such at initial recognition. Financial liabilities held for trading are the
financial liabilities that:
(a) are incurred principally for the purpose of repurchasing in the near term;
(b) on initial recognition are part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) are derivatives (except for a derivative that is a designated and effective hedging instrument or a
financial guarantee contract).
The above financial liabilities are subsequently measured at fair value. All the realized and unrealized gains/
(losses) are recognized in profit or loss.
The Group may, at initial recognition, designate a financial liability as at fair value through profit or loss
when one of the following criteria is met:
(a) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise from measuring assets or liabilities or recognizing the gains and losses on them on different
bases;
(b) a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy, and information about the
group is provided internally on that basis to the entity’s key management personnel;
(c) a contract contains one or more embedded derivatives, with the host being not an asset within the
scope of IFRS 9, and the embedded derivative(s) do(es) significantly modify the cash flows.
Once designated as financial liabilities at fair value through profit or loss at initial recognition, the financial
liabilities shall not be reclassified to other financial liabilities in subsequent periods. Financial liabilities
designated at FVPL are subsequently measured at fair value. Any changes in fair value are recognized in
profit or loss, except for changes in fair value arising from changes in the Group’s own credit risk which are
recognized in other comprehensive income. Changes in fair value due to changes in the Group’s own credit
risk are not subsequently reclassified to profit or loss upon derecognition of the liabilities.
Other financial liabilities
The Group measures other financial liabilities subsequently at amortized cost, using the effective interest
method. Other financial liabilities of the Group mainly include customer deposits and payables to brokerage
customers, short-term borrowings, long-term borrowings and bonds payable, etc.
204 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-26
F-26
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(13) FINANCIAL LIABILITIES (CONTINUED)
Financial guarantee contracts
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made
to reimburse the holder for a loss, which incurs because the specified debtor fails to make a payment
when due in accordance with the terms of a debt instrument. The Group initially measures such contracts
at fair value. The fair value at inception is likely to equal the premium received. This amount is recognized
rateably over the period of the contract in fees and commission income. Subsequently, the liabilities
arising from the financial guarantee contracts are measured at the higher of premium received on the
initial recognition less income recognized in accordance with the principles of IFRS 15, and the amount of
impairment provision calculated as described in Note 2.(12) -impairment.
Apart from the above financial guarantee contracts issued by the Group’s banking operations which are
accounted for under IFRS 9, the Group has also regarded certain financial guarantee contracts as insurance
contracts.
(14) DERIVATIVE FINANCIAL INSTRUMENTS
The Group’s derivative financial instruments mainly include interest rate swaps, forward currency contracts
and swap transaction, credit swap and stock index futures, etc. Such derivative financial instruments are
initially recognized at fair value on the date of which the related derivative contracts are entered into and
are subsequently measured at fair value. All derivatives are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Except for those related to hedge accounting, the gains or losses from fair value changes of derivatives are
recognized in profit or loss.
An embedded derivative is a component of a hybrid contract that also includes a non-derivative
host-with the effect that some of the cash flows of the combined instrument vary in a way similar to a
stand-alone derivative.
FINANCIAL STATEMENTS
If a hybrid contract contains a host that is not an asset within the scope of IFRS 9, an embedded derivative
shall be separated from the host and accounted for as a derivative if, and only if:
(a) the economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host;
(b) a separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative; and
(c) the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss
(i.e., a derivative that is embedded in the hybrid contract at fair value through profit or loss is not
separated).
For the above assets, the Group may bifurcate the embedded derivative and measured it at fair value
through profit or loss, or designate the entire hybrid instrument to be measured at fair value through profit
or loss.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 205
F-27
F-27
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(15) FAIR VALUE OF FINANCIAL INSTRUMENTS
For financial instruments where there is active market, the fair value is determined by quoted prices in
active markets. For financial instruments where there is no active market, the fair value is determined
by using valuation techniques. Such techniques should be appropriate in the circumstances for which
sufficient data is available, and the inputs should be consistent with the objective of estimating the price at
which an orderly transaction to sell the asset or to transfer the liability would take place between market
participants at the measurement date under current market conditions, and maximize the use of relevant
observable inputs and minimize the use of unobservable inputs.
Such techniques include using recent prices in arm’s length transactions, reference to the current
market value of another instrument which is substantially the same, discounted cash flow analysis and/
or option pricing models. For discounted cash flow techniques, estimated future cash flows are based on
management’s best estimates and the discount rate used is a market rate for similar instruments. Certain
financial instruments, including derivative financial instruments, are valued using pricing models that
consider, among other factors, contractual and market prices, correlation, time value of money, credit risk,
yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different
pricing models and assumptions could produce materially different estimates of fair values.
Determining whether to classify financial instruments into level 3 of the fair value hierarchy is generally
based on the significance of the unobservable factors involved in valuation methodologies.
(16) OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis or realize the assets and settle the liabilities
simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the
Group or the counterparty.
(17) ASSETS PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS AND ASSETS SOLD
UNDER REPURCHASE AGREEMENTS
Assets sold under repurchase agreements continue to be recognized but a liability is recognized and
presented as “assets sold under agreements to repurchase” for the proceeds from selling such assets. The
Group may be required to provide additional collateral based on the fair value of the underlying assets and
such non-cash collateral assets continue to be recognized on the balance sheet. The difference between
the selling price and repurchasing price is recognized as interest expense over the term of the agreement
using the effective interest method.
The amounts advanced under these agreements are recognized and presented as “financial assets
purchased under reverse repurchase agreements”. The Group may not take physical possession of assets
purchased under such agreements. In the event of default by the counterparty to repurchase the assets,
the Group has the right to the underlying assets. The difference between the purchasing price and reselling
price is recognized as interest income over the term of the agreement using the effective interest method.
Sale of assets under repurchase agreements and purchase of assets under reverse repurchase agreements
conducted in the bank and securities businesses are included in the operating activities of consolidated
statement of cash flows and sale of assets under repurchase agreements and purchase of assets under
reverse repurchase agreements conducted in the insurance business are included in the financing and
investing activities of consolidated statement of cash flows.
206 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-28
F-28
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(18) FINANCE LEASE RECEIVABLE AND UNEARNED FINANCE INCOME
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of
the leased asset to the lessee. At the commencement of the lease term, the Group recognizes the minimum
lease payments receivable by the Group, the initial direct costs and the unguaranteed residual value in
the finance lease receivable. The difference between (a) the aggregate of the minimum lease payments,
the unguaranteed residual value and the initial direct costs and (b) the aggregate of their present values
is recognized as unearned finance lease income. Finance lease receivable net of unearned finance lease
income which represents the Group’s net investment in the finance lease is presented as finance lease
receivable in the consolidated statement of financial position. Unearned finance lease income is allocated
over the lease term based on a pattern reflecting a constant periodic return on the Group’s net investment
in the finance lease, and is recognized as “other revenues and other gains”.
The impairment provision measurement and derecognition of finance lease receivable are complied with
the basic accounting policy of the financial assets (Note 2.(12)). The Group incorporates forward looking
information in estimating the expected credit loss for finance lease receivable. The Group derecognizes
finance lease receivables when the rights to receive cash flows from the finance lease have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership. Refer
to Note 13 and Note 23 for details.
(19) PRECIOUS METALS
The Group’s precious metals represent gold and other precious metals. Precious metals that are not related
to the Group’s precious metals trading activities are initially measured at acquisition cost and subsequently
measured at the lower of cost and net recoverable amount. Precious metals acquired by the Group for
trading purposes are initially measured at fair value and subsequent changes in fair value are recorded in
income statement.
(20) INVESTMENT PROPERTIES
Investment properties are interests in land and buildings that are held to earn rental income and/
FINANCIAL STATEMENTS
or for capital appreciation, rather than for use in the production or supply of goods or services or for
administrative purposes.
Investment properties are initially measured at cost, which is the fair value of the consideration given to
acquire them, including transaction costs. Subsequently, all investment properties are stated at cost less
accumulated depreciation and accumulated impairment losses.
Depreciation is computed on a straight-line basis, after taking into account the estimated residual value (0%
to 10% of original cost), over the estimated useful lives. The estimated useful lives of investment properties
vary from 15 to 40 years.
The useful life and depreciation methods are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from the individual investment
properties.
Fully depreciated assets are retained in the financial statements until they are no longer in use and no
further charge for depreciation is made in respect of these assets.
Transfers to, or from, investment properties are made when, and only when, there is evidence of a change
in use or the investment property is sold.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 207
F-29
F-29
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(21) PROPERTY AND EQUIPMENT
Property and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and any impairment losses. An item of property and equipment is derecognized upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognized in the income statement in the year the asset is derecognized is the difference
between the net sales proceeds and the carrying amount of the relevant asset.
The cost of an item of property and equipment comprises its purchase price and any directly attributable
costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred
after items of property and equipment have been put into operation, such as repairs and maintenance,
is normally charged to the income statement in the year in which it is incurred. In situations where it can
be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of an item of property and equipment, and where the cost of the
item can be measured reliably, the expenditure is capitalized as an additional cost of that asset or as a
replacement.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property and
equipment to its residual value over its estimated useful life. The principal assumptions used for this
purpose are as follows:
Estimated residual values Estimated useful lives
Leasehold improvements – Over the shorter of economic
useful lives and terms of the leases
Buildings 0% – 10% 15 – 40 years
Equipment, furniture and fixtures 0% – 10% 3 – 15 years
Motor vehicles 0% – 15% 3 – 25 years
The useful lives and depreciation methods are reviewed periodically to ensure that the method and period
of depreciation are consistent with the expected pattern of economic benefits from the items of property
and equipment.
Fully depreciated assets are retained in the financial statements until they are no longer in use and no
further charge for depreciation is made in respect of these assets.
(22) CONSTRUCTION IN PROGRESS
Construction in progress mainly represents costs incurred in the construction of building premises, as well
as the cost of equipment pending installation, less any impairment losses.
No provision for depreciation is made on construction in progress until such time the relevant assets are
completed and ready for use.
208 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-30
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(23) INTANGIBLE ASSETS (OTHER THAN GOODWILL)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is the fair value as at the date of acquisition. The useful
lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
are subsequently amortized on the straight-line basis over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortization
period and the amortization method for an intangible asset with a finite useful life are reviewed at least at
each financial year end.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the
cash-generating unit level. Such intangible assets are not amortized. The useful life of an intangible asset
with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to
be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on
a prospective basis.
Core deposits
Core deposits are accounts that a financial institution expects to maintain for an extended period of time
due to ongoing business relationships. The intangible asset value associated with core deposits reflects
the present value of additional cash flow resulted from the use of the deposits at a lower cost alternative
source of funding in the future periods.
Expressway operating rights
Expenditures on acquiring the expressway operating rights are capitalized as intangible assets and
subsequently amortized on the straight-line basis over the contract terms.
Prepaid land premiums
Prepaid land premiums are prepayments for land under PRC law for fixed periods. Prepaid land premiums
are initially stated at cost and subsequently amortized on the straight-line basis over the lease terms. All
FINANCIAL STATEMENTS
lands related to the Group’s prepaid land premiums are located in Mainland China.
Trademarks
Trademarks are initially stated at cost and subsequently amortized on the straight-line basis over the
estimated useful lives.
The estimated useful lives of intangible assets are set as below:
Estimated useful lives
Expressway operating rights 20 – 30 years
Prepaid land premiums 30 – 50 years,
indefinite
Core deposits 20 years
Trademarks 10 – 40 years,
indefinite
Software and others (including patents and know-how, customer relationships and
contract rights, etc.) 2 – 25 years
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 209
F-31
F-31
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(24) FORECLOSED ASSETS
Foreclosed assets are initially recognized at fair value. The difference between the initial fair value and the
sum of the related loan principal, interest receivable and impairment provision is taken into the income
statement. At the end of the reporting period, the foreclosed assets are measured at the lower of their
carrying value and net recoverable amount. When the carrying value of the foreclosed assets is higher
than the net recoverable amount, a provision for the decline in value of foreclosed assets is recognized as
impairment losses in the income statement.
(25) INVENTORIES
The Group’s inventories comprise raw materials, product in progress, finished goods, other supplemental
materials, etc. and lands purchased for property development by real estate subsidiaries. Inventory is
initially measured at cost which includes purchasing cost, processing cost and other costs which made the
inventory to the present place and condition.
The actual cost of inventory is priced based on moving weighted average method.
At the end of the reporting period, inventory is measured at the lower of its cost and net realizable value. If
the net realizable value is lower than cost, inventory impairment provisions are allotted.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale and related taxes. Estimates of net
recoverable amount are based on the most reliable evidence available at the time the estimates are made,
also taking into consideration the purpose for which the inventory is held and the influence of events after
the end of the reporting period.
Inventory impairment provisions should be accrued when the cost of individual inventory item is higher
than its net realizable value.
After allotting inventory impairment provisions, if the influencing factors of previous inventory impairment
provisions have disappeared, and hence the net realizable value of the inventories are higher than their
cost, the previous written down amount should be recovered and the reversed amount which is within the
amount of original allotted inventory impairment provisions should be included in current profit and loss.
(26) IMPAIRMENT OF NON-FINANCIAL ASSETS
The Group assesses at each reporting date whether there is an indication that a non-financial asset other
than deferred tax assets may be impaired. If any such indication exists, or when annual impairment testing
for a non-financial asset is required, the Group makes an estimate of the asset’s recoverable amount. A
non-financial asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s fair value
less costs to sell and its value in use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which
case the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where
the carrying amount of a non-financial asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs to disposal, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
210 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-32
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(26) IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)
For non-financial assets other than goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment losses may no longer exist or may have
decreased. If such an indication exists, the Group makes an estimate of the recoverable amount. A
previously recognized impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognized for the asset in prior years. Such a reversal is recognized in the income statement.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable
amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. The
recoverable amount is the higher of its fair value less costs to disposal and its value-in-use, determined
on an individual asset (or cash-generating unit) basis, unless the individual asset (or cash-generating unit)
does not generate cash flows that are largely independent from those of other assets or groups of assets
(or groups of cash-generating units). Impairment losses recognized in relation to goodwill are not reversed
for subsequent increases in its recoverable amount.
Intangible assets with indefinite useful lives are tested for impairment annually at each year end either
individually or at the cash-generating unit level, as appropriate.
(27) INSURANCE GUARANTEE FUND
The Group calculates the insurance guarantee fund based on the sum of benchmark rate and risk
differential rate for the year:
(a) Benchmark rate: 0.8% of the consideration received for property insurance, short-term health insurance
and accident insurance; 0.3% of the consideration received for life insurance, long-term health
insurance and annuities; including 0.05% of the consideration received for investment-linked insurance.
FINANCIAL STATEMENTS
(b) Risk differential rate: based on the result of the solvency integrated risk rating.
No additional provision is required for Ping An Life Insurance Company of China, Ltd. (“Ping An Life”), Ping
An Annuity Insurance Company of China, Ltd. (“Ping An Annuity”) and Ping An Health Insurance Company
of China, Ltd. (“Ping An Health Insurance”), when the accumulated insurance guarantee fund balances of
life insurance industry reach 1% of the industry total assets. For Ping An Property & Casualty Insurance
Company of China, Ltd. (“Ping An Property & Casualty”), no additional provision is required when the
accumulated balance of property and casualty insurance industry reaches 6% of the industry total assets.
The consideration received used in the calculation of the insurance guarantee fund is the amount agreed in
the insurance policies, excluding VAT.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 211
F-33
F-33
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS
(28.1) Definition of insurance contract
Insurance contract is a contract under which one party (the issuer) accepts significant insurance risk from
another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future
event (the insured event) adversely affects the policyholder. Insured event is an uncertain future event
covered by an insurance contract that creates insurance risk. Insurance risk is the risk, other than financial
risk, transferred from the holder of a contract to the issuer.
The Group applies IFRS 17 to:
(a) insurance contracts, including reinsurance contracts, the Group issues;
(b) reinsurance contracts the Group holds;
(c) insurance contracts the Group acquired in a transfer of insurance contracts or a business combination;
(d) investment contracts with discretionary participation features the Group issues.
Reinsurance contract is an insurance contract issued by the reinsurer to compensate the cedent for claims
arising from one or more insurance contracts issued by the cedent.
Investment contract with discretionary participation features is a financial instrument that provides a
particular investor with the contractual right to receive, as a supplement to an amount not subject to the
discretion of the issuer, additional amounts:
(a) that are expected to be a significant portion of the total contractual benefits;
(b) the timing or amount of which are contractually at the discretion of the issuer; and
(c) that are contractually based on the returns on specified items.
Insurance contract with direct participation features is an insurance contract that meet the following
conditions at inception:
(a) the contractual terms specify that the policyholder participates in a share of a clearly identified pool
of underlying items;
(b) the Group expects to pay to the policyholder an amount equal to a substantial share of the fair value
returns on the underlying items; and
(c) the Group expects a substantial proportion of any change in the amounts to be paid to the
policyholder to vary with the change in fair value of the underlying items.
Reinsurance contracts issued and reinsurance contracts held cannot be insurance contracts with direct
participation features.
212 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-34
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.2) Identification of insurance contract
The Group assesses the significance of insurance risk contract by contract. A contract is an insurance
contract only if it transfers significant insurance risk. A contract that meets the definition of an insurance
contract remains an insurance contract until all rights and obligations are extinguished (i.e., discharged,
cancelled or expired), unless the contract is derecognized because of a contract modification.
Below assessments are performed to determine whether the insurance risk is significant:
(a) Insurance risk is significant if, and only if, an insured event could cause the Group to pay additional
amounts that are significant in any single scenario that has commercial substance, even if the
insured event is extremely unlikely, or even if the expected probability-weighted present value of the
contingent cash flows is a small proportion of the expected present value of the remaining cash flows
from the insurance contract. The additional amounts refer to the present value of amounts that exceed
those that would be payable if no insured event had occurred. Those additional amounts include
claims handling and assessment costs.
(b) In addition, a contract transfers significant insurance risk only if there is a scenario that has
commercial substance in which the Group has a possibility of a loss on a present value basis. However,
even if a reinsurance contract does not expose the issuer to the possibility of a significant loss, that
contract is deemed to transfer significant insurance risk if it transfers to the reinsurer substantially all
the insurance risk relating to the reinsured portions of the underlying insurance contracts.
(28.3) Combination of insurance contracts
A set or series of insurance contracts with the same or a related counterparty may achieve, or be designed
to achieve, an overall commercial effect. In order to report the substance of such contracts, the Group
treats the set or series of contracts as a whole.
FINANCIAL STATEMENTS
(28.4) Separating components from an insurance contract
An insurance contract may contain more components. The Group separates the following non-insurance
components from such contracts:
(a) embedded derivatives that should be separated in accordance with IFRS 9;
(b) distinct investment components, except for those that can meet the definition of investment contract
with discretionary participation features;
(c) promises to transfer distinct goods or services other than insurance contract services.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 213
F-35
F-35
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.4) Separating components from an insurance contract (Continued)
Investment component is the amounts that an insurance contract requires the Group to repay to a
policyholder in all circumstances, regardless of whether an insured event occurs. An investment component
is distinct if, and only if, both the following conditions are met:
(a) the investment component and the insurance component are not highly interrelated. An investment
component and an insurance component are highly interrelated if, and only if:
(i) the Group is unable to measure one component without considering the other. Thus, if the value
of one component varies according to the value of the other, the two components are highly
interrelated; or
(ii) the policyholder is unable to benefit from one component unless the other is also present. Thus,
if the lapse or maturity of one component in a contract causes the lapse or maturity of the other,
the two components are highly interrelated; and
(b) a contract with equivalent terms is sold, or could be sold, separately in the same market or the same
jurisdiction, either by entities that issue insurance contracts or by other parties.
Insurance contract services are the services that the Group provides to a policyholder of an insurance
contract, including: coverage for an insured event (insurance coverage); for insurance contracts without
direct participation features, the generation of an investment return for the policyholder (investment-return
service); and for insurance contracts with direct participation features, the management of underlying
items on behalf of the policyholder (investment-related service). The Group separates from an insurance
contract a promise to transfer distinct goods or services other than insurance contract services to a
policyholder. For the purpose of separation, the Group does not consider activities that the Group must
undertake to fulfill a contract unless the Group transfers a good or service other than insurance contract
services to the policyholder as those activities occur. A good or service other than an insurance contract
service promised to a policyholder is distinct if the policyholder can benefit from the good or service either
on its own or together with other resources readily available to the policyholder. A good or service other
than an insurance contract service that is promised to the policyholder is not distinct if: the cash flows and
risks associated with the good or service are highly interrelated with the cash flows and risks associated
with the insurance components in the contract; and the Group provides a significant service in integrating
the good or service with the insurance components.
After the separation of any cash flows related to embedded derivatives and distinct investment
component, the Group attributes the remaining cash flows to insurance component (including unseparated
embedded derivatives, non-distinct investment component and promises to transfer goods or services
other than insurance contract services which are not distinct) and promises to transfer distinct goods or
services other than insurance contract services.
214 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-36
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.5) Level of aggregation of insurance contracts
The Group identifies portfolios of insurance contracts. A portfolio comprises contracts subject to similar
risks and managed together. The Group divides portfolios of insurance contracts into groups of insurance
contracts and applies the recognition and measurement requirements to the groups of insurance contracts.
Insurance contracts issued more than one year apart are not included in the same group. The Group
determines the group to which contracts belong by considering individual contracts. If the Group has
reasonable and supportable information to conclude that a set of contracts will all be in the same group,
the Group may measure the set of contracts to determine the group.
The Group divides a portfolio of insurance contracts issued into a minimum of:
(a) a group of contracts that are onerous at initial recognition, if any;
(b) a group of contracts that at initial recognition have no significant possibility of becoming onerous
subsequently, if any; and
(c) a group of the remaining contracts in the portfolio, if any.
(28.6) Recognition of insurance contracts
The Group recognizes a group of insurance contracts it issues from the earliest of the following:
(a) the beginning of the coverage period of the group of contracts;
(b) the date when the first payment from a policyholder in the group becomes due; and
(c) for a group of onerous contracts, when the group becomes onerous.
FINANCIAL STATEMENTS
For individual contract that meet one of the criteria set out above, the Group determines the group to
which it belongs at initial recognition and does not reassess the composition of the groups subsequently.
Coverage period is the period during which the Group provides insurance contract services.
The Group recognizes an asset for insurance acquisition cash flows paid or payable before the related
group of insurance contracts is recognized. The Group allocates insurance acquisition cash flows to groups
of insurance contracts using a systematic and rational method. Insurance acquisition cash flows are cash
flows arising from the costs of selling, underwriting and starting a group of insurance contracts (issued or
expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the
group belongs. The Group derecognizes an asset for insurance acquisition cash flows when the insurance
acquisition cash flows are included in the measurement of the related group of insurance contracts. At the
end of each reporting period, the Group assesses the recoverability of an asset for insurance acquisition
cash flows if facts and circumstances indicate the asset may be impaired. If the Group identifies an
impairment loss, the Group adjusts the carrying amount of the asset and recognizes the impairment loss
in profit or loss. The Group recognizes in profit or loss a reversal of some or all of an impairment loss
previously recognized and increase the carrying amount of the asset, to the extent that the impairment
conditions no longer exist or have improved.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 215
F-37
F-37
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts
(28.7.1) General model
Measurement on initial recognition
On initial recognition, the Group shall measure a group of insurance contracts at the total of the fulfilment
cash flows and the contractual service margin. The contractual service margin represents the unearned
profit the Group will recognize as it provides insurance contract services under the insurance contracts in
the group. The fulfilment cash flows comprise:
(a) estimates of future cash flows;
(b) an adjustment to reflect the time value of money and the financial risks related to the future cash
flows; and
(c) a risk adjustment for non-financial risk.
Risk adjustment for non-financial risk is the compensation the Group requires for bearing the uncertainty
about the amount and timing of the cash flows that arises from non-financial risk as the Group fulfils
insurance contracts. The fulfilment cash flows do not reflect the non-performance risk of the Group.
When the Group estimates the future cash flows at a higher level of aggregation, the Group allocates the
resulting fulfilment cash flows to individual groups of contracts. The estimates of future cash flows shall:
(a) be unbiased probability-weighted mean;
(b) be consistent with observable market prices for market variables;
(c) be current – the estimates shall reflect conditions existing at the measurement date, including
assumptions at that date about the future;
(d) be explicit – the Group shall estimate the cash flows separately from the adjustment for the time value
of money and financial risk, unless the most appropriate measurement technique combines these
estimates.
The Group includes in the measurement of a group of insurance contracts all the future cash flows within
the boundary of each contract in the group. Cash flows are within the boundary of an insurance contract if
they arise from substantive rights and obligations that exist during the reporting period in which the Group
can compel the policyholder to pay the premiums or in which the Group has a substantive obligation to
provide the policyholder with insurance contract services. A substantive obligation to provide insurance
contract services ends when:
(a) the Group has the practical ability to reassess the risks of the particular policyholder and, as a result,
can set a price or level of benefits that fully reflects those risks; or
(b) the Group has the practical ability to reassess the risks of the portfolio of insurance contracts that
contains the contract and, as a result, can set a price or level of benefits that fully reflects the risk of
that portfolio; and the pricing of the premiums up to the date when the risks are reassessed does not
take into account the risks that relate to periods after the reassessment date.
216 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-38
F-38
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.1) General model (Continued)
Measurement on initial recognition (Continued)
The Group uses appropriate discount rate to adjust the estimates of future cash flows to reflect the time
value of money and the financial risks related to those cash flows, to the extent that the financial risks are
not included in the estimates of cash flows. The discount rates applied to the estimates of the future cash
flows shall:
(a) reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics
of the insurance contracts;
(b) be consistent with observable current market prices for financial instruments with cash flows whose
characteristics are consistent with those of the insurance contracts, and exclude the effect of factors
that influence such observable market prices but do not affect the future cash flows of the insurance
contracts.
The Group adjusts the estimate of the present value of the future cash flows to reflect the compensation
that the Group requires for bearing the uncertainty about the amount and timing of the cash flows that
arises from non-financial risk.
The Group calculates the total amount of below items on initial recognition of a group of insurance
contracts:
(a) the fulfilment cash flows;
(b) the derecognition at the date of initial recognition of any asset for insurance acquisition cash flows
and any other asset or liability previously recognized for cash flows related to the group of contracts;
FINANCIAL STATEMENTS
(c) any cash flows arising from the contracts in the group at that date.
If the total amount represents net cash inflows, the Group recognizes it as contract service margin. If the
total amount represents net cash outflows, the Group recognizes a loss in profit or loss.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 217
F-39
F-39
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.1) General model (Continued)
Subsequent measurement
The carrying amount of a group of insurance contracts at the end of each reporting period shall be the
sum of the liability for remaining coverage and the liability for incurred claims. The liability for remaining
coverage comprises the fulfilment cash flows related to future service allocated to the group at that date
and the contractual service margin of the group at that date. The liability for incurred claims comprises the
fulfilment cash flows related to past service allocated to the group at that date.
For insurance contracts without direct participation features, the carrying amount of the contractual
service margin of a group of contracts at the end of the reporting period equals the carrying amount at the
start of the reporting period adjusted for:
(a) the effect of any new contracts added to the group.
(b) interest accreted on the carrying amount of the contractual service margin during the reporting
period, measured at the discount rates determined at the date of initial recognition of a group of
contracts, applied to nominal cash flows that do not vary based on the returns on any underlying
items.
(c) the changes in fulfilment cash flows relating to future service, except that such increases in the
fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to a
loss; or except that such decreases in the fulfilment cash flows are allocated to the loss component of
the liability for remaining coverage.
(d) the effect of any currency exchange differences on the contractual service margin.
(e) the amount recognized as insurance revenue because of the transfer of insurance contract services in
the period, determined by the allocation of the contractual service margin remaining at the end of the
reporting period (before any allocation) over the current and remaining coverage period.
The Group recognizes the reduction in the liability for remaining coverage because of services provided
in the period as insurance revenue. The Group recognizes the increase in the liability for incurred claims
because of claims and expenses incurred in the period and any subsequent changes in fulfilment cash flows
relating to incurred claims and incurred expenses as insurance service expenses. Insurance revenue and
insurance service expenses presented in profit or loss has excluded any investment components.
The Group determines insurance service expenses related to insurance acquisition cash flows in a
systematic way on the basis of the passage of time. The Group recognizes the same amount as insurance
revenue to reflect the portion of the premiums that relate to recovering those cash flows.
The Group recognizes the change in the liability for remaining coverage and the liability for incurred
claims because of the effect of the time value of money and the effect of financial risk as insurance finance
income or expenses.
218 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-40
F-40
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.1) General model (Continued)
Subsequent measurement (Continued)
The Group makes accounting policy choices to portfolios of insurance contracts between:
(a) including insurance finance income or expenses for the period in profit or loss; or
(b) disaggregating insurance finance income or expenses for the period to include in profit or loss an
amount determined by a systematic allocation of the expected total insurance finance income or
expenses over the duration of the group of contracts, the difference between the insurance finance
income or expenses and the total insurance finance income or expenses for the period is included in
other comprehensive income.
When applying IAS 21 The Effects of Changes in Foreign Exchange Rates to a group of insurance contracts
that generate cash flows in a foreign currency, the Group treats the group of contracts, including the
contractual service margin, as a monetary item. The Group includes exchange differences on changes in the
carrying amount of groups of insurance contracts in the statement of profit or loss, unless they relate to
changes in the carrying amount of groups of insurance contracts included in other comprehensive income
for insurance finance income or expenses, in which case they are included in other comprehensive income.
(28.7.2) Measurements for insurance contract with direct participation features (Variable Fee Approach)
The Group assesses whether an insurance contract can meet the definition of insurance contracts with
direct participation features by using its expectations at inception of the contract and does not perform
reassessment afterwards.
Insurance contracts with direct participation features are contracts under which the Group’s obligation to
FINANCIAL STATEMENTS
the policyholder is the net of:
(a) the obligation to pay the policyholder an amount equal to the fair value of the underlying items; and
(b) a variable fee that the Group will deduct from (a) in exchange for the future service provided by the
insurance contract, comprising:
(i) the amount of the Group’s share of the fair value of the underlying items; less
(ii) fulfilment cash flows that do not vary based on the returns on underlying items.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 219
F-41
F-41
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.2) Measurements for insurance contract with direct participation features (Variable Fee Approach)
(Continued)
For insurance contracts with direct participation features, the carrying amount of the contractual service
margin of a group of contracts at the end of the reporting period equals the carrying amount at the start
of the reporting period adjusted for:
(a) the effect of any new contracts added to the group.
(b) the change in the amount of the Group’s share of the fair value of the underlying items, except to the
extent that:
(i) if the Group mitigates the effect of financial risk using derivatives or reinsurance contracts held,
when meets certain conditions, the Group may choose to recognize insurance finance income
or expenses for the period in profit or loss to reflect some or all of the changes in the effect of
the time value of money and financial risk on the amount of the Group’s share of the underlying
items. However, if the Group chooses to disaggregate insurance finance income or expenses
of such reinsurance contracts held between profit or loss and other comprehensive income,
the insurance finance income or expenses mentioned above should also be disaggregated
accordingly;
(ii) the decrease in the amount of the Group’s share of the fair value of the underlying items exceeds
the carrying amount of the contractual service margin, giving rise to a loss; or
(iii) the increase in the amount of the Group’s share of the fair value of the underlying items is
allocated to the loss component of the liability for remaining coverage.
(c) the changes in fulfilment cash flows relating to future service and do not vary based on the returns on
underlying items, except to the extent that:
(i) if the Group mitigates the effect of financial risk using derivatives, reinsurance contracts held or
non-derivative financial instruments measured at fair value through profit or loss, when meets
certain conditions, the Group may choose to recognize insurance finance income or expenses
for the period in profit or loss to reflect some or all of the changes in the effect of the time
value of money and financial risk on the fulfilment cash flows. However, if the Group chooses to
disaggregate insurance finance income or expenses of such reinsurance contracts held between
profit or loss and other comprehensive income, the insurance finance income or expenses
mentioned above should also be disaggregated accordingly;
(ii) such increases in the fulfilment cash flows exceed the carrying amount of the contractual service
margin, giving rise to a loss; or
(iii) such decreases in the fulfilment cash flows are allocated to the loss component of the liability for
remaining coverage.
220 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-42
F-42
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.2) Measurements for insurance contract with direct participation features (Variable Fee Approach)
(Continued)
(d) the effect of any currency exchange differences arising on the contractual service margin.
(e) the amount recognized as insurance revenue because of the transfer of insurance contract services in
the period, determined by the allocation of the contractual service margin remaining at the end of the
reporting period (before any allocation) over the current and remaining coverage period.
For insurance contracts with direct participation features that the Group holds the underlying items, the
Group makes the accounting policy choice of disaggregating insurance finance income or expenses for the
period between profit or loss and other comprehensive income, includes in profit or loss an amount that
exactly match the income or expenses included in profit or loss for the underlying items, resulting in the
net of the separately presented items being nil.
(28.7.3) Measurements for onerous insurance contracts
If a group of insurance contracts is onerous at the date of initial recognition, or if additional loss caused
by contracts added to the group of onerous contracts, the Group recognizes a loss as insurance service
expenses in profit or loss for the net outflow for the group of onerous contracts, resulting in the carrying
amount of the liability for remaining coverage for the group being equal to the fulfilment cash flows.
A group of insurance contracts becomes onerous (or more onerous) on subsequent measurement if meets
one of the following conditions, the Group recognizes a loss as insurance service expenses in profit or loss
and increases the liability for remaining coverage:
(a) the amount of unfavourable changes relating to future service in the fulfilment cash flows allocated
to the group arising from changes in estimates of future cash flows and the risk adjustment for
FINANCIAL STATEMENTS
non-financial risk exceed the carrying amount of the contractual service margin;
(b) for a group of insurance contracts with direct participation features, the decrease in the amount of the
Group’s share of the fair value of the underlying items exceed the carrying amount of the contractual
service margin.
After the Group has recognized a loss on an onerous group of insurance contracts, the Group allocates
below changes of the liability for remaining coverage on a systematic basis between the loss component of
the liability for remaining coverage and the liability for remaining coverage excluding the loss component:
(a) estimates of the present value of future cash flows for claims and expenses released from the liability
for remaining coverage because of incurred insurance service expenses;
(b) changes in the risk adjustment for non-financial risk recognized in profit or loss because of the release
from risk; and
(c) insurance finance income or expenses.
Any amounts allocated to the loss component of the liability for remaining coverage shall not be
recognized as insurance revenue.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 221
F-43
F-43
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.3) Measurements for onerous insurance contracts (Continued)
After the Group has recognized a loss on an onerous group of insurance contracts, the subsequent
measurements are:
(a) for any subsequent increases relating to future service in fulfilment cash flows allocated to the group
arising from changes in estimates of future cash flows and the risk adjustment for non-financial risk,
and any subsequent decreases in the amount of the Group’s share of the fair value of the underlying
items, the Group recognizes a loss as insurance service expenses in profit or loss and increases the
liability for remaining coverage;
(b) for any subsequent decreases relating to future service in fulfilment cash flows allocated to the group
arising from changes in estimates of future cash flows and the risk adjustment for non-financial risk,
and any subsequent increases in the amount of the Group’s share of the fair value of the underlying
items, the Group reverses the insurance service expenses in profit or loss and decreases the loss
component of the liability for remaining coverage until that component is reduced to zero, the Group
adjusts the contractual service margin only for the excess of the decrease over the amount allocated
to the loss component.
(28.7.4) Premium Allocation Approach
The Group simplifies the measurement of a group of insurance contracts using the premium allocation
approach if, and only if, at the inception of the group:
(a) the Group reasonably expects that such simplification would produce a measurement of the liability
for remaining coverage for the group that would not differ materially from the one that would be
produced applying general model, unless the Group expects significant variability in the fulfilment
cash flows that would affect the measurement of the liability for remaining coverage during the period
before a claim is incurred; or
(b) the coverage period of each contract in the group is one year or less.
For contracts issued to which the Group applies the premium allocation approach, the Group assumes
no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances indicate
otherwise.
Using the premium allocation approach, on initial recognition, the carrying amount of the liability for
remaining coverage is the premiums received at initial recognition, minus any insurance acquisition cash
flows at that date, and plus or minus any amount arising from the derecognition at that date of any asset
for insurance acquisition cash flows and any other asset or liability previously recognized for cash flows
related to the group of contracts.
At the end of each subsequent reporting period, the carrying amount of the liability for remaining coverage
is the carrying amount at the start of the reporting period plus the premiums received in the period, minus
insurance acquisition cash flows, plus any amounts relating to the amortization of insurance acquisition
cash flows recognized as insurance service expenses in the reporting period, plus any adjustment to a
financing component, minus the amount recognized as insurance revenue for services provided in that
period, and minus any investment component paid or transferred to the liability for incurred claims.
222 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-44
F-44
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.7) Measurement of insurance contracts (Continued)
(28.7.4) Premium Allocation Approach (Continued)
The Group adjusts the carrying amount of the liability for remaining coverage to reflect the time value of
money and the effect of financial risk using the discount rates determined on initial recognition. The Group
is not required to adjust the carrying amount of the liability for remaining coverage to reflect the time
value of money and the effect of financial risk if, at initial recognition, the Group expects that the time
between providing each part of the services and the related premium due date is no more than a year.
If at any time during the coverage period, facts and circumstances indicate that a group of insurance
contracts is onerous, to the extent that the fulfilment cash flows exceed the carrying amount of the liability
for remaining coverage, the Group recognizes a loss as insurance service expenses in profit or loss and
increase the liability for remaining coverage.
The Group measures the liability for incurred claims for the group of insurance contracts at the fulfilment
cash flows relating to incurred claims and other related expenses. The Group is not required to adjust
future cash flows for the time value of money and the effect of financial risk if those cash flows are
expected to be paid or received in one year or less from the date the claims are incurred. The Group would
also not include in the fulfilment cash flows mentioned above any such adjustment.
When the Group applies the premium allocation approach, insurance revenue for the period is the amount
of expected premium receipts (excluding any investment component and adjusted to reflect the time
value of money and the effect of financial risk) allocated to the period. The Group allocates the expected
premium receipts to each period of insurance contract services on the basis of the passage of time; but if
the expected pattern of release of risk during the coverage period differs significantly from the passage of
time, then on the basis of the expected timing of incurred insurance service expenses.
(28.8) Recognition and measurement for reinsurance contracts held
FINANCIAL STATEMENTS
In addition to the requirements for insurance contracts set out above, the recognition and measurement
for reinsurance contracts held are modified as follows. The requirements of measurements for onerous
insurance contracts are not applicable for reinsurance contracts held.
(28.8.1) Recognition for reinsurance contracts held
The Group divides portfolios of reinsurance contracts held into a minimum of:
(a) a group of contracts that there is a net gain at initial recognition, if any;
(b) a group of contracts that at initial recognition have no significant possibility of becoming to have net
gain subsequently, if any; and
(c) a group of the remaining contracts in the portfolio, if any.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 223
F-45
F-45
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.8) Recognition and measurement for reinsurance contracts held (Continued)
(28.8.1) Recognition for reinsurance contracts held (Continued)
The Group recognizes a group of reinsurance contracts held from the earlier of the following:
(a) the beginning of the coverage period of the group of reinsurance contracts held; and
(b) the date the Group recognizes an onerous group of underlying insurance contracts.
If a group of reinsurance contracts held provide proportionate coverage, the Group recognizes such group
of reinsurance contracts held from the earlier of the following:
(a) the later date of the beginning of the coverage period of the group of reinsurance contracts held and
the date that any underlying insurance contract is initially recognized; and
(b) the date the Group recognizes an onerous group of underlying insurance contracts.
(28.8.2) Measurement for reinsurance contracts held
On initial recognition, the Group measures a group of reinsurance contracts held at the total of the
fulfilment cash flows and the contractual service margin. The contractual service margin represents the net
cost or net gain the Group will recognize as it receives insurance contract services from the reinsurer.
The Group uses consistent assumptions to measure the estimates of the present value of the future cash
flows for the group of reinsurance contracts held and the estimates of the present value of the future cash
flows for the group of underlying insurance contracts. In addition, the Group includes in the estimates of
the present value of the future cash flows for the group of reinsurance contracts held the effect of any risk
of non-performance by the issuer of the reinsurance contract.
The Group determines the risk adjustment for non-financial risk so that it represents the amount of risk
being transferred by the holder of the group of reinsurance contracts to the issuer of those contracts.
On initial recognition for a group of reinsurance contracts held, the Group calculates the sum of:
(a) the fulfilment cash flows;
(b) the amount derecognized at that date of any asset or liability previously recognized for cash flows
related to the group of reinsurance contracts held;
(c) any cash flows arising at that date; and
(d) loss-recovery component of assets for remaining coverage of reinsurance contracts held.
The Group recognizes any net cost or net gain of the above total amounts as a contractual service margin.
If the net cost relates to events that occurred before the purchase of the group of reinsurance contracts
held, the Group recognizes such a cost immediately in profit or loss as an expense.
224 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.8) Recognition and measurement for reinsurance contracts held (Continued)
(28.8.2) Measurement for reinsurance contracts held (Continued)
If the reinsurance contract held is entered into before or at the same time as the onerous underlying
insurance contracts are recognized, when the Group recognizes a loss on initial recognition of an onerous
group of underlying insurance contracts or on addition of onerous underlying insurance contracts to a
group, the Group recognizes a loss-recovery component of the asset for remaining coverage for such
groups of reinsurance contracts held by multiplying:
(a) the loss recognized on the underlying insurance contracts; and
(b) the percentage of claims on the underlying insurance contracts the Group expects to recover from the
group of reinsurance contracts held.
The Group adjusts the same amount calculated above to contractual service margin and recognizes as
amount recovered from reinsurer in profit or loss.
The Group adjusts the loss-recovery component to reflect changes in the loss component of an onerous
group of underlying insurance contracts. The carrying amount of the loss-recovery component does not
exceed the portion of the carrying amount of the loss component of the onerous group of underlying
insurance contracts that the Group expects to recover from the group of reinsurance contracts held.
The Group measures the contractual service margin at the end of the reporting period for a group of
reinsurance contracts held as the carrying amount determined at the start of the reporting period, adjusted
for:
(a) the effect of any new contracts added to the group.
FINANCIAL STATEMENTS
(b) interest accreted on the carrying amount of the contractual service margin, measured at the discount
rates determined at the date of initial recognition of a group of contracts, to nominal cash flows that
do not vary based on the returns on any underlying items.
(c) the loss-recovery component of the asset for remaining coverage for such groups of reinsurance
contracts held, and reversals of a loss-recovery component recognized to the extent those reversals
are not changes in the fulfilment cash flows of the group of reinsurance contracts held.
(d) the changes in the fulfilment cash flows relating to future service, except that such change results
from a change in fulfilment cash flows allocated to a group of underlying insurance contracts that
does not adjust the contractual service margin for the group of underlying insurance contracts; or
except that such change results from onerous contracts, if the Group measures a group of underlying
insurance contracts applying the premium allocation approach.
(e) the effect of any currency exchange differences arising on the contractual service margin.
(f) the amount recognized in profit or loss because of services received in the period, determined by the
allocation of the contractual service margin remaining at the end of the reporting period (before any
allocation) over the current and remaining coverage period of the group of reinsurance contracts held.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 225
F-47
F-47
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.8) Recognition and measurement for reinsurance contracts held (Continued)
(28.8.2) Measurement for reinsurance contracts held (Continued)
The Group recognizes the reduction in the asset for remaining coverage because of insurance contract
services received from the reinsurer in the period as allocation of reinsurance premiums paid. The Group
recognizes the increase in the asset for incurred claims because of claims and expenses that are expected
to be reimbursed in the period and any subsequent related changes in fulfilment cash flows as amount
recovered from reinsurer. The Group treats amounts from the reinsurer that it expects to receive that
are not contingent on claims of the underlying contracts as the reduction to the allocation of reinsurance
premiums paid. Allocation of reinsurance premiums paid and amount recovered from reinsurer presented in
profit or loss has excluded any investment components.
The Group uses the premium allocation approach to simplify the measurement of a group of reinsurance
contracts held, if at the inception of the group:
(a) the Group reasonably expects the resulting measurement would not differ materially from the result
of not applying the premium allocation approach set out above, unless the Group expects significant
variability in the fulfilment cash flows that would affect the measurement of the asset for remaining
coverage during the period before a claim is incurred; or
(b) the coverage period of each contract in the group of reinsurance contracts held is one year or less.
(28.9) Investment contracts with discretionary participation features
In addition to the requirements for insurance contracts set out above, the recognition and measurement for
investment contract with discretionary participation features are modified as follows:
(a) the date of initial recognition is the date the Group becomes party to the contract.
(b) the contract boundary is modified so that cash flows are within the contract boundary if they result
from a substantive obligation of the Group to deliver cash at a present or future date. The Group has
no substantive obligation to deliver cash if the Group has the practical ability to set a price for the
promise to deliver the cash that fully reflects the amount of cash promised and related risks.
(c) the allocation of the contractual service margin is modified so that the Group recognizes the
contractual service margin over the duration of the group of contracts in a systematic way that
reflects the transfer of investment services under the contract.
226 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-48
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.10) Modification and derecognition
If the terms of an insurance contract are modified, the Group derecognizes the original contract and
recognizes the modified contract as a new contract, if, and only if, any of the conditions below are
satisfied:
(a) if the modified terms had been included at contract inception:
(i) the modified contract would have been excluded from the scope of IFRS 17;
(ii) the Group would have separated different components from the host insurance contract, resulting
in a different insurance contract to which IFRS 17 would have applied;
(iii) the modified contract would have had a substantially different contract boundary; or
(iv) the modified contract would have been included in a different group of contracts.
(b) the original contract met the definition of an insurance contract with direct participation features, but
the modified contract no longer meets that definition, or vice versa; or
(c) the Group applied the premium allocation approach to the original contract, but the modifications
mean that the contract no longer meets the eligibility criteria for that approach.
If a contract modification meets none of the conditions above, the Group treats changes in cash flows
caused by the modification as changes in estimates of fulfilment cash flows.
The Group derecognizes an insurance contract when it is extinguished, i.e. when the obligation specified in
the insurance contract expires or is discharged or cancelled. The Group derecognizes an insurance contract
from within a group of contracts by applying the following requirements:
FINANCIAL STATEMENTS
(a) the fulfilment cash flows allocated to the group are adjusted to eliminate the present value of the
future cash flows and risk adjustment for non-financial risk relating to the rights and obligations that
have been derecognized from the group;
(b) the contractual service margin of the group is adjusted; and
(c) the number of coverage units for expected remaining insurance contract services is adjusted.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 227
F-49
F-49
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS (CONTINUED)
(28.10) Modification and derecognition (Continued)
When the Group derecognizes an insurance contract because it transfers the contract to a third party
or derecognizes an insurance contract and recognizes a new contract, the Group applies the following
requirements:
(a) adjusts the contractual service margin of the group from which the contract has been derecognized,
for the difference between (i) and either (ii) for contracts transferred to a third party or (iii) for
contracts derecognized due to modification:
(i) the change in the carrying amount of the group of insurance contracts resulting from the
derecognition of the contract.
(ii) the premium charged by the third party.
(iii) the premium the Group would have charged had it entered into a contract with equivalent terms
as the new contract at the date of the contract modification, less any additional premium charged
for the modification.
(b) measures the new contract recognized assuming that the Group received the premium described in
(a)(iii) at the date of the modification.
If the Group derecognizes an insurance contract because it transfers the contract to a third party or
derecognizes an insurance contract due to modification, the Group reclassifies to profit or loss as a
reclassification adjustment any remaining amounts for the group that were previously recognized in other
comprehensive income, unless for insurance contracts with direct participation features that the Group
holds the underlying items.
(29) PROVISIONS
A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past
event and it is probable that a future outflow of resources will be required to settle the obligation, provided
that a reliable estimate can be made of the amount of the obligation. When the effect of discounting
is material, the amount recognized is the present value at the end of the reporting period of the future
expenditures expected to be required to settle the obligation.
Except for contingent considerations deriving from or contingent liabilities assumed in business
combinations and the provision recognized for the loss allowance of off-balance sheet credit exposure,
contingent liabilities are recognized as provisions if the following conditions are met:
(a) An entity has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
228 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-50
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(29) PROVISIONS (CONTINUED)
The amount recognized as a provision shall be the best estimate of the expenditure required to settle the
present obligation at the end of the reporting period with the consideration of risks, uncertainties and the
present value. Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the
current best estimate.
The Group incorporates forward looking information in estimating the expected credit loss for loan
commitments and financial guarantee contracts. Refer to Note 13 and Note 47 for details.
(30) REVENUE RECOGNITION
The Group’s main revenue is recognized on the following bases:
Insurance revenue
The Group recognizes insurance revenue as it provides insurance contract services under groups of
insurance contracts.
For insurance contracts not measured under the premium allocation approach, insurance revenue
comprises the relevant amount arising from changes of the liability for remaining coverage that relate to
services for which the Group expects to receive consideration, excludes investment components, and the
amortization of insurance acquisition cash flows, the details are as follows:
(a) Amounts relating to the changes in the liability for remaining coverage:
(i) expected insurance service expenses incurred in the period;
(ii) change in the risk adjustment for non-financial risk;
(iii) amount of contractual service margin recognized for services provided in the period;
FINANCIAL STATEMENTS
(iv) other amounts, such as experience adjustments for premium receipts that relate to current or
past service, if any;
(b) For insurance acquisition cash flows recovery, the Group allocates a portion of premiums related
to the recovery in a systematic way based on the passage of time over the expected coverage of a
group of contracts. The allocated amount is recognized as insurance revenue with the same amount
recognized as insurance service expenses.
For insurance contracts measured under the premium allocation approach, the Group recognizes insurance
revenue for the period based on the passage of time by allocating expected premium receipts to each
period of service. However, when the expected pattern of release from risk during the coverage period
differs significantly from the passage of time, the premium receipts are allocated based on the expected
pattern of incurred insurance service expenses.
Interest income
Interest income for interest bearing financial instruments, is recognized in the income statement using the
effective interest rate method. When a financial asset is impaired, the Group reduces the carrying amount
to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument, and continues unwinding the discount as interest income.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 229
F-51
F-51
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(30) REVENUE RECOGNITION (CONTINUED)
Fees and commission income of non-insurance operations
The fees and commission income of non-insurance operations from a diverse range of services it provides
to its customers are recognized when the control of services is transferred to customers. Fee income can
be divided into the following main categories:
Fee income earned from services that are provided over a certain period of time
Fees earned from the provision of services over a period of time are accrued over that period. These
fees include investment fund administration fees, custodian fees, fiduciary fees, credit related fees, asset
management fees, portfolio and other management fees, advisory fees, etc. However, loan commitment
fees for loans that are likely to be drawn down are deferred (together with any incremental costs) and
recognized as an adjustment to the effective interest rate on the loan.
Fee income from providing transaction services
Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such
as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses,
are recognized on the completion of the underlying transaction and the control of services is transferred
to customers. Fees or components of fees that are linked to a certain performance are recognized after
fulfilling the corresponding criteria. These fees may include underwriting fees, corporate finance fees and
brokerage fees. Loan syndication fees are recognized in the income statement when the syndication has
been completed and the Group retains no part of the loans for itself or retains part at the same effective
interest rate as for the other participants.
Dividend income
Dividend income is recognized when the right to receive dividend payment is established.
Expressway toll fee income
Expressway toll fee income is recognized upon the completion of the performance obligation of services.
Sale of goods
Revenue from the sale of goods is recognized when control of the goods has been transferred. Control
of goods or services refers to the ability to direct the use of, and obtain substantially all of the remaining
benefits from, the goods or services.
The amount of revenue from the sale of goods shall be measured by the transaction price, which is
allocated to each performance obligation. The transaction price is the amount of consideration to be
entitled in exchange for transferring promised goods to a customer. The Group considers the terms of the
contract and its customary business practices to determine the transaction price. When determining the
transaction price, the Group considers the effects of variable consideration, the existence of a significant
financing component in the contract, non-cash consideration and consideration payable to a customer.
The part with unconditional rights is recognized as a receivable by the Group, while the rest is recognized
as contracts assets. And the impairment provisions of receivables and contracts assets are recognized
based on ECL. If the consideration received or receivable from the contract exceeds the performance
completed, the excess part would be recognized as contracts liabilities. The Group presents the net amount
by the offsetting between contracts assets and contracts liabilities under one contact.
230 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-52
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(31) LEASES
Leases refer to a contract in which the lessor transfers the right to use the assets to the lessee for a
certain period of time to obtain the consideration. Leases where substantially all the rewards and risks of
ownership of assets remain with the lessor are accounted for as operating leases.
As lessor of operating leases
Where the Group is the lessor, assets leased by the Group under operating leases are included in
investment properties and rentals receivable under such operating leases are credited to the income
statement on the straight-line basis over the lease terms. Contingent rents are recognized as profit or loss
in the period in which they are earned.
Group as a lessee
The Group mainly leases buildings as right-of-use assets. The Group applies the lease recognition
exemption to short-term leases and leases of low-value assets, and does not recognize the right-of-use
assets and lease liabilities. Lease payments on short-term leases and leases of low-value assets are
recognized as costs of asset or expenses on a straight-line basis over the lease term. Except for lease
applying lease recognition exemption, leases are recognized as a right-of-use asset at the date at which the
lease begins, lease liabilities are initial measured at the present value of the lease payments that have not
been paid. Lease payments include fixed payments, variable lease payment based on an index or a rate, the
exercise price of a purchase option if the lessee is reasonably certain to exercise that option and payments
of penalties for terminating the lease, etc. The variable lease payments determined on a certain percentage
of sales are not included in the lease payments and are recognized in profit or loss when incurred.
Right-of-use assets are initial measured at cost comprising the amount of the initial measurement of lease
liability, any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs and deduct any lease incentives receivable. The right-of-use asset is depreciated
over the asset’s useful life on a straight-line basis if the Group can reasonably determine the ownership of
the assets at the end of the lease term; The right-of-use asset is depreciated over the shorter of the asset’s
FINANCIAL STATEMENTS
useful life and the lease term if the ownership of the assets is uncertain at the end of the lease term. When
the recoverable amount is lower than the carrying amount of the right-of-use asset, the Group reduces its
carrying amount to the recoverable amount.
(32) EMPLOYEE BENEFITS
Pension obligations
The employees of the Group are mainly covered by various defined contribution pension plans. The Group
makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
the related government authorities that are responsible for the pension liability to retired employees. Under
such plans, the Group has no other significant legal or constructive obligations for retirement benefits
beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
group life insurance but the amounts involved are insignificant.
Housing benefits
The employees of the Group are entitled to participate in various government-sponsored housing funds.
The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of
the employees. The Group’s liability in respect of these funds is limited to the contributions payable in each
period.
Medical benefits
The Group makes monthly contributions for medical benefits to the local authorities in accordance with the
relevant local regulations for the employees. The Group’s liability in respect of employee medical benefits is
limited to the contributions payable in each period.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 231
F-53
F-53
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(33) SHARE-BASED PAYMENT
Equity-settled share-based payment transactions
The Group operates an equity-settled, share-based compensation plan, under which the Group receives
services from employees as consideration for equity instruments.
The total amount to be expensed is determined by reference to the fair value of the shares granted, which
includes the impact of market performance conditions (for example, an entity’s share price) but excludes
the impact of any service and non-market performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the entity over a specified time period) and includes
the impact of any non-vesting conditions (for example, the requirement for employees to save or holding
shares for a specified period of time). The Group estimates the number of total shares expected to vest
taking into consideration of service and non-market performance conditions. Based on number of shares
expected to vest, related cost or expense is recognized over the vesting period according to fair value of
the shares granted on granted date.
At the end of each reporting period, the Group revises its estimates of the number of options and awarded
shares that are expected to vest based on the non-marketing performance and service conditions.
It recognizes the impact of the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The Company settles with the awardees under the share purchase scheme upon vesting.
(34) TAX
Income tax comprises current and deferred tax. Income tax is recognized in the income statement, or in
other comprehensive income or in equity if it relates to items that are recognized in the same or a different
period directly in other comprehensive income or in equity.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
(a) when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible
temporary differences; and
(b) in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
232 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-54
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(34) TAX (CONTINUED)
Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused
tax credits and any unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry-forward of unused tax credits and
unused tax losses can be utilized, except:
(a) when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give
rise to equal taxable and deductible temporary differences; and
(b) in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be utilized. Conversely, previously unrecognized deferred tax assets are
reassessed by the end of each reporting period and are recognized to the extent that it is probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
FINANCIAL STATEMENTS
(35) DIVIDENDS
When the final dividends proposed by the directors have been approved by the shareholders and declared,
they are recognized as a liability.
Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and
articles of association grant the directors the authority to declare interim dividends. Consequently, interim
dividends are recognized immediately as a liability when they are proposed and declared.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 233
F-55
F-55
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
2. MATERIAL ACCOUNTING POLICIES (CONTINUED)
(36) RELATED PARTIES
A party is considered to be related to the Group if:
(a) the party is a person or a close member of that person’s family and that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
Or
(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same Group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third
entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a); and
(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(37) SEGMENT REPORTING
For management purposes, the Group is organized into operating segments based on the internal
organization structure, management requirements and internal reporting. The reportable segments are
determined and disclosed based on operating segments and the presentation is consistent with the
information reported to the Board of Directors.
Operating segments refer to the Group’s component that satisfies the following conditions:
(a) The component produces income and expenses in its daily operation;
(b) The management of the Company regularly assesses the operating results of its business units for the
purpose of making decisions about resource allocation and performance assessment;
(c) The Group is able to obtain the accounting information such as the financial position, operating results
and cash flows of the component.
Two or more operating segments can be merged as one if they have similar characteristics and satisfy
certain conditions.
234 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-56
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES
The Group makes estimates and judgements that affect the reported amounts of revenues, expenses,
assets and liabilities and the disclosure of contingent liabilities in these financial statements. Estimates
and judgements are continually assessed based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
In the process of applying the Group’s accounting policies, management has made the following
judgements and accounting estimation, which have the significant effect on the amounts recognized in the
financial statements.
(1) FAIR VALUE OF FINANCIAL INSTRUMENTS DETERMINED USING VALUATION
TECHNIQUES
Fair value, in the absence of an active market, is estimated by using valuation techniques, applying
currently applicable and sufficiently available data, and the valuation techniques supported by other
information, mainly include market approach and income approach, reference to the recent arm’s length
transactions, current market value of another instrument which is substantially the same, and by using the
discounted cash flow analysis and option pricing models.
When using valuation techniques to determine the fair value of financial instruments, the Group would
choose the input value in consistent with market participants, considering the transactions of related assets
and liabilities. All related observable market parameters are considered in priority, including interest rate,
foreign exchange rate, commodity prices and share prices or index. When related observable parameters
are unavailable or inaccessible, the Group uses unobservable parameters and makes estimates for credit
risk, market volatility and liquidity adjustments.
Using different valuation techniques and parameter assumptions may lead to significant difference of fair
value estimation.
(2) CLASSIFICATION OF FINANCIAL ASSETS
FINANCIAL STATEMENTS
The judgements in determining the classification of financial assets include the analysis of business models
and the contractual cash flows characteristics.
An entity’s business model refers to how an entity manages its financial assets in order to generate cash
flows. That is, the entity’s business model determines whether cash flows are arising from collecting
contractual cash flows, selling financial assets or both. The business model of managing financial assets
is not determined by a single factor or activity. Instead, the entity should consider all relevant evidence
available when making the assessment. Relevant evidence mainly includes, but not limited to, how the cash
flow of the group of assets is collected, how the performance of the group of assets is reported to key
management personnel, and how the risk of group of assets is being assessed and managed.
The contractual cash flows characteristics of financial assets refer to the cash flow attributes of the
financial assets reflecting the economic characteristics of the relevant financial assets (i.e., whether the
contractual cash flows generated by the relevant financial assets on a specified date solely represents the
payments of principal and interest). The principal amount refers to the fair value of the financial asset at
initial recognition. The principal amount may change throughout the lifetime of the financial assets due
to prepayment or other reasons. The interest includes the time value of money, the credit risk associated
with the outstanding principal amount for a specific period, other basic lending credit risks, and the
consideration of costs and profits.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 235
F-57
F-57
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(3) MEASUREMENT OF THE EXPECTED CREDIT LOSSES
The measurement of the expected credit losses for financial assets measured at amortized cost and FVOCI
is an area that requires the use of complex models and significant assumptions about future economic
conditions and credit behaviour. Explanation of the inputs, assumptions and estimation techniques used in
measuring ECL is further detailed in Note 49.
A number of significant judgements are also required in applying the accounting requirements for
measuring ECL, such as:
(a) Determining criteria for significant increase in credit risk;
(b) Choosing appropriate models and assumptions for the measurement of ECL;
(c) Establishing the number and relative weightings of forward-looking scenarios for each type of product
and the associated ECL; and
(d) Establishing groups of similar financial assets for the purposes of measuring ECL.
(4) LEVEL OF AGGREGATION AND RECOGNITION OF GROUP OF INSURANCE CONTRACTS
For contracts issued to which the Group does not apply the premium allocation approach, the judgements
exercised in determining whether contracts are onerous on initial recognition or those that have no
significant possibility of becoming onerous subsequently are:
(a) based on the likelihood of changes in assumptions which, if they occurred, would result in the
contracts becoming onerous; and
(b) using information about profitability estimation for the relevant group of products.
(5) ELIGIBILITY FOR THE PREMIUM ALLOCATION APPROACH AND THE VARIABLE FEE
APPROACH
The Group assesses the eligibility for the premium allocation approach and the variable fee approach
when measures a group of insurance contracts on initial recognition, based on the characteristics of the
insurance contracts and applicable facts and circumstances.
(6) DETERMINATION OF COVERAGE UNIT
The Group allocates the contractual service margin at the end of the period equally to each coverage unit
provided in the current period and expected to be provided in the future, and recognizes as insurance
revenue in each period. The Group identifies the coverage units of a group of insurance contracts in each
period. The number of coverage units in a group is the quantity of insurance contract services provided
by the contracts in the group, determined by considering the quantity of the benefits provided and the
expected coverage period.
In assessing the quantity of services provided by insurance contracts, the Group considers the terms and
benefit features of the contracts, based on the service pattern of insurance coverage, investment-return
service and investment-related service, as applicable. For contracts providing multiple services, the Group
determines the relative weighting of each services based on related factors, including the expected
maximum benefits, investment component, etc.
Expected coverage period is derived based on the consideration of the contract terms and estimates used
when measures fulfilment cash flows, including mortality rates, morbidity rates, lapse rate, etc.
236 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-58
F-58
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(7) ESTIMATION OF THE FULFILMENT CASH FLOWS OF INSURANCE CONTRACTS
At the end of the reporting period, when measuring the insurance contract liabilities, the Group needs
to make a reasonable estimate of the present value of the fulfilment cash flows within the boundary
of insurance contract, based on information currently available at the end of the reporting period, and
considers the risk adjustment for non-financial risk.
The main assumptions used in measuring the present value of the fulfilment cash flows include discount
rates, insurance incident occurrence rates, lapse rates, expense assumption, policy dividend assumptions,
claim ratios, risk adjustment for non-financial risk, etc.
(a) Discount rates
For the estimated fulfilment cash flows that do vary based on the returns on underlying items and those
that do not, the Group determines discount rates applying the bottom-up approach, which means the
discount rates are determined by base rate curve with comprehensive premium in consideration of the time
value of money. The comprehensive premium is added by considering taxation impacts, the liquidity and
other relevant factors. The current discount rate assumption for the measurement as at 31 December 2023
ranged from 2.62% to 4.60% (31 December 2022: 2.59%-4.60%).
The discount rate assumptions are affected by the future macro-economy, capital market, investment
channels of insurance funds, investment strategy, etc., and therefore subject to uncertainty.
(b) Insurance incident occurrence rates
The Group uses reasonable estimates, based on market and actual experience and expected future
development trends, in deriving assumptions of mortality rates, morbidity rates, disability rates, etc.
The assumption of mortality rates is based on the Group’s prior experience data on mortality rates,
estimates of current and future expectations, the industrial benchmark and the understanding of the China
FINANCIAL STATEMENTS
insurance market. The assumption of mortality rates is presented as a percentage of “China Life Insurance
Mortality Table (2010-2013)”, which is the industry standard for life insurance in China. The assumption
of morbidity rates is determined based on the industrial benchmark, the Group’s assumptions used in
product pricing, experience data of morbidity rates, and estimates of current and future expectation.
The assumptions of mortality and morbidity rates are affected by factors such as changes in lifestyles
of national citizens, social development, and improvement of medical treatment, and hence subject to
uncertainty.
(c) Lapse rates
The Group uses reasonable estimates, based on actual experience and future development trends, in
deriving lapse rate assumptions. The assumptions of lapse rates are determined by reference to different
pricing interest rates, product categories and sales channels.
(d) Expense assumption
The Group uses reasonable estimates, based on an expense study and future development trends, in
deriving expense assumptions. If the future expense level becomes sensitive to inflation, the Group will
consider the inflation factor as well in determining expense assumptions. The expense assumptions include
assumptions of insurance acquisition cash flows, policy administration and maintenance costs, and claim
handling costs.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 237
F-59
F-59
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(7) ESTIMATION OF THE FULFILMENT CASH FLOWS OF INSURANCE CONTRACTS
(CONTINUED)
(e) Policy dividend assumptions
The Group uses reasonable estimates, based on expected investment returns of participating insurance
accounts, participating dividend policy, policyholders’ reasonable expectations, etc. in deriving policy
dividend assumptions. As at 31 December 2023, policyholder dividend assumption was determined based on
75% (31 December 2022: 75%) of the interest and mortality surplus for individual participating business.
(f) Claim ratios
The Group uses reasonable estimates, based on historical claim development experience and claims paid,
with consideration of adjustments to company policies like underwriting policies, level of premium rates,
claim management and the changing trends of external environment such as macroeconomic, regulations,
and legislation, in deriving claim development factors and claim ratios.
(g) Risk adjustment for non-financial risk
The Group uses the confidence level, confidence level conversion to determine the risk adjustment for
non-financial risk. As at 31 December 2023, the risk adjustment for non-financial risk of insurance contracts
and reinsurance contracts held was determined based on the confidence level of 75% (31 December 2022:
75%).
(8) DETERMINATION OF CONTROL OVER THE STRUCTURED ENTITIES
To determine whether the Group controls the structured entities of which the Group acts as an asset
manager, management applies judgement based on all relevant fact and circumstance to determine
whether the Group is acting as the principal or agent for the structured entities. If the Group is acting as
the principal, it has control over the structured entities. In assessing whether the Group is acting as the
principal, the Group considers factors such as scope of the asset manager’s decision-making authority,
rights held by other parties, remuneration to which it is entitled, and exposure to variable returns results
from its additional involvement with structured entities. The Group will perform reassessment once the fact
and circumstance changes leading to changes in above factors.
For further disclosure in respect of the maximum risk exposure of unconsolidated structured entities of the
Group, see Note 49.(8).
238 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-60
F-60
4. SCOPE OF CONSOLIDATION
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below:
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Life Shenzhen, Corporation Life insurance, Shenzhen 99.51% – 99.51% 33,800,000,000
Ping An Property & Casualty Shenzhen, Corporation Property and casualty 99.55% – 99.55% 21,000,000,000
insurance, Shenzhen
Ping An Bank Co., Ltd. (ii) Shenzhen, Corporation Banking, Shenzhen 49.56% 8.40% 58.00% 19,405,918,198
(“Ping An Bank”)
Ping An Trust Co., Ltd. Shenzhen, Corporation Investment and trust, 99.88% – 99.88% 13,000,000,000
(“Ping An Trust”) Shenzhen
Ping An Securities Co., Ltd. Shenzhen, Corporation Securities investment and 40.96% 55.59% 96.62% 13,800,000,000
(“Ping An Securities”) brokerage, Shenzhen
Ping An Annuity Shanghai, Corporation Annuity insurance, 94.18% 5.79% 100.00% 11,603,419,173
Shanghai
Ping An Asset Management Co., Ltd. Shanghai, Corporation Asset management, 98.67% 1.33% 100.00% 1,500,000,000
Shanghai
Ping An Health Insurance Shanghai, Corporation Health insurance, Shanghai 74.33% 0.68% 75.01% 4,616,577,790
China Ping An Insurance Overseas Hong Kong, Corporation Investment holding, 100.00% – 100.00% HKD7,085,000,000
FINANCIAL STATEMENTS
(Holdings) Limited Hong Kong
China Ping An Insurance (Hong Kong) Hong Kong, Corporation Property and casualty – 100.00% 100.00% HKD490,000,000
Company Limited insurance, Hong Kong
Ping An International Financial Leasing Shanghai, Corporation Financial leasing, Shanghai 69.44% 30.56% 100.00% 14,500,000,000
Co., Ltd. (“Ping An Financial Leasing”)
Ping An of China Asset Management Hong Kong, Corporation Asset management, – 100.00% 100.00% HKD395,000,000
(Hong Kong) Company Limited Hong Kong
Shenzhen Ping An Innovation Capital Shenzhen, Corporation Investment holding, – 99.88% 100.00% 4,000,000,000
Investment Co., Ltd. Shenzhen
Ping An Trendwin Capital Management Shanghai, Corporation Investment consulting, – 99.75% 100.00% 100,000,000
Co., Ltd. Shanghai
Ping An Real Estate Co., Ltd. Shenzhen, Corporation Property management and – 99.62% 100.00% 21,160,523,628
(“Ping An Real Estate”) investment management,
Shenzhen
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 239
F-61
F-61
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Technology (Shenzhen) Co., Ltd. Shenzhen, Corporation IT services, Shenzhen 37.66% 62.34% 100.00% 5,310,315,757
Shenzhen Ping An Finserve Co., Ltd. Shenzhen, Corporation IT and business process – 100.00% 100.00% 598,583,070
outsourcing services,
Shenzhen
Ping An E-wallet Electronic Commerce Shenzhen, Corporation Internet service, Shenzhen – 77.14% 78.63% 1,000,000,000
Company Limited (“Ping An E-wallet”)
eLink Commerce Company Limited Hong Kong, Corporation E-commerce trade, – 99.89% 100.00% HKD25,124,600
Hong Kong
Shenzhen Wanlitong Network Shenzhen, Corporation Custom loyalty service, – 77.14% 100.00% 200,000,000
Information Technology Co., Ltd. Shenzhen
Shenzhen Ping An Commercial Property Shenzhen, Corporation Property leasing and – 99.50% 99.99% 1,810,000,000
Investment Co., Ltd. (iii) (“Ping An property management,
Commercial Property Investment”) Shenzhen
Ping An Futures Co., Ltd. Shenzhen, Corporation Futures brokerage, – 96.64% 100.00% 721,716,042
Shenzhen
Shenzhen Ping An Real Estate Shenzhen, Corporation Real estate investment and – 100.00% 100.00% 1,310,000,000
Investment Co., Ltd. management, Shenzhen
Shanghai Pingpu Investment Co., Ltd. Shanghai, Corporation Investment management, – 99.51% 100.00% 9,130,500,000
Shanghai
Anseng Investment Company Limited British Virgin Islands, Project investment, British – 99.51% 100.00% USD50,000
Corporation Virgin Islands
Shenzhen Ping An Financial Technology Shenzhen, Corporation Corporation management 100.00% – 100.00% 30,406,000,000
Consulting Co., Ltd. (“Ping An Financial advisory services,
Technology”) Shenzhen
Ping An Tradition International Money Shenzhen, Corporation Currency brokerage, – 66.92% 67.00% 50,000,000
Broking Company Ltd. Shenzhen
Pingan Haofang (Shanghai) E-commerce Shanghai, Corporation Property agency, Shanghai – 100.00% 100.00% 1,930,000,000
Co., Ltd.
Ping An Wealthtone Investment Shenzhen, Corporation Asset management, – 68.11% 100.00% 800,000,000
Management Co., Ltd. Shenzhen
240 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-62
F-62
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Fund Management Company Shenzhen, Corporation Fund raising and – 68.11% 68.19% 1,300,000,000
Limited distribution, Shenzhen
Shenzhen Ping An Financial Center Shenzhen, Corporation Property leasing and – 99.51% 100.00% 6,688,870,000
Development Company Ltd. property management,
Shenzhen
Ping An Insurance Sales Services Co., Shenzhen, Corporation Sales agency of insurance, – 75.10% 75.10% 515,000,000
Ltd. Shenzhen
Ping An Chuang Zhan Insurance Sales & Guangzhou, Corporation Insurance agent, Shenzhen – 99.55% 100.00% 50,000,000
Service Co., Ltd.
Reach Success International Limited British Virgin Islands, Project investment, British – 99.51% 100.00% USD50,000
Corporation Virgin Islands
Jade Reach Investments Limited British Virgin Islands, Project investment, British – 99.51% 100.00% USD50,000
Corporation Virgin Islands
Shenyang Shengping Investment Shenyang, Corporation Property management and – 99.51% 100.00% 419,000,000
Management Co., Ltd. investment management,
Shenyang
FINANCIAL STATEMENTS
Tongxiang Ping An Investment Co., Ltd. Jiaxing, Corporation Investment management, – 99.62% 100.00% 500,000,000
Jiaxing
Ping An Commercial Factoring Co., Ltd. Shanghai, Corporation Commercial factoring, – 100.00% 100.00% 2,700,000,000
Shanghai
Shanxi Changjin Expressway Co., Ltd. Taiyuan, Corporation Expressway operation, – 59.71% 60.00% 750,000,000
Jincheng
Shanxi Jinjiao Expressway Co., Ltd. Taiyuan, Corporation Expressway operation, – 59.71% 60.00% 504,000,000
Jincheng
Ping An Caizhi Investment Management Shenzhen, Corporation Equity investment, – 96.55% 100.00% 300,000,000
Company Limited (iii) Shenzhen
Ping An of China Securities (Hong Kong) Hong Kong, Corporation Investment holding, Hong – 96.55% 100.00% HKD663,514,734
Company Limited Kong
Ping An of China Futures (Hong Kong) Hong Kong, Corporation Futures brokerage, Hong – 96.55% 100.00% HKD20,000,000
Company Limited Kong
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 241
F-63
F-63
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An of China Capital (Hong Kong) Hong Kong, Corporation Investment management, – 96.55% 100.00% HKD20,000,000
Company Limited Hong Kong
China PA Securities (Hong Kong) Hong Kong, Corporation Securities investment and – 96.55% 100.00% HKD440,000,000
Company Limited brokerage, Hong Kong
Shanghai Lufax Fund Sales Co., Ltd. Shanghai, Corporation Fund sales, Shanghai – 95.43% 100.00% 20,000,000
Fuer Insurance Broker Co., Ltd. Shanghai, Corporation Insurance brokerage – 100.00% 100.00% 50,000,000
service, Shanghai
Beijing Shuangronghui Investment Co., Beijing, Corporation Property leasing, Beijing – 99.51% 100.00% 256,323,143
Ltd.
Chengdu Ping An Property Investment Chengdu, Corporation Real estate investment and – 99.51% 100.00% 840,000,000
Co., Ltd. management, Chengdu
Hangzhou Pingjiang Investment Co., Ltd. Hangzhou, Corporation Real estate development – 99.51% 100.00% 1,430,000,000
and management,
Hangzhou
Beijing Jingxinlize Investment Co., Ltd. Beijing, Corporation Investment management, – 99.51% 100.00% 1,160,000,000
Beijing
Anbon Allied Investment Company Hong Kong, Corporation Real estate investment – 99.51% 100.00% GBP90,000,160
Limited and management, United
Kingdom
Talent Bronze Limited Hong Kong, Corporation Real estate investment – 99.51% 100.00% GBP133,000,000
and management, United
Kingdom
Ping An Pioneer Capital Co., Ltd. Shenzhen, Corporation Financial products and – 96.55% 100.00% 1,000,000,000
equity investment,
Shenzhen
Shenzhen Pingke Information Consulting Shenzhen, Corporation Management consulting, – 100.00% 100.00% 5,092,341,943
Co., Ltd. Shenzhen
Beijing Jingping Shangdi Investment Beijing, Corporation Property leasing, Beijing – 99.51% 100.00% 45,000,000
Co., Ltd.
242 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-64
F-64
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Guangzhou Xinping Property Investment Guangzhou, Corporation Property leasing, – 99.51% 100.00% 50,000,000
Co., Ltd. Guangzhou
Shanghai Jahwa (Group) Company Ltd. Shanghai, Corporation Production and sale of – 99.51% 100.00% 5,268,261,234
(“Shanghai Jahwa”) consumer chemicals,
Shanghai
Shanghai Jahwa United Co., Ltd. (iii) Shanghai, Corporation Industry, Shanghai – 51.56% 51.88% 678,873,194
Falcon Vision Global Limited British Virgin Islands, Investment management, – 99.51% 100.00% USD50,000
Corporation Shanghai
Shanghai Zean Investment Management Shanghai, Corporation Property leasing, Shanghai – 99.51% 100.00% 4,810,000,000
Company Limited
PA Dragon LLC USA, Corporation Logistics and real estate, – 99.52% 100.00% USD143,954,940
USA
Shanghai Pingan Automobile Shanghai, Corporation E-commerce, Shanghai – 94.74% 94.74% 63,330,000
E-commerce Co., Ltd.
Shanghai Gezhouba Yangming Property Shanghai, Corporation Real estate development – 99.51% 100.00% 20,000,000
Co., Ltd. and management,
FINANCIAL STATEMENTS
Shanghai
Shanghai Jinyao Investment Management Shanghai, Corporation Investment management, – 99.05% 100.00% 1,290,000,000
Co., Ltd. Shanghai
Shanghai Pingxin Asset Management Shanghai, Corporation Asset management, – 100.00% 100.00% 1,010,000,000
Co., Ltd. Shanghai
Shenzhen Qianhai Credit Service Centre Shenzhen, Corporation Credit information services, – 100.00% 100.00% 345,075,000
Co., Ltd. Shenzhen
Pingan Real Estate Capital Limited Hong Kong, Corporation Investment platform, – 99.62% 100.00% 2,536,129,600
Hong Kong
Shenzhen Pulian Consulting Co., Ltd. Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 100,000,000
Shenzhen
Guangzhou Ping An Good Loan Guangzhou, Corporation Micro loan, Guangzhou – 100.00% 100.00% 600,000,000
Microfinance Co., Ltd.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 243
F-65
F-65
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
An Ke Technology Company Limited Hong Kong, Corporation Investment management – 100.00% 100.00% USD582,996,000
and investment
consulting, Hong Kong
Ping An Pay Technology Service Co., Ltd. Shenzhen, Corporation Internet service, Shenzhen – 77.14% 100.00% 680,000,000
Ping An Pay Electronic Payment Co., Ltd. Shanghai, Corporation Internet service, Shanghai – 77.14% 100.00% 489,580,000
Tongxiang Anhao Investment Jiaxing, Corporation Investment management, – 99.81% 100.00% 300,000,000
Management Co., Ltd. Jiaxing
Ping An Infrastructure Investment Fund Shenzhen, Corporation Investment management, – 98.02% 99.00% 1,000,000,000
Management Co., Ltd. Shenzhen
Ping An Fortune Management Co., Ltd. Shanghai, Corporation Consulting services, – 100.00% 100.00% 100,000,000
Shanghai
Shenzhen Dingshuntong Investment Co., Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 100,000,000
Ltd. Shenzhen
Shenzhen Ping An Evergreen Investment Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 1,500,100,000
Development Holding Co., Ltd. Shenzhen
Ping An International Financial Leasing Tianjin, Corporation Financial leasing, Tianjin – 100.00% 100.00% 10,400,000,000
(Tianjin) Co., Ltd.
Shenzhen Anpu Development Co., Ltd. Shenzhen, Corporation Logistics and warehousing, – 79.61% 80.00% 5,625,000,000
Shenzhen
China PA Asset Management (Hong Hong Kong, Corporation Asset management, – 96.55% 100.00% HKD10,000,000
Kong) Company Limited Hong Kong
Shanghai Tianhe Insurance Brokerage Shanghai, Corporation Insurance brokerage, – 42.52% 100.00% 50,000,000
Co., Ltd. Shanghai
Helios P.A. Company Limited Hong Kong, Corporation Project investment, – 99.51% 100.00% USD677,161,910
Hong Kong
Ping An Urban-Tech (Shenzhen) Co., Ltd. Shenzhen, Corporation IT services, Shenzhen – 79.21% 100.00% 50,000,000
Shenzhen Ping An Chuangke Investment Shenzhen, Corporation Investment management, – 99.81% 100.00% 100,000,000
Management Co., Ltd. Shenzhen
244 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-66
F-66
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Shenzhen Anchuang Investment Shenzhen, Corporation Investment management, – 99.81% 100.00% 100,000,000
Management Co., Ltd. Shenzhen
Lianxin (Shenzhen) Investment Shenzhen, Corporation Investment management, – 99.72% 100.00% 5,100,000,000
Management Co., Ltd. (“Lianxin Shenzhen
Investment”)
Autohome Inc. Cayman Islands, Automotive internet – 42.52% 46.50% USD1,273,469
Corporation platform, Beijing
Mayborn Group Limited United Kingdom, Infant products, United – 51.56% 100.00% GBP1,154,873
Corporation Kingdom
Jiaxing Ping An Cornerstone I Equity Jiaxing, Corporation Investment management, – 99.51% 100.00% 1,000,000
Investment Management Co., Ltd. Shanghai
Ping An Wealth Management Co., Ltd. Shenzhen, Corporation Asset management, – 57.96% 100.00% 5,000,000,000
Shenzhen
TTP Car Inc. Cayman Islands, Second-hand car platform, – 21.69% 51.00% USD15,753
Corporation Shanghai
Shenzhen Shengjun Investment Shenzhen, Corporation Investment management, –
FINANCIAL STATEMENTS
99.72% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Overseas W.H. Investment Company Cayman Islands, Investment holding, – 100.00% 100.00% USD5,038,967,126
Limited Corporation Cayman Islands
Shenzhen Pingjia Investment Shenzhen, Corporation Investment platform, – 99.81% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Chongqing Youshengda Real Estate Chongqing, Corporation Real estate consulting, – 99.51% 100.00% 12,537,286,000
Consulting Co., Ltd. Chongqing
Hangzhou Xiaoshan Ping An Cornerstone Hangzhou, Corporation Investment management, – 99.51% 100.00% 10,000,000
II Equity Investment Co., Ltd. Shanghai
Shenzhen Hengchuang Investment Shenzhen, Corporation Investment platform, – 99.62% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Global Voyager Fund (HK) Company Hong Kong, Corporation Asset management, – 100.00% 100.00% USD14,794,701
Limited Hong Kong
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 245
F-67
F-67
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
China PA Wealth Management (Hong Hong Kong, Corporation Insurance brokerage, – 96.55% 100.00% HKD1,000,000
Kong) Company Limited Hong Kong
Ping An Commodities Trading Co., Ltd. Shenzhen, Corporation Commodity trade, – 96.64% 100.00% 1,000,000,000
Shenzhen
Shanghai Raffles Kaixuan Commercial Shanghai, Corporation Property leasing and – 69.66% 70.00% 2,208,601,418
Management Service Co., Ltd. property management,
Shanghai
Shanghai Huaqing Real Estate Shanghai, Corporation Property leasing and – 59.71% 60.00% USD30,000,000
Management Co., Ltd. property management,
Shanghai
Beijing Xinjie Real Estate Development Beijing, Corporation Property leasing and – 69.66% 70.00% USD24,500,000
Co., Ltd. property management,
Beijing
Chengdu Raffles City Industry Co., Ltd. Chengdu, Corporation Property leasing and – 69.66% 70.00% USD217,700,000
property management,
Chengdu
Raffles City (Hangzhou) Real Estate Hangzhou, Corporation Property leasing and – 69.66% 70.00% USD299,740,000
Development Co., Ltd. property management,
Hangzhou
Ningbo Xinyin Business Management Ningbo, Corporation Property leasing and – 69.66% 70.00% 800,000,000
Service Co., Ltd. property management,
Ningbo
Beijing Jinkunlize Property Co., Ltd. Beijing, Corporation Property leasing and – 99.51% 100.00% 3,380,000,000
property management,
Beijing
New Founder (Beijing) Enterprise Beijing, Corporation Corporation management, – 99.51% 100.00% 50,000,000
Management Development Co., Ltd. Beijing
New Founder Holding Development Zhuhai, Corporation Investment and technical – 66.18% 66.51% 7,250,000,000
Company Limited (“New Founder services, Beijing
Group”)
Founder Securities Co., Ltd. (“Founder Changsha, Corporation Securities brokerage, – 19.00% 28.71% 8,232,101,395
Securities”) Changsha
246 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-68
F-68
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2023 are set out below
(Continued):
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
PKU Healthcare Management Co., Ltd. Zhuhai, Corporation Hospital management, – 66.18% 100.00% 3,000,000,000
Beijing
Founder Cifco Futures Co., Ltd. Beijing, Corporation Futures brokerage, Beijing – 17.56% 92.44% 1,005,000,000
Founder Financing Securities Co., Ltd. Beijing, Corporation Securities underwriting and – 19.00% 100.00% 1,400,000,000
sponsorship, Beijing
Shanghai Jifeng Investment Management Shanghai, Corporation Investment management, – 17.56% 100.00% 500,000,000
Co., Ltd. (iii) Shanghai
Beijing Founder Fubon Crown Asset Beijing, Corporation Customer-specific asset – 12.67% 100.00% 130,000,000
Management Co., Ltd. management, Beijing
Founder Securities (Hong Kong) Limited Hong Kong, Corporation Securities trading and – 19.00% 100.00% HKD410,000,000
consulting, Hong Kong
Founder Asset Management (Hong Hong Kong, Corporation Asset management, – 19.00% 100.00% HKD22,000,000
Kong) Limited Hong Kong
Founder Fubon Fund Management Co., Beijing, Corporation Fund raising and – 12.67% 66.70% 660,000,000
Ltd. distribution, Beijing
FINANCIAL STATEMENTS
Notes:
(i) The proportion of ordinary shares, as shown in the above table, is the sum product of direct holding by the Company and indirect
holding by a multiplication of the proportion of shares held in each holding layer. The proportion of votes is the sum product of the
proportion of votes held directly by the Company and indirectly via subsidiaries controlled by the Company.
(ii) For the year ended 31 December 2023, Ping An Bank’s profit attributable to its non-controlling interest was RMB19,530 million (2022:
RMB19,136 million), the dividend paid to its non-controlling interest was RMB4,667 million (2022: RMB4,200 million). As at 31 December
2023, Ping An Bank’s equity attributable to its non-controlling interest was RMB227,551 million (31 December 2022: RMB211,724 million).
Ping An Bank’s summarized financial information is disclosed in “segment reporting” under the “Banking” segment.
(iii) The registered capitals of these subsidiaries were changed in 2023.
The Company and its subsidiaries are subject to the Company Law as well as various listing requirements,
where applicable. Capital or asset transactions between the Company and its subsidiaries might be
subject to regulatory requirements. Certain of the Company’s subsidiaries are subject to regulatory capital
requirements. As such, there are restrictions on the Group’s ability to access or use the assets of these
subsidiaries or use them to settle the liabilities of these subsidiaries. Please refer to Note 49.(7) for detailed
disclosure on the relevant regulatory capital requirements.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 247
F-69
F-69
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
4. SCOPE OF CONSOLIDATION (CONTINUED)
(2) As at 31 December 2023, the Group consolidated the following principal structured entities:
Attributable equity Paid-in capital
Name interest (RMB) Principal activities
Ping An Asset Xinxiang No.28 Assets 99.51% 18,284,946,602 Investment in wealth
Management management products
Huabao East Aggregated Fund Trust 98.87% 12,000,000,000 Investment in debt schemes
Scheme
Shanghai Trust Huarong Aggregated Fund 99.52% 9,500,000,000 Investment in debt schemes
Trust Scheme
Ping An Asset Xinxiang No.19 Assets 99.51% 6,289,478,815 Investment in wealth
Management management products
Ping An Asset Xinxiang No.5 Assets 99.55% 102,235,678 Investment in wealth
Management management products
Ping An Asset Xinxiang No.20 Assets 99.51% 5,511,269,442 Investment in wealth
Management management products
Ping An Asset Xinxiang No.18 Assets 99.51% 5,540,918,880 Investment in wealth
Management management products
Ping An Fund – Ping An Life Fixed Income 99.51% 11,784,108,709 Investment in wealth
No. 1 MOM Single Asset Management management products
Plan
Ping An Fund – Ping An Life Equity No. 2 99.51% 20,381,188,007 Investment in wealth
MOM Single Asset Management Plan management products
248 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-70
F-70
5. SEGMENT REPORTING
The segment businesses are separately presented as the insurance segment, the banking segment, the
asset management segment, the technology business segment and the other businesses, based on the
products and service offerings. The insurance segment is divided into the life and health insurance and
the property and casualty insurance segment which are in line with the nature of products, risk and asset
portfolios. The types of products and services from which reportable segments derive revenue are listed
below:
– The life and health insurance segment offers a comprehensive range of life insurance products to
individual and corporate customers, including term, whole-life, endowment, annuity, investment-linked,
universal life and health care and medical insurance, reflecting performance summary of Ping An Life,
Ping An Annuity and Ping An Health Insurance;
– The property and casualty insurance segment offers a wide variety of insurance products to individual
and corporate customers, including auto insurance, non-auto insurance, accident and health insurance,
reflecting performance of Ping An Property & Casualty;
– The banking segment undertakes loan and intermediary business with corporate customers and retail
customers as well as wealth management and credit card services with individual customers, reflecting
performance of Ping An Bank;
– The asset management segment provides trust products services, brokerage services, trading services,
investment banking services, investment management services, finance lease business and other
asset management services, reflecting performance summary of Ping An Trust, Ping An Securities,
Ping An Asset Management Co., Ltd. and Ping An Financial Leasing and the other asset management
subsidiaries;
– The technology business segment provides various financial and daily-life services through internet
platforms such as financial transaction information service platform, health care service platform,
reflecting performance summary of the technology business subsidiaries, associates and joint ventures.
FINANCIAL STATEMENTS
Except for the above business segments, the other segments did not have a material impact on the Group’s
operating outcome, and as such are not separately presented.
Management monitors the operating results of the Group’s business units separately for the purpose of
making decisions with regard to resource allocation and performance assessment. Segment performance is
assessed based on key performance indicators.
Transfer prices between operating segments are based on the amount stated in the contracts agreed by
both sides.
During 2023 and 2022, revenue from the Group’s top five customers accounted for less than 1% of the total
revenue for the year.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 249
F-71
F-71
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2023 and for the year then ended is as follows:
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
Insurance revenue 223,600 313,458 – – – (618) 536,440
Interest revenue from banking
operations – – 227,617 – – (65) 227,552
Fees and commission revenue from
non-insurance operations 5,424 – 35,042 9,277 – (3,937) 45,806
Including: Inter-segment fees
and commission revenue
from non-insurance
operations (10) – 3,510 331 – (3,831) –
Interest revenue from non-banking
operations 99,000 7,956 – 13,284 801 (2,538) 118,503
Including: Inter-segment interest
revenue from non-
banking operations 82 34 – 3,048 81 (3,245) –
Investment income 19,483 4,623 15,750 (5,173) 493 (1,852) 33,324
Including: Inter-segment
investment income 2,057 133 (17) 132 42 (2,347) –
Including: Operating lease income
from investment
properties 7,893 387 50 41 – (1,465) 6,906
Share of profits and losses of
associates and joint ventures 3,166 465 – 921 583 (3,701) 1,434
Other revenues and other gains 37,663 1,249 915 29,550 18,457 (19,030) 68,804
Including: Inter-segment
other revenues 9,890 58 25 3,136 5,187 (18,296) –
Including: Non-operating gains 423 254 49 85 5 – 816
Total revenue 388,336 327,751 279,324 47,859 20,334 (31,741) 1,031,863
250 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-72
F-72
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2023 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
Insurance service expenses (133,978) (306,390) – – – 190 (440,178)
Allocation of reinsurance premiums
paid (2,714) (12,496) – – – 1,031 (14,179)
Less: Amount recovered from reinsurer 2,538 8,540 – – – (630) 10,448
Net insurance finance expenses for
insurance contracts issued (118,509) (5,483) – – – 33 (123,959)
Less: Net reinsurance finance income
for reinsurance contracts held 55 518 – – – (31) 542
Interest expenses on banking
operations – – (109,626) – – 1,021 (108,605)
Fees and commission expenses on non-
insurance operations (1,415) – (5,612) (1,815) – 69 (8,773)
Net impairment losses on financial
assets and other assets (1,850) (505) (59,094) (17,251) (269) (102) (79,071)
Including: Loan impairment
losses, net – – (62,833) – – – (62,833)
Including: Impairment losses on
investment assets (1,422) (119) 5,239 (13,493) – (145) (9,940)
Including: Impairment losses on
receivables and others (428) (386) (1,500) (3,758) (269) 43 (6,298)
Foreign exchange gains/(losses) 4 (80) 662 (138) (41) (287) 120
General and administrative expenses (21,274) (682) (47,677) (13,650) (13,066) 12,472 (83,877)
Changes in insurance premium reserves – (230) – – – – (230)
Interest expenses on non-banking
FINANCIAL STATEMENTS
operations (8,628) (1,446) – (17,801) (179) 3,708 (24,346)
Including: Financial costs (5,533) (837) – (16,684) (179) 3,767 (19,466)
Including: Interest expenses on assets
sold under agreements
to repurchase and
placements from banks
and other financial
institutions (3,095) (609) – (1,117) – (59) (4,880)
Other expenses (31,979) (679) (259) (13,833) (3,841) 10,953 (39,638)
Total expenses (317,750) (318,933) (221,606) (64,488) (17,396) 28,427 (911,746)
Profit before tax 70,586 8,818 57,718 (16,629) 2,938 (3,314) 120,117
Income tax 2,805 140 (11,263) (2,893) 191 177 (10,843)
Profit for the year 73,391 8,958 46,455 (19,522) 3,129 (3,137) 109,274
– Attributable to owners of the parent 72,598 8,918 26,925 (20,747) 2,054 (4,083) 85,665
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 251
F-73
F-73
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2023 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
Cash and amounts due from banks and
other financial institutions 316,898 47,827 317,991 119,676 27,725 (26,040) 804,077
Balances with the Central Bank and
statutory deposits for insurance
operations 10,573 4,320 270,976 – 5 5 285,879
Accounts receivable 4,650 224 – 29,356 1,747 (341) 35,636
Insurance contract assets – 3 – – – – 3
Reinsurance contract assets 6,066 17,454 – – – (1,305) 22,215
Finance lease receivable – – – 180,674 – – 180,674
Loans and advances to customers – – 3,320,110 – – (1,988) 3,318,122
Financial assets at fair value through
profit or loss 1,049,278 137,743 450,293 149,211 7,821 8,701 1,803,047
Financial assets at amortized cost 166,712 167,956 772,467 189,477 976 (54,235) 1,243,353
Debt financial assets at fair value
through other comprehensive income 2,399,977 16,348 161,931 50,762 – 7,990 2,637,008
Equity financial assets at fair value
through other comprehensive income 251,417 20,138 6,214 46 49 (12,987) 264,877
Investments in associates and joint
ventures 140,452 26,859 – 62,507 78,112 (49,053) 258,877
Others 307,410 37,151 287,134 83,402 22,012 (7,460) 729,649
Segment assets 4,653,433 476,023 5,587,116 865,111 138,447 (136,713) 11,583,417
252 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-74
F-74
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2023 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
Due to banks and other financial
institutions 41,197 1,828 725,633 277,985 645 (83,570) 963,718
Assets sold under agreements to
repurchase 90,788 34,603 58,152 57,396 – 864 241,803
Accounts payable 6,292 168 – 1,863 830 (295) 8,858
Insurance contract liabilities 3,899,625 261,153 – – – (977) 4,159,801
Reinsurance contract liabilities – 53 – – – – 53
Customer deposits and payables to
brokerage customers 51,587 – 3,458,287 64,797 – (40,132) 3,534,539
Bonds payable 57,101 10,543 728,328 165,253 – 2,782 964,007
Others 113,125 42,257 144,388 186,784 21,210 (26,090) 481,674
Segment liabilities 4,259,715 350,605 5,114,788 754,078 22,685 (147,418) 10,354,453
Segment equity 393,718 125,418 472,328 111,033 115,762 10,705 1,228,964
– Attributable to owners of the parent 326,411 124,647 244,777 92,836 97,250 13,090 899,011
Other segment information:
Capital expenditures 5,784 859 4,672 1,611 518 (350) 13,094
Depreciation and amortization 10,560 1,497 6,324 1,156 1,739 (619) 20,657
Total other non-cash expenses charged
to consolidated results 1,850 505 59,094 17,251 269 102 79,071
Other information of life and health insurance segment subject to general model as at 31 December 2023 is
as follows:
FINANCIAL STATEMENTS
Other segment information Life and health insurance
(in RMB million)
Accumulated changes in the fair value and credit risks provision of debt financial
assets at fair value through other comprehensive income, net of tax 74,638
Accumulated insurance finance expenses for insurance contracts issued in other
comprehensive income that may be reclassified subsequently to profit or loss, net of
tax (93,119)
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 253
F-75
F-75
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows:
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
(Restated) (Restated) (Restated) (Restated)
Insurance revenue 232,194 294,222 – – – (435) 525,981
Interest revenue from banking
operations – – 228,878 – – (94) 228,784
Fees and commission revenue from
non-insurance operations – – 37,754 11,296 – (3,068) 45,982
Including: Inter-segment fees and
commission revenue from
non-insurance operations – – 2,768 287 – (3,055) –
Interest revenue from non-banking
operations 93,368 7,961 – 15,760 595 (1,751) 115,933
Including: Inter-segment interest
revenue from non-
banking operations 203 71 – 2,139 87 (2,500) –
Investment income (14,946) 1,849 14,529 1,398 (2,112) (3,029) (2,311)
Including: Inter-segment investment
income 2,255 197 (8) 152 59 (2,655) –
Including: Operating lease income
from investment
properties 7,321 393 46 50 – (1,632) 6,178
Share of profits and losses of
associates and joint ventures 4,344 620 – 5,419 4,196 (4,414) 10,165
Other revenues and other gains 24,229 1,152 544 33,922 19,864 (19,059) 60,652
Including: Inter-segment other
revenues 10,045 27 18 3,217 5,666 (18,973) –
Including: Non-operating gains 159 103 64 10 8 15 359
Total revenue 339,189 305,804 281,705 67,795 22,543 (31,850) 985,186
254 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-76
F-76
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
(Restated) (Restated) (Restated) (Restated)
Insurance service expenses (137,256) (284,978) – – – 13 (422,221)
Allocation of reinsurance premiums
paid (3,480) (12,284) – – – 845 (14,919)
Less: Amount recovered from reinsurer 2,184 8,861 – – – (440) 10,605
Net insurance finance expenses for
insurance contracts issued (94,786) (5,151) – – – 4 (99,933)
Less: Net reinsurance finance income
for reinsurance contracts held 81 490 – – – (7) 564
Interest expenses on banking
operations – – (98,748) – – 1,060 (97,688)
Fees and commission expenses on non-
insurance operations – – (7,546) (2,432) – 50 (9,928)
Net impairment losses on financial
assets and other assets (628) (32) (71,306) (9,352) (600) (2) (81,920)
Including: Loan impairment
losses, net – – (64,168) – – – (64,168)
Including: Impairment losses on
investment assets (570) 19 (6,766) (6,021) 38 – (13,300)
Including: Impairment losses on
receivables and others (58) (51) (372) (3,331) (638) (2) (4,452)
Foreign exchange gains/(losses) (447) (252) 4,548 (614) 34 (125) 3,144
General and administrative expenses (12,631) (657) (51,114) (13,755) (13,543) 11,885 (79,815)
Changes in insurance premium reserves – (78) – – – – (78)
FINANCIAL STATEMENTS
Interest expenses on non-banking
operations (4,448) (1,305) – (19,017) (321) 2,393 (22,698)
Including: Financial costs (2,016) (870) – (18,176) (321) 2,489 (18,894)
Including: Interest expenses on assets
sold under agreements
to repurchase and
placements from banks
and other financial
institutions (2,432) (435) – (841) – (96) (3,804)
Other expenses (20,023) (540) (286) (14,378) (3,896) 11,159 (27,964)
Total expenses (271,434) (295,926) (224,452) (59,548) (18,326) 26,835 (842,851)
Profit before tax 67,755 9,878 57,253 8,247 4,217 (5,015) 142,335
Income tax 7,750 234 (11,737) (4,444) 636 43 (7,518)
Profit for the year 75,505 10,112 45,516 3,803 4,853 (4,972) 134,817
– Attributable to owners of the parent 74,501 10,066 26,380 2,292 3,614 (5,845) 111,008
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 255
F-77
F-77
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
(Restated) (Restated) (Restated) (Restated)
Cash and amounts due from banks and
other financial institutions 336,212 59,688 236,412 130,915 24,076 (12,462) 774,841
Balances with the Central Bank and
statutory deposits for insurance
operations 10,171 4,263 281,115 – 5 5 295,559
Accounts receivable 8,239 117 – 25,975 2,344 (557) 36,118
Reinsurance contract assets 5,374 16,474 – – – (1,233) 20,615
Finance lease receivable – – – 186,858 – – 186,858
Loans and advances to customers – – 3,242,258 – – (4,204) 3,238,054
Financial assets at fair value through
profit or loss 870,375 119,936 446,133 180,050 10,752 13,273 1,640,519
Financial assets at amortized cost 127,624 150,655 731,850 169,245 811 (56,150) 1,124,035
Debt financial assets at fair value
through other comprehensive income 2,215,809 9,587 172,233 94,669 – 8,492 2,500,790
Equity financial assets at fair value
through other comprehensive income 261,484 21,772 6,380 6 49 (24,920) 264,771
Investments in associates and joint
ventures 138,842 26,000 – 82,103 78,487 (44,639) 280,793
Others 289,381 39,495 205,133 97,126 25,268 (9,416) 646,987
Segment assets 4,263,511 447,987 5,321,514 966,947 141,792 (131,811) 11,009,940
256 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-78
F-78
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Asset Technology and
(in RMB million) insurance insurance Banking management business elimination Total
(Restated) (Restated) (Restated) (Restated)
Due to banks and other financial
institutions 39,386 4,366 656,586 293,553 3,428 (74,231) 923,088
Assets sold under agreements to
repurchase 178,291 24,593 13,303 55,139 – 411 271,737
Accounts payable 6,985 185 – 2,653 1,025 (499) 10,349
Insurance contract liabilities 3,424,203 247,871 – – – (897) 3,671,177
Reinsurance contract liabilities – 105 – – – – 105
Customer deposits and payables to
brokerage customers 52,465 – 3,352,266 73,363 – (46,095) 3,431,999
Bonds payable 41,916 10,487 692,075 179,223 – 7,397 931,098
Others 136,877 41,842 172,604 224,146 23,591 (14,669) 584,391
Segment liabilities 3,880,123 329,449 4,886,834 828,077 28,044 (128,583) 9,823,944
Segment equity 383,388 118,538 434,680 138,870 113,748 (3,228) 1,185,996
– Attributable to owners of the parent 317,494 117,799 222,956 117,143 94,937 (1,138) 869,191
Other segment information:
Capital expenditures 7,077 1,204 6,170 2,992 1,681 (1,694) 17,430
Depreciation and amortization 9,650 1,624 6,535 1,273 1,950 (730) 20,302
Total other non-cash expenses
charged to consolidated results 628 32 71,306 9,352 600 2 81,920
Other information of life and health insurance segment subject to general model as at 31 December 2022 is
FINANCIAL STATEMENTS
as follows:
Other segment information Life and health insurance
(in RMB million) (Restated)
Accumulated changes in the fair value and credit risks provision of debt financial assets
at fair value through other comprehensive income, net of tax 37,378
Accumulated insurance finance expenses for insurance contracts issued in other
comprehensive income that may be reclassified subsequently to profit or loss, net of
tax (28,830)
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 257
F-79
F-79
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
6. INSURANCE REVENUE
(in RMB million) 2023 2022
(Restated)
Insurance contracts not measured under the premium allocation
approach
Insurance revenue relating to the changes in the liability for
remaining coverage
Amount of contractual service margin recognized in
profit or loss 77,864 83,460
Change in the risk adjustment for non-financial risk 7,224 7,426
Expected insurance service expenses incurred in the period 85,516 93,387
Others (7) (118)
Amortization of insurance acquisition cash flows 48,218 47,078
Subtotal 218,815 231,233
Insurance contracts measured under the premium allocation
approach 317,625 294,748
536,440 525,981
(in RMB million) 2023 2022
(Restated)
Contracts under the fair value approach 19,824 20,793
Contracts under the modified retrospective approach 160,400 329,355
Other contracts 356,216 175,833
536,440 525,981
7. NET INTEREST INCOME FROM BANKING OPERATIONS
(in RMB million) 2023 2022
Interest revenue from banking operations
Due from the Central Bank 3,844 3,715
Due from and placements with banks and other
financial institutions and financial assets purchased
under reverse repurchase agreements 8,776 4,795
Loans and advances to customers 183,807 188,282
Financial investments 31,125 31,992
Subtotal 227,552 228,784
Interest expenses on banking operations
Due to the Central Bank 4,101 3,860
Due to and placements from banks and other
financial institutions and assets sold under
agreements to repurchase 12,539 8,054
Customer deposits 74,927 66,304
Bonds payable 17,038 19,470
Subtotal 108,605 97,688
Net interest income from banking operations 118,947 131,096
258 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-80
F-80
8. INTEREST REVENUE FROM NON-BANKING OPERATIONS
(in RMB million) 2023 2022
(Restated)
Financial assets at amortized cost 33,202 30,082
Debt financial assets at fair value through
other comprehensive income 85,301 85,851
118,503 115,933
9. NET FEES AND COMMISSION INCOME FROM NON-INSURANCE
OPERATIONS
(in RMB million) 2023 2022
Fees and commission revenue from non-insurance operations
Brokerage commission 9,045 6,541
Underwriting commission 960 618
Trust service fees 939 1,544
Fees and commission from the banking business 31,532 34,986
Others 3,330 2,293
Subtotal 45,806 45,982
Fees and commission expenses on non-insurance operations
Brokerage commission 2,392 2,238
Fees and commission on the banking business 5,612 7,546
Others 769 144
Subtotal 8,773 9,928
Net fees and commission income from non-insurance operations 37,033 36,054
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 259
F-81
F-81
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
10. INVESTMENT INCOME
(in RMB million) 2023 2022
(Restated)
Net investment income 92,296 90,598
Realized gains/(losses) (49,933) (55,973)
Unrealized gains/(losses) (9,039) (36,936)
Total investment income 33,324 (2,311)
(1) NET INVESTMENT INCOME
(in RMB million) 2023 2022
(Restated)
Financial assets at fair value through profit or loss 67,259 68,602
Equity financial assets at fair value through
other comprehensive income 18,131 15,818
Operating lease income from investment properties 6,906 6,178
92,296 90,598
(2) REALIZED GAINS/(LOSSES)
(in RMB million) 2023 2022
(Restated)
Financial instruments at fair value through profit or loss (53,184) (58,221)
Debt financial assets at fair value through
other comprehensive income 599 (243)
Financial assets at amortized cost (506) (273)
Derivative financial instruments (43) 1,471
Gains on disposals of loans and advances at fair value through
other comprehensive income 2,403 3,255
Precious metal transactions investment gains 410 15
Investment in subsidiaries, associates and joint ventures 388 (1,977)
(49,933) (55,973)
(3) UNREALIZED GAINS/(LOSSES)
(in RMB million) 2023 2022
(Restated)
Financial assets at fair value through profit or loss
Bonds 8,497 (4,079)
Funds (3,850) (20,277)
Stocks (5,286) 8,229
Wealth management investments, debt schemes and
other investments (10,760) (22,598)
Financial liabilities at fair value through profit or loss 2,295 418
Derivative financial instruments 65 1,371
(9,039) (36,936)
260 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-82
F-82
11. OTHER REVENUES AND OTHER GAINS
(in RMB million) 2023 2022
(Restated)
Sales revenue 27,413 20,316
Expressway toll fee 899 844
Annuity management fee 1,558 1,535
Management fee and consulting fee income 7,017 9,609
Finance lease income 16,592 16,650
Others 15,325 11,698
68,804 60,652
12. INSURANCE SERVICE EXPENSES
(in RMB million) 2023 2022
(Restated)
Claims and other expenses 309,810 301,042
Amortization of insurance acquisition cash flows 120,708 113,210
Losses on onerous contracts and reversal of those losses 9,660 7,969
440,178 422,221
13. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS
(in RMB million) 2023 2022
(Restated)
Accounts receivable 152 (23)
Loans and advances to customers 62,833 64,168
Debt financial assets at fair value through
other comprehensive income 476 168
FINANCIAL STATEMENTS
Financial assets at amortized cost 7,719 3,472
Finance lease receivable 697 1,763
Placements with banks and other financial institutions (1,485) 2,175
Credit commitments 3,689 5,758
Due from banks and other financial institutions (1,512) 1,502
Others 5,175 1,570
77,744 80,553
14. NET IMPAIRMENT LOSSES ON OTHER ASSETS
(in RMB million) 2023 2022
(Restated)
Investments in associates and joint ventures 864 928
Others 463 439
1,327 1,367
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 261
F-83
F-83
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
15. PROFIT BEFORE TAX
(1) PROFIT BEFORE TAX IS ARRIVED AT AFTER CHARGING THE FOLLOWING ITEMS:
(in RMB million) 2023 2022
(Restated)
General and administrative expenses (Note 15.(2)) 83,877 79,815
Other expenses (Note 15.(3)) 39,638 27,964
Net impairment losses on financial assets (Note 13) 77,744 80,553
Net impairment losses on other assets (Note 14) 1,327 1,367
(2) GENERAL AND ADMINISTRATIVE EXPENSES
(in RMB million) 2023 2022
(Restated)
Employee costs 80,768 75,798
Including: Wages, salaries and bonuses 61,505 57,802
Retirement benefits, social security contributions
and welfare benefits 17,364 16,169
Property and equipment costs 20,702 20,864
Including: Depreciation of property and equipment 7,486 6,932
Amortization of intangible assets 2,509 2,133
Depreciation of right-of-use assets 4,736 5,839
Operation expenses and regulatory charges 59,184 56,710
Administrative costs 2,979 3,626
Taxes and surcharges 3,665 3,414
Others 8,657 7,702
Including: Audit fee 125 95
175,955 168,114
Less: Expenses directly attributable to insurance contracts
Insurance acquisition cash flows recognized in liabilities
for remaining coverage (55,377) (53,763)
Amounts recognized in insurance service expenses (36,701) (34,536)
(92,078) (88,299)
83,877 79,815
(3) OTHER EXPENSES
(in RMB million) 2023 2022
(Restated)
Cost of sales 14,827 9,284
Depreciation of investment properties 4,692 3,645
Interest expenses on finance lease operations 7,150 6,824
Others 12,969 8,211
39,638 27,964
262 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-84
16. INCOME TAX
(in RMB million) 2023 2022
(Restated)
Current income tax
Charge for the year 15,577 26,481
Adjustments in respect of current income tax of previous years 2,122 1,162
Deferred income tax (6,856) (20,125)
10,843 7,518
Certain subsidiaries enjoy tax preferential treatments. These subsidiaries are not material to the Group.
Except for those subsidiaries enjoying tax preferential treatments, the applicable corporate income tax rate
of the Group for 2023 was 25%.
Reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax
rate of 25% (2022: 25%) is as follows:
(in RMB million) 2023 2022
(Restated)
Profit before tax 120,117 142,335
Tax at the applicable tax rate of 25% (2022: 25%) 30,029 35,584
Expenses not deductible for tax 3,343 3,989
Income not subject to tax (32,250) (31,232)
Adjustments in respect of current income tax of previous years 2,122 1,162
Others 7,599 (1,985)
Income tax per consolidated income statement 10,843 7,518
Taxes for taxable income attained from outside of the PRC are measured at the tax rates under local and
PRC law, regulations and conventions. The income tax credited by the Group is verified by official tax
FINANCIAL STATEMENTS
bureau.
17. DIVIDENDS
(in RMB million) 2023 2022
2022 final dividend declared in 2023 – RMB1.50 (2021 final dividend
declared in 2022 – RMB1.50) per ordinary share (i) 27,161 27,161
2023 interim dividend – RMB0.93 (2022 interim dividend – RMB0.92) per
ordinary share (ii) 16,840 16,659
(i) On 15 March 2023, the Board of Directors of the Company approved the Profit Distribution Plan of the Company for 2022, agreeing
to declare a cash dividend in the amount of RMB1.50 (tax inclusive) per share. The total amount of the cash dividend for 2022 was
RMB27,161 million (tax inclusive).
On 12 May 2023, the above profit distribution plan was approved by the shareholders of the Company at the annual general meeting.
(ii) On 29 August 2023, the Board of Directors of the Company approved the Profit Distribution Plan of the Company for Interim
Dividend of 2023, and declared an interim cash dividend of RMB0.93 (tax inclusive) per share. The total amount of the cash dividend
was RMB16,840 million (tax inclusive).
(iii) On 21 March 2024, the Board of Directors of the Company approved the Profit Distribution Plan of the Company for 2023, and
declared a final cash dividend of 2023 in the amount of RMB1.50 (tax inclusive) per share. Pursuant to the Shanghai Stock Exchange’s
Guidelines for Self-regulation of Listed Companies No.7 – Repurchase of Shares and other applicable regulations, the Company’s
A shares in the Company’s repurchased securities account after trading hours on the record date of A shareholders for the final
dividend will not be entitled to the final dividend distribution. The actual total amount of final dividend payment is subject to the
total number of shares that will be entitled to the dividend distribution on the record date of A shareholders. The total amount of
the final dividend payment for 2023 is RMB27,161,462,992.50 (tax inclusive) based on the total share capital of 18,210,234,607 shares less
the 102,592,612 A shares of the Company in the repurchased securities account as at 31 December 2023, which was not recognized as
a liability as at 31 December 2023.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 263
F-85
F-85
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
18. EARNINGS PER SHARE
(1) BASIC
Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the
weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased
by the Group.
2023 2022
(Restated)
Profit attributable to owners of the parent (in RMB million) 85,665 111,008
Weighted average number of ordinary shares in issue (million shares) 17,717 17,454
Basic earnings per share (in RMB) 4.84 6.36
Weighted average number of ordinary shares in issue (million shares) 2023 2022
Issued ordinary shares as at 1 January 18,280 18,280
Weighted average number of shares held by the Key Employee
Share Purchase Plan (26) (22)
Weighted average number of shares held by the Long-term
Service Plan (331) (234)
Weighted average number of shares held by the consolidated
assets management schemes (i) (33) (406)
Weighted average number of the treasury shares cancelled (39) –
Weighted average number of shares held by the treasury share (134) (164)
Weighted average number of ordinary shares in issue 17,717 17,454
(i) As at 31 December 2023, no shares (31 December 2022: 261 million) were held by the consolidated assets management schemes.
(2) DILUTED
Diluted earnings per share was computed by dividing the adjusted profit attributable to owners of the
parent based on assuming conversion of all dilutive potential shares for the year by the adjusted weighted
average number of ordinary shares in issue. The shares granted by the Company under the Key Employee
Share Purchase Plan (Note 38) and Long-term Service Plan (Note 39) have a potential dilutive effect on the
earnings per share.
2023 2022
(Restated)
Earnings (in RMB million)
Profit attributable to owners of the parent 85,665 111,008
Weighted average number of ordinary shares (million shares)
Weighted average number of ordinary shares in issue 17,717 17,454
Adjustments for:
Assumed vesting of Key Employee Share Purchase Plan 26 22
Assumed vesting of Long-term Service Plan 331 234
Weighted average number of ordinary shares for diluted earnings
per share in issue (million shares) 18,074 17,710
Diluted earnings per share (in RMB) 4.74 6.27
264 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-86
19. CASH AND AMOUNTS DUE FROM BANKS AND OTHER FINANCIAL
INSTITUTIONS
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Cash on hand 3,690 4,165
Term deposits 259,756 284,645
Due from banks and other financial institutions 319,924 352,110
Placements with banks and other financial institutions 220,707 133,921
804,077 774,841
Details of placements with banks and other financial institutions are as follows:
(in RMB million) 31 December 2023 31 December 2022
Measured at amortized cost
Placements with banks 68,410 64,520
Placements with other financial institutions 153,229 68,952
Gross 221,639 133,472
Less: Provision for impairment losses (932) (2,328)
Net 220,707 131,144
Measured at fair value through other comprehensive income
Placements with other financial institutions – 2,777
Total 220,707 133,921
As at 31 December 2023, the Group has no placement with banks and other financial institutions measured
at fair value through other comprehensive income (31 December 2022: the provision for impairment
losses of placements with banks and other financial institutions measured at fair value through other
comprehensive income is RMB91 million).
As at 31 December 2023, cash and amounts due from banks and other financial institutions of RMB7,961
FINANCIAL STATEMENTS
million (31 December 2022: RMB10,919 million) were restricted from use.
As at 31 December 2023, cash and amounts due from overseas amounted to RMB30,224 million (31 December
2022: RMB60,616 million).
20. BALANCES WITH THE CENTRAL BANK
(in RMB million) 31 December 2023 31 December 2022
Statutory reserve deposits with the Central Bank for banking
operations 227,324 240,380
Statutory reserve deposits with the Central Bank for banking
operations – RMB 225,304 234,851
Statutory reserve deposits with the Central Bank for banking
operations – foreign currencies 2,020 5,529
Surplus reserve deposits with the Central Bank 43,450 40,467
Fiscal deposits with the Central Bank 202 268
270,976 281,115
In accordance with relevant regulations, subsidiaries of the Group engaged in bank operations are required
to place mandatory reserve deposits with the People’s Bank of China for customer deposits in both local
currency and foreign currencies. As at 31 December 2023, the mandatory deposits are calculated at 7.0%
(31 December 2022: 7.5%) of customer deposits denominated in RMB and 4.0% (31 December 2022: 6.0%) of
customer deposits denominated in foreign currencies. Mandatory reserve deposits are not available for use
by the Group in its day-to-day operations.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 265
F-87
F-87
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
21. FINANCIAL ASSETS PURCHASED UNDER REVERSE REPURCHASE
AGREEMENTS
Classified by collateral:
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Bonds 156,011 84,920
Bills 8,787 2,676
Stocks and others 3,112 4,059
Gross 167,910 91,655
Less: Provision for impairment losses (250) (141)
Net 167,660 91,514
22. DERIVATIVE FINANCIAL INSTRUMENTS
31 December 2023
Assets Liabilities
(in RMB million) Nominal amount Fair value Nominal amount Fair value
Interest rate swaps 3,956,299 14,070 2,587,657 12,718
Currency forwards and swaps 1,228,639 27,015 1,218,587 27,780
Gold derivative instruments 20,804 702 25,476 1,999
Stock index options 27,999 1,255 2,469 145
Stock index swaps 7,993 333 9,372 128
Others 15,508 1,603 2,493 1,761
5,257,242 44,978 3,846,054 44,531
31 December 2022
Assets Liabilities
(in RMB million) Nominal amount Fair value Nominal amount Fair value
Interest rate swaps 3,819,447 11,893 2,102,061 10,062
Currency forwards and swaps 992,397 15,602 1,146,546 23,498
Gold derivative instruments 36,240 1,049 43,741 3,172
Stock index options 17,143 146 2,233 88
Stock index swaps 3,718 160 7,669 776
Others 48,074 428 20,277 2,142
4,917,019 29,278 3,322,527 39,738
23. FINANCE LEASE RECEIVABLE
(in RMB million) 31 December 2023 31 December 2022
Finance lease receivables, net of unrealized financial gains 185,658 192,444
Less: Provision for impairment losses (4,984) (5,586)
180,674 186,858
The Group’s finance lease receivables are the net amount offsetting the unrealized financial gains.
As at 31 December 2023, finance lease receivables with an amount of RMB17,207 million (31 December 2022:
RMB24,052 million) were pledged as collateral for long-term and short-term borrowings.
266 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-88
24. LOANS AND ADVANCES TO CUSTOMERS
(1) ANALYSED BY CORPORATE AND INDIVIDUAL
(in RMB million) 31 December 2023 31 December 2022
Measured at amortized cost
Corporate customers
Loans 973,872 945,687
Individual customers
Mortgage loans 303,568 284,443
Credit card receivables 514,092 578,691
Consumer loans 545,291 602,247
Business loans 614,768 582,009
Gross 2,951,591 2,993,077
Add: Interest receivable 9,954 11,016
Less: Provision for impairment losses (97,353) (97,919)
Net 2,864,192 2,906,174
Measured at fair value through other comprehensive income
Corporate customers
Loans 239,131 134,333
Discounted bills 214,799 197,547
Subtotal 453,930 331,880
Carrying amount 3,318,122 3,238,054
As at 31 December 2023, discounted bills with a carrying amount of RMB26 million (31 December 2022:
RMB211 million) were pledged for amounts due to the Central Bank.
As at 31 December 2023, the provision for impairment losses of loans and advances to customers measured
at fair value through other comprehensive income was RMB2,692 million (31 December 2022: RMB3,277
FINANCIAL STATEMENTS
million), refer to Note 24.(6).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 267
F-89
F-89
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
24. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
(2) ANALYSED BY INDUSTRY
(in RMB million) 31 December 2023 31 December 2022
Loans and advances to customers
Agriculture, husbandry and fishery 3,575 3,124
Mining 17,821 18,899
Manufacturing 200,675 183,192
Energy 37,527 33,091
Transportation and communication 59,744 51,441
Wholesaling and retailing 151,160 124,729
Real estate 255,322 283,484
Social service, technology, culture and sanitary industries 246,241 219,219
Construction 52,760 45,868
Individual customers 1,977,719 2,047,390
Others 402,977 314,520
Gross 3,405,521 3,324,957
Add: Interest receivable 9,954 11,016
Less: Provision for impairment losses (97,353) (97,919)
Carrying amount 3,318,122 3,238,054
(3) ANALYSED BY TYPE OF COLLATERAL HELD
(in RMB million) 31 December 2023 31 December 2022
Unsecured 1,315,512 1,283,638
Guaranteed 226,971 221,241
Secured by collateral
Secured by mortgages 1,313,001 1,316,244
Secured by monetary assets 335,238 306,287
Subtotal 3,190,722 3,127,410
Discounted bills 214,799 197,547
Gross 3,405,521 3,324,957
Add: Interest receivable 9,954 11,016
Less: Provision for impairment losses (97,353) (97,919)
Carrying amount 3,318,122 3,238,054
(4) AGING ANALYSIS OF PAST DUE LOANS BY PASS DUE DAYS
31 December 2023
3 months More than
(in RMB million) Within 3 months to 1 year 1 to 3 years 3 years Total
Unsecured 22,378 12,372 404 127 35,281
Guaranteed 1,115 1,056 19 4 2,194
Secured by collateral
Secured by mortgages 13,584 4,714 1,223 34 19,555
Secured by monetary assets 1,504 1,109 258 – 2,871
38,581 19,251 1,904 165 59,901
268 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-90
24. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
(4) AGING ANALYSIS OF PAST DUE LOANS BY PASS DUE DAYS (CONTINUED)
31 December 2022
3 months More than
(in RMB million) Within 3 months to 1 year 1 to 3 years 3 years Total
Unsecured 25,934 14,983 343 78 41,338
Guaranteed 91 87 595 262 1,035
Secured by collateral
Secured by mortgages 12,318 5,639 827 – 18,784
Secured by monetary assets 623 708 607 3 1,941
38,966 21,417 2,372 343 63,098
Past due loans refer to the loans with either principal or interest being past due by one day or more.
(5) ANALYSED BY REGION
31 December 2023 31 December 2022
(in RMB million) Amount % Amount %
Eastern 780,270 22.91% 708,410 21.31%
Southern 706,021 20.73% 649,810 19.54%
Western 335,842 9.86% 310,665 9.34%
Northern 559,056 16.42% 489,810 14.73%
Head office 991,440 29.11% 1,136,487 34.18%
Overseas 32,892 0.97% 29,775 0.90%
Gross 3,405,521 100.00% 3,324,957 100.00%
Add: Interest receivable 9,954 11,016
Less: Loan allowance (97,353) (97,919)
Carrying amount 3,318,122 3,238,054
FINANCIAL STATEMENTS
(6) LOAN IMPAIRMENT PROVISION
(in RMB million) 2023 2022
Measured at amortized cost
As at 1 January 97,919 89,256
Charge for the year 62,973 61,837
Write-off and transfer during the year (80,727) (65,136)
Recovery of loans written off previously 17,779 11,942
Unwinding of discount of impairment provisions recognized
as interest income (83) (45)
Others (508) 65
As at 31 December 97,353 97,919
Measured at fair value through other comprehensive income
As at 1 January 3,277 946
(Recover)/charge for the year (140) 2,331
Write-off and transfer during the year (445) –
As at 31 December 2,692 3,277
As at 31 December 100,045 101,196
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 269
F-91
F-91
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Bonds
Government bonds 200,566 135,150
Finance bonds 307,378 290,788
Corporate bonds 78,485 81,142
Funds 475,511 517,951
Stocks 156,514 83,995
Preferred shares 22,929 23,164
Unlisted equity investments 127,304 133,295
Debt schemes 72,237 60,698
Wealth management investments 258,313 238,092
Other investments 103,810 76,244
Total 1,803,047 1,640,519
Listed 316,044 198,459
Unlisted 1,487,003 1,442,060
1,803,047 1,640,519
26. FINANCIAL ASSETS AT AMORTIZED COST
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Bonds
Government bonds 892,641 767,761
Finance bonds 32,113 32,047
Corporate bonds 47,433 53,131
Debt schemes 14,196 16,102
Wealth management investments 117,172 147,424
Other investments 186,775 148,373
Gross 1,290,330 1,164,838
Less: Provisions for impairment losses (46,977) (40,803)
Net 1,243,353 1,124,035
Listed 62,757 61,208
Unlisted 1,180,596 1,062,827
1,243,353 1,124,035
270 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-92
27. DEBT FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Bonds
Government bonds 1,973,152 1,733,996
Finance bonds 352,063 380,170
Corporate bonds 75,772 78,393
Debt schemes 108,515 114,289
Margin accounts receivable – 49,126
Wealth management investments 127,506 144,816
Total 2,637,008 2,500,790
Listed 364,740 375,826
Unlisted 2,272,268 2,124,964
2,637,008 2,500,790
As at 31 December 2023, the total provision for impairment losses recognized in debt financial assets at fair
value through other comprehensive income is RMB8,818 million (31 December 2022: RMB8,557 million).
28. EQUITY FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
Equity financial assets at fair value through other comprehensive income comprise the following individual
investments:
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Stocks 177,686 174,047
FINANCIAL STATEMENTS
Preferred shares 81,893 85,784
Other equity investments 5,298 4,940
Total 264,877 264,771
Listed 259,579 259,831
Unlisted 5,298 4,940
264,877 264,771
For the equity investments which are not held for trading but for long-term investments, the Group has
irrevocably elected to recognize them in this category at initial recognition.
In 2023, for the consideration of optimizing asset allocation and asset-liability management, the Group
disposed of equity financial assets at fair value through other comprehensive income amounted to
RMB21,956 million (2022: RMB27,224 million), and the net cumulative losses of RMB311 million (2022: net
cumulative gains of RMB113 million) on disposal was transferred from other comprehensive income to
retained profits.
The dividend income of equity financial assets at fair value through other comprehensive income
recognized during the year are disclosed in Note 10.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 271
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F-93
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
29. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The Group’s investments in the principal associates and joint ventures as at 31 December 2023 are as
follows:
2023
Provision Proportion of
Increase balance Change of Cash ordinary
As at Additional /(Decrease) in As at as at provision in dividends in shares held by
(in RMB million) 1 January investment current year 31 December 31 December current year current year the Group (%)(i)
Associates
Veolia Water (Kunming) Investment Co., Ltd.
(“Veolia Kunming”) 309 – (4) 305 (37) – – 23.88%
Veolia Water (Yellow River) Investment Co., Ltd.
(“Veolia Yellow River”) 140 – (140) – – – – –
Veolia Water (Liuzhou) Investment Co., Ltd.
(“Veolia Liuzhou”) 147 – (147) – – – – –
Shanxi Taichang Expressway Co., Ltd. (“Shanxi Taichang”) 1,032 – 115 1,147 – – – 29.85%
Beijing-Shanghai High-Speed Railway Equity
Investment Scheme (“Beijing-Shanghai Railway”) 9,489 – 4 9,493 – – 16 59.14%
Massive Idea Investments Limited 1,131 – (29) 1,102 – – – 36.66%
Guangzhou Jinglun Property Development Co., Ltd. 637 – 7 644 – – – 39.92%
Lufax Holding Ltd. (“Lufax Holding”) 52,845 – (380) 52,465 – – 594 41.43%
Ping An Healthcare and Technology Co., Ltd.
(“Ping An Health”) 18,739 – (66) 18,673 – – – 39.41%
HealthKonnect Medical and Health Technology Management
Company Limited (“Ping An HealthKonnect”) 2,988 – 248 3,236 – – – 29.55%
OneConnect Financial Technology Co., Ltd. (“OneConnect”) 2,079 – (166) 1,913 – – – 32.12%
Shenzhen China Merchants-Ping An Asset
Management Co., Ltd. 1,098 – (106) 992 – – – 38.81%
ZhongAn Online P&C Insurance Co., Ltd.
(“ZhongAn Online”) 1,499 – 509 2,008 – – – 10.21%
Beijing Beiqi Penglong Automobile Service Co., Ltd. 1,807 – (39) 1,768 – – 111 39.18%
China Yangtze Power Co., Ltd. 15,882 – 259 16,141 – – 845 4.03%
China Traditional Chinese Medicine Holdings Co., Ltd. 2,790 – 115 2,905 – – 28 11.94%
China Fortune Land Development Co., Ltd.
(“China Fortune”) 2,522 – (782) 1,740 (9,820) – – 25.02%
China Jinmao Holding Group Co., Ltd. 7,139 – (1,533) 5,606 (1,558) – 58 13.18%
Ping An Consumer Finance Co., Ltd.
(“Ping An Consumer Finance”) 1,386 – 147 1,533 – – – 30.00%
Vivid Synergy Limited 10,070 – 146 10,216 – – – 29.85%
Shanghai Yibin Property Co., Ltd. 13,338 – (9) 13,329 – – – 41.80%
Guangzhou Futures Exchange Co., Ltd. 465 – 30 495 – – – 15.00%
Others 38,047 412 (6,986) 31,473 (1,347) (354) 2,689
Subtotal 185,579 412 (8,807) 177,184 (12,762) (354) 4,341
Joint ventures
Beijing Zhaotai Property Development Co., Ltd. 1,619 – (341) 1,278 – – 339 24.95%
Wuhan DAJT Property Development Co., Ltd. 468 – (8) 460 – – – 49.81%
Founder Meiji Yasuda Life Insurance Co., Ltd. 2,795 867 (680) 2,982 (199) (199) – 33.75%
Others 90,332 976 (14,335) 76,973 (311) (311) 2,925
Subtotal 95,214 1,843 (15,364) 81,693 (510) (510) 3,264
Total 280,793 2,255 (24,171) 258,877 (13,272) (864) 7,605
272 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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29. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)
The Group’s investments in the principal associates and joint ventures as at 31 December 2022 are as
follows:
2022
Provision Proportion of
Increase balance Change of Cash ordinary
As at Additional /(Decrease) in As at as at provision in dividends in shares held by
(in RMB million) 1 January investment current year 31 December 31 December current year current year the Group (%)(i)
Associates
Veolia Kunming 272 – 37 309 (37) – – 23.88%
Veolia Yellow River 158 – (18) 140 (402) – – 48.76%
Veolia Liuzhou 93 – 54 147 (23) – – 44.78%
Shanxi Taichang 873 – 159 1,032 – – – 29.85%
Beijing-Shanghai Railway 9,318 – 171 9,489 – – 89 39.18%
Massive Idea Investments Limited 1,074 – 57 1,131 – – – 36.66%
Guangzhou Jinglun Property Development Co., Ltd. 701 – (64) 637 – – 64 39.92%
Xuhui Holdings Co., Ltd. 4,336 – (4,336) – – (777) 31 –
Lufax Holding 51,564 – 1,281 52,845 – – 3,250 41.44%
Ping An Health 18,922 – (183) 18,739 – – – 39.41%
Ping An HealthKonnect 2,903 – 85 2,988 – – – 29.55%
OneConnect 2,259 52 (232) 2,079 – – – 32.12%
Shenzhen China Merchants-Ping An Asset Management
Co., Ltd. 1,570 – (472) 1,098 – – 102 38.81%
ZhongAn Online 1,735 – (236) 1,499 – – – 10.21%
Beijing Beiqi Penglong Automobile Service Co., Ltd. 1,830 – (23) 1,807 – – – 39.18%
China Yangtze Power Co., Ltd. 15,684 – 198 15,882 – – 807 4.34%
China Traditional Chinese Medicine Holdings Co., Ltd. 2,797 – (7) 2,790 – – 38 11.94%
China Fortune 3,621 – (1,099) 2,522 (9,822) – – 25.02%
FINANCIAL STATEMENTS
China Jinmao Holding Group Co., Ltd. 7,137 – 2 7,139 (1,558) – 146 13.36%
Ping An Consumer Finance 1,330 – 56 1,386 – – – 30.00%
Vivid Synergy Limited 9,217 – 853 10,070 – – – 29.85%
Shanghai Yibin Property Co., Ltd. 13,345 – (7) 13,338 – – – 41.80%
Guangzhou Futures Exchange Co., Ltd. 450 – 15 465 – – – 15.00%
Others 35,633 5,988 (3,574) 38,047 (1,156) (151) 1,729
Subtotal 186,822 6,040 (7,283) 185,579 (12,998) (928) 6,256
Joint ventures
Yunnan Kunyu Highway Development Co., Ltd. 762 – (762) – – – – –
Beijing Zhaotai Property Development Co., Ltd. 1,632 – (13) 1,619 – – – 24.95%
Wuhan DAJT Property Development Co., Ltd. 482 – (14) 468 – – – 49.81%
Founder Meiji Yasuda Life Insurance Co., Ltd. – 2,795 – 2,795 – – – 33.75%
Others 94,363 5,674 (9,705) 90,332 – – 3,924
Subtotal 97,239 8,469 (10,494) 95,214 – – 3,924
Total 284,061 14,509 (17,777) 280,793 (12,998) (928) 10,180
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 273
F-95
F-95
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
29. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)
The financial information summary of the Group’s principal associates and joint ventures as at year end of
2023 are as follows:
Total
Significant to Total assets liabilities Total Net profit/
Place of Place of the Group’s as at as at revenue in (loss) in
(in RMB million) business incorporation Principal activities operation 31 December 31 December current year current year(ii)
Associates
Ping An Health China Cayman Online health care Yes 16,520 3,253 4,674 (323)
OneConnect China Cayman Technology-as-a-service Yes 8,068 5,121 3,668 (363)
cloud platform for
financial institutions
Lufax Holding China Cayman Financial technology Yes 237,023 143,339 34,255 887
The financial information summary of the Group’s principal associates and joint ventures as at year end of
2022 are as follows:
Total
Significant to Total assets liabilities Total Net profit/
Place of Place of the Group’s as at as at revenue in (loss) in
(in RMB million) business incorporation Principal activities operation 31 December 31 December current year current year(ii)
Associates
Ping An Health China Cayman Online health care Yes 17,184 3,653 6,205 (636)
OneConnect China Cayman Technology-as-a-service Yes 8,882 5,604 4,464 (872)
cloud platform for
financial institutions
Lufax Holding China Cayman Financial technology Yes 349,263 254,476 58,116 8,699
The Group has no significant contingent liabilities relating to the associates and joint ventures listed above.
Note i: The proportion of ordinary shares, as shown in the above table, is the multiplication of the proportion of shares held in each
holding layer.
Note ii: Net profit/(loss) refers to the net profit/(loss) attributable to shareholders of the parent company of Ping An Health, OneConnect
and Lufax Holding respectively.
30. STATUTORY DEPOSITS FOR INSURANCE OPERATIONS
(in RMB million) 31 December 2023 31 December 2022
Ping An Life 6,760 6,760
Ping An Property & Casualty 4,200 4,200
Ping An Annuity 2,322 2,322
Ping An Health Insurance 1,100 940
Others 18 18
Subtotal 14,400 14,240
Less: Provision for impairment losses (5) (4)
Add: Interest receivable 508 208
Total 14,903 14,444
Statutory deposits for insurance operations are placed with PRC national commercial banks in accordance
with the Insurance Law and relevant regulations issued by regulatory authorities based on 20% of the
registered capital for the insurance company subsidiaries and 5% of the registered capital for insurance
sales agency subsidiaries within the Group, respectively. Statutory deposits for insurance operations
can only be utilized to settle liabilities during liquidation of insurance companies, insurance sales agency
companies and insurance brokerage companies.
274 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-96
F-96
31. INVESTMENT PROPERTIES
(in RMB million) 2023 2022
Cost
As at 1 January 136,091 102,166
Acquisition of subsidiaries 11,081 25,799
Additions 2,379 3,536
Transfer (to)/from property and equipment, net (1,716) 4,740
Disposals (166) (150)
As at 31 December 147,669 136,091
Accumulated depreciation
As at 1 January 21,327 16,121
Acquisition of subsidiaries 911 507
Charge for the year 4,692 3,645
Transfer (to)/from property and equipment, net (714) 1,058
Disposals (1) (4)
As at 31 December 26,215 21,327
Impairment losses
As at 1 January 1 4
Charge for the year 48 –
Disposals (1) (3)
As at 31 December 48 1
Net carrying amount
As at 31 December 121,406 114,763
As at 1 January 114,763 86,041
Fair value
As at 31 December 162,654 154,690
FINANCIAL STATEMENTS
As at 1 January 154,690 121,526
The fair value of the investment properties as at 31 December 2023 were estimated by the Group, based on
valuation performed by independent valuers. It falls under level 3 in the fair value hierarchy.
The rental income arising from investment properties for the year 2023 amounted to RMB6,906 million (2022:
RMB6,178 million), which is included in net investment income.
As at 31 December 2023, investment properties with a carrying amount of RMB11,613 million (31 December
2022: RMB19,411 million) were pledged as collateral for long-term and short-term borrowings with a carrying
amount of RMB7,937 million (31 December 2022: RMB7,270 million).
The Group was still in the process of applying for title certificates for certain investment properties with
a carrying amount of RMB3,669 million as at 31 December 2023 (31 December 2022: RMB3,465 million).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 275
F-97
F-97
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
32. PROPERTY AND EQUIPMENT
2023
Equipment,
Leasehold furniture and Motor Construction
(in RMB million) improvements Buildings fixtures vehicles in progress Total
Cost
As at 1 January 12,970 48,953 26,544 2,236 2,718 93,421
Acquisitions of subsidiaries – – 15 – – 15
Additions 128 210 1,843 70 2,228 4,479
Transfer from/(to) construction in progress 727 31 95 – (853) –
Transfer from investment properties, net – 1,716 – – – 1,716
Disposals of subsidiaries – – (2) (3) – (5)
Disposals (322) (563) (2,170) (480) (46) (3,581)
As at 31 December 13,503 50,347 26,325 1,823 4,047 96,045
Accumulated depreciation
As at 1 January 9,254 12,599 16,368 1,345 – 39,566
Acquisitions of subsidiaries – – 14 – – 14
Charge for the year 1,432 1,935 4,309 132 – 7,808
Transfer from investment properties, net – 714 – – – 714
Disposals of subsidiaries – – (2) (1) – (3)
Disposals (172) (249) (1,853) (352) – (2,626)
As at 31 December 10,514 14,999 18,836 1,124 – 45,473
Impairment losses
As at 1 January – 83 72 43 – 198
Charge for the year – 18 29 – – 47
Disposals – (34) (40) – – (74)
As at 31 December – 67 61 43 – 171
Net carrying amount
As at 31 December 2,989 35,281 7,428 656 4,047 50,401
As at 1 January 3,716 36,271 10,104 848 2,718 53,657
276 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-98
F-98
32. PROPERTY AND EQUIPMENT (CONTINUED)
2022
Equipment,
Leasehold furniture and Motor Construction
(in RMB million) improvements Buildings fixtures vehicles in progress Total
Cost
As at 1 January 12,485 43,510 24,202 2,657 3,169 86,023
Acquisitions of subsidiaries 167 8,823 1,780 33 83 10,886
Additions 198 469 1,945 3 1,343 3,958
Transfer from/(to) construction in progress 655 450 120 1 (1,226) –
Transfer to investment properties, net – (4,100) – – (640) (4,740)
Disposals of subsidiaries – – (1) – – (1)
Disposals (535) (199) (1,502) (458) (11) (2,705)
As at 31 December 12,970 48,953 26,544 2,236 2,718 93,421
Accumulated depreciation
As at 1 January 8,550 12,150 13,832 1,549 – 36,081
Acquisitions of subsidiaries – – 1 – – 1
Charge for the year 1,954 1,573 3,859 122 – 7,508
Transfer to investment properties, net – (1,058) – – – (1,058)
Disposals (1,250) (66) (1,324) (326) – (2,966)
As at 31 December 9,254 12,599 16,368 1,345 – 39,566
Impairment losses
As at 1 January – 81 66 37 – 184
Additions – 2 6 6 – 14
As at 31 December – 83 72 43 – 198
Net carrying amount
As at 31 December 3,716 36,271 10,104 848 2,718 53,657
FINANCIAL STATEMENTS
As at 1 January 3,935 31,279 10,304 1,071 3,169 49,758
The Group was still in the process of applying for title certificates for its buildings with a carrying amount
of RMB523 million as at 31 December 2023 (31 December 2022: RMB558 million).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 277
F-99
F-99
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
33. INTANGIBLE ASSETS
2023
Expressway Prepaid Software
(in RMB million) Goodwill (i) operating rights land premiums Core deposits Trademarks and others Total
Cost
As at 1 January 44,338 5,129 37,130 15,082 10,056 15,965 127,700
Acquisitions of subsidiaries – – 1,138 – – 1 1,139
Additions 127 – 823 – 18 1,476 2,444
Disposals of subsidiaries – – – – – (1) (1)
Disposals (58) – (350) – – (158) (566)
As at 31 December 44,407 5,129 38,741 15,082 10,074 17,283 130,716
Accumulated amortization
As at 1 January – 3,335 3,744 8,640 893 11,387 27,999
Acquisitions of subsidiaries – – 23 – – – 23
Charge for the year – 189 918 754 97 1,412 3,370
Disposals of subsidiaries – – – – – (1) (1)
Disposals – – (39) – – (53) (92)
As at 31 December – 3,524 4,646 9,394 990 12,745 31,299
Impairment losses
As at 1 January 278 – – – – 12 290
Additions 13 – – – – 38 51
Disposals – – – – – (2) (2)
As at 31 December 291 – – – – 48 339
Net carrying amount
As at 31 December 44,116 1,605 34,095 5,688 9,084 4,490 99,078
As at 1 January 44,060 1,794 33,386 6,442 9,163 4,566 99,411
278 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-100
F-100
33. INTANGIBLE ASSETS (CONTINUED)
2022
Expressway Prepaid Software
(in RMB million) Goodwill (i) operating rights land premiums Core deposits Trademarks and others Total
Cost
As at 1 January 23,233 5,129 26,268 15,082 9,987 13,571 93,270
Acquisitions of subsidiaries – – 8,857 – – 1,045 9,902
Additions 21,105 – 2,358 – 69 1,786 25,318
Disposals – – (353) – – (437) (790)
As at 31 December 44,338 5,129 37,130 15,082 10,056 15,965 127,700
Accumulated amortization
As at 1 January – 3,146 2,885 7,886 783 10,039 24,739
Acquisitions of subsidiaries – – 134 – – – 134
Charge for the year – 189 761 754 110 1,357 3,171
Disposals – – (36) – – (9) (45)
As at 31 December – 3,335 3,744 8,640 893 11,387 27,999
Impairment losses
As at 1 January 58 – – – – 11 69
Additions 220 – – – – 1 221
As at 31 December 278 – – – – 12 290
Net carrying amount
As at 31 December 44,060 1,794 33,386 6,442 9,163 4,566 99,411
As at 1 January 23,175 1,983 23,383 7,196 9,204 3,521 68,462
As at 31 December 2023, expressway operating rights with a carrying amount of RMB1,467 million (31
December 2022: RMB1,604 million) were pledged as collateral for long-term borrowings amounting to
RMB157 million (31 December 2022: RMB260 million).
FINANCIAL STATEMENTS
As at 31 December 2023, prepaid land premiums with a carrying amount of RMB981 million (31 December
2022: RMB1,485 million) were pledged as collateral for long-term borrowings amounting to RMB638 million
(31 December 2022: RMB579 million).
As at 31 December 2023, the Group has no prepaid land premiums without title certificates (31 December
2022: RMB1,936 million).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 279
F-101
F-101
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
33. INTANGIBLE ASSETS (CONTINUED)
(I) GOODWILL
2023
As at As at
(in RMB million) 1 January Increase Decrease 31 December
Ping An Bank 8,761 – – 8,761
Shanghai Jahwa 2,502 – – 2,502
Mayborn Group Limited 1,766 118 – 1,884
Ping An Securities 328 – – 328
Ping An Commercial Property Investment 66 – – 66
Beijing Shuangronghui Investment Co., Ltd. 134 – – 134
Shanghai Gezhouba Yangming Property Co., Ltd. 241 – – 241
Ping An E-wallet 1,073 – – 1,073
Autohome Inc. 5,265 – – 5,265
TTP Car Inc. 2,438 – – 2,438
New Founder Group 20,977 – – 20,977
Other 787 9 (58) 738
Total 44,338 127 (58) 44,407
Less: Impairment losses (278) (13) – (291)
Net carrying amount 44,060 114 (58) 44,116
2022
As at As at
(in RMB million) 1 January Increase Decrease 31 December
Ping An Bank 8,761 – – 8,761
Shanghai Jahwa 2,502 – – 2,502
Mayborn Group Limited 1,749 17 – 1,766
Ping An Securities 328 – – 328
Ping An Commercial Property Investment 66 – – 66
Beijing Shuangronghui Investment Co., Ltd. 134 – – 134
Shanghai Gezhouba Yangming Property Co., Ltd. 241 – – 241
Ping An E-wallet 1,073 – – 1,073
Autohome Inc. 5,265 – – 5,265
TTP Car Inc. 2,438 – – 2,438
New Founder Group – 20,977 – 20,977
Other 676 111 – 787
Total 23,233 21,105 – 44,338
Less: Impairment losses (58) (220) – (278)
Net carrying amount 23,175 20,885 – 44,060
280 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-102
F-102
33. INTANGIBLE ASSETS (CONTINUED)
(I) GOODWILL (CONTINUED)
When assessing the impairment of goodwill, the main valuation technique used to determine the
recoverable amount of the groups of assets (or groups of cash-generating units) are Fair Value Less Cost
to Sell and Present Value of Future Cash Flows.
Fair value is based on the fair value of stocks issued in the public market or applicable valuation
techniques. The present value of future cash flows is based on business plans approved by management
covering a five-year period and a risk adjusted discount rate. Cash flows beyond that period have been
extrapolated using a steady growth rate and terminal value. Discount rates used by the Group range from
10% to 17% (2022: from 10% to 17%) and growth rates, where applicable, range from 2% to 25% (2022: from 2%
to 35%) for 2023.
The Group’s right-of-use assets include the above prepaid land premiums and right-of-use assets disclosed
in Note 34.
34. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
RIGHT-OF-USE ASSETS
2023
(in RMB million) Buildings Others Total
Cost
As at 1 January 19,721 9 19,730
Additions 3,919 4 3,923
Disposals (7,979) (1) (7,980)
As at 31 December 15,661 12 15,673
Accumulated depreciation
As at 1 January 7,146 4 7,150
FINANCIAL STATEMENTS
Charge for the year 4,787 5 4,792
Disposals (6,065) (1) (6,066)
As at 31 December 5,868 8 5,876
Impairment provision
As at 1 January – – –
Additions 3 – 3
As at 31 December 3 – 3
Net carrying amount
As at 31 December 9,790 4 9,794
As at 1 January 12,575 5 12,580
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 281
F-103
F-103
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
34. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (CONTINUED)
RIGHT-OF-USE ASSETS (CONTINUED)
2022
(in RMB million) Buildings Others Total
Cost
As at 1 January 24,752 4 24,756
Additions 6,428 6 6,434
Disposals (11,459) (1) (11,460)
As at 31 December 19,721 9 19,730
Accumulated depreciation
As at 1 January 10,568 3 10,571
Charge for the year 5,980 2 5,982
Disposals (9,402) (1) (9,403)
As at 31 December 7,146 4 7,150
Impairment provision
As at 1 January – – –
As at 31 December – – –
Net carrying amount
As at 31 December 12,575 5 12,580
As at 1 January 14,184 1 14,185
The Group’s right-of-use assets include the above assets and prepaid land premiums disclosed in Note 33.
The amount recognized in the Consolidated Income Statement and the Consolidated Statement of Cash
Flows for the year relating to the lease contracts are as follows:
(in RMB million) 2023 2022
Interest expense on lease liabilities 451 555
Expense relating to leases of low-value assets and short-term leases
applied the simplified approach 660 584
Total cash outflows for lease 6,107 7,044
282 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-104
F-104
35. OTHER ASSETS
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Other receivables 76,052 90,806
Foreclosed assets 1,804 2,070
Prepayments 2,211 3,927
Precious metals held for trading 10,043 16,834
Dividends receivable 378 1,060
Amounts in the processing clearance and settlement 39,036 29,680
Others 18,987 20,509
Gross 148,511 164,886
Less: Impairment provisions (13,516) (8,423)
Including: Other receivables (9,530) (5,056)
Foreclosed assets (1,587) (1,699)
Precious metals held for trading (363) (279)
Others (2,036) (1,389)
Net 134,995 156,463
36. SHARE CAPITAL
Domestic listed Overseas listed
A shares, par value H shares, par value
(million shares) RMB1.00 per share RMB1.00 per share Total
31 December 2023 10,762 7,448 18,210
31 December 2022 10,832 7,448 18,280
In June 2023, the Company cancelled 70,006,803 A shares repurchased under the 2019 A Share Repurchase
Plan, and the total share capital of the Company was changed from 18,280,241,410 shares to 18,210,234,607
FINANCIAL STATEMENTS
shares.
37. RESERVES, RETAINED PROFITS AND NON-CONTROLLING INTERESTS
In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic
or other losses as incurred by companies operating in the insurance, banking, trust, securities, futures
and fund businesses. The Group’s respective entities engaged in such businesses would need to make
appropriations for such reserves based on their respective year-end profit or risk assets, the companies
operating in insurance should make appropriations for general reserves based on 10% of net profit, the
company operating in banking should make appropriations based on 1.5% of risk assets, the company
operating in securities should make appropriations based on 10% of net profit, the companies operating in
trust should make appropriations based on 5% of trust claim reserves, the companies operating in futures
should make appropriations based on 10% of net profit, and the companies operating in fund should make
appropriations based on 10% of fund management fees as determined in accordance with PRC Accounting
Standards, and based on the applicable PRC financial regulations, in their annual financial statements. Such
reserves are not available for dividend distribution or transfer to share capital.
In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
Standards and (ii) the retained profits determined in accordance with IFRSs.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 283
F-105
F-105
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
37. RESERVES, RETAINED PROFITS AND NON-CONTROLLING INTERESTS
(CONTINUED)
The Group’s subsidiaries consolidated certain asset management schemes that were managed by third
parties. These asset management schemes invested in the insurance index shares which included the
Company’s shares. As such the Group indirectly hold the Company’s shares. The consideration paid by the
consolidated asset management schemes in purchasing the Company’s shares from the market, including
any directly attributable incremental cost, is debited to “Share premium” under “Reserves”. No gain or loss
shall be recognized in profit or loss on the sale of those shares, the consideration received is credited to
“Share premium” under “Reserves”. As at 31 December 2023, these assets management schemes have been
liquidated, there is no consolidated assets management scheme that holds shares of the Company (as at
31 December 2022, 261 million shares of the Company were held by these consolidated assets management
schemes).
38. KEY EMPLOYEE SHARE PURCHASE PLAN
The Company has adopted a Key Employee Share Purchase Plan for the key employees (including
executive directors and senior management) of the Company and its subsidiaries. Shares shall be vested
and awarded to the key employees approved for participation in the plan, subject to the achievement of
certain performance targets.
Movement of reserves relating to the Key Employee Share Purchase Plan is as follows:
Cost of shares held for
Key Employee Share Value of
(in RMB million) Purchase Plan employee services Total
As at 1 January 2023 (1,137) 767 (370)
Purchased (i) (694) – (694)
Share-based compensation expenses (ii) – 609 609
Exercised 515 (515) –
Expired 55 – 55
As at 31 December 2023 (1,261) 861 (400)
Cost of shares held for
Key Employee Share Value of
(in RMB million) Purchase Plan employee services Total
As at 1 January 2022 (1,439) 984 (455)
Purchased (i) (596) – (596)
Share-based compensation expenses (ii) – 573 573
Exercised 790 (790) –
Expired 108 – 108
As at 31 December 2022 (1,137) 767 (370)
(i) During the period from 16 March 2023 to 23 March 2023, 15,030,180 ordinary A shares were purchased from the market. The average
price of shares purchased was RMB46.13 per share. The total purchasing cost was RMB694 million (transaction expenses included).
During the period from 18 March 2022 to 25 March 2022, 12,518,547 ordinary A shares were purchased from the market. The average
price of shares purchased was RMB47.56 per share. The total purchasing cost was RMB596 million (transaction expenses included).
(ii) The share-based compensation expenses of the Key Employee Share Purchase Plan and the total value of employee services were
RMB609 million during 2023 (2022: RMB573 million).
284 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-106
F-106
38. KEY EMPLOYEE SHARE PURCHASE PLAN (CONTINUED)
(iii) Movement of shares relating to the Key Employee Share Purchase Plan is as follows (refer to Note 54.(3) for details about directors):
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Type 2023 the year[1] the year[2] 2023
From 24 February 2020 RMB80.17 per share Directors 394,275 – 394,275 –
to 27 February 2020 The five highest – – – –
paid individuals
Other employees 1,546,892 – 1,472,470 –
From 26 April 2021 RMB73.13 per share Directors 1,078,437 – 539,215 539,222
to 29 April 2021 The five highest – – – –
paid individuals
Other employees 4,051,091 – 1,935,297 1,937,251
From 18 March 2022 RMB47.56 per share Directors 2,685,633 – 895,209 1,790,424
to 25 March 2022 The five highest – – – –
paid individuals
Other employees 9,832,121 – 3,021,866 6,045,353
From 16 March 2023 RMB46.13 per share Directors – 2,675,673 – 2,675,673
to 23 March 2023 The five highest – 19,503 – 19,503
paid individuals
Other employees – 12,333,609 – 12,333,609
[1] The closing price of the domestic listed A shares on the trading day before the period of purchase was RMB45.95 per share.
The lock-up period of the relevant shares is from 25 March 2023 to 24 March 2024. One third of the shares under the Key
Employee Share Purchase Plan will be unlocked each year and vested in batches to employees after the lock-up period
according to rules of the Key Employee Share Purchase Plan, if employees achieve the requirements of the Company’s
performance indicators (including compliant operation indicators, risk management indicators, economic efficiency indicators,
and social responsibility indicators).
[2] The weighted average price of the domestic listed A shares on the trading day before the grant date was RMB53.83 per share.
[3] From 1 January 2023 to 31 December 2023, the number of shares lapsed under the Key Employee Share Purchase Plan
(excluding directors and the five highest paid individuals) reached 1,017,867; there was no share cancellation under the Key
Employee Share Purchase Plan.
FINANCIAL STATEMENTS
[4] The relevant shares are locked for one year from the purchasing date; one third of the shares will be unlocked each year and
vested in batches to employees after the lock-up period according to rules of the Key Employee Share Purchase Plan.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 285
F-107
F-107
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
39. LONG-TERM SERVICE PLAN
The Company has adopted a Long-term Service Plan for the employees of the Company and its
subsidiaries. Shares shall be vested and awarded to the employees participated in the Long-term Service
Plan, subject to the confirmation of their applications made when they retire from the Company.
Movement of reserves relating to the Long-term Service Plan is as follows:
Cost of shares Value of
held for Long-term employee
(in RMB million) Service Plan services Total
As at 1 January 2023 (16,886) 970 (15,916)
Purchased (i) (4,451) – (4,451)
Share-based compensation expenses (ii) – 472 472
Exercised 13 (13) –
As at 31 December 2023 (21,324) 1,429 (19,895)
Cost of shares Value of
held for Long-term employee
(in RMB million) Service Plan services Total
As at 1 January 2022 (12,465) 662 (11,803)
Purchased (i) (4,439) – (4,439)
Share-based compensation expenses (ii) – 326 326
Exercised 18 (18) –
As at 31 December 2022 (16,886) 970 (15,916)
(i) From 16 March 2023 to 23 March 2023, 96,608,364 ordinary A shares were purchased from the market. The average price of shares
purchased was RMB46.06 per share. The total purchasing cost was RMB4,451 million (transaction expenses included).
From 18 March 2022 to 25 March 2022, 93,314,482 ordinary A shares were purchased from the market. The average price of shares
purchased was RMB47.56 per share. The total purchasing cost was RMB4,439 million (transaction expenses included).
(ii) The share-based compensation expenses and the total value of employee services of the Long-term Service Plan were RMB472
million during 2023 (2022: RMB326 million).
286 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-108
F-108
39. LONG-TERM SERVICE PLAN (CONTINUED)
(iii) Movement of shares relating to the Long-term Service Plan is as follows (refer to Note 54.(3) for details about directors):
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Type 2023 the year[1] the year [2]
2023
From 7 May 2019 RMB79.10 per share Directors 884,666 – – 695,095
to 14 May 2019 The five highest 44,233 – – 44,233
paid individuals
Other employees 53,188,568 – 96,599 53,281,540
From 24 February 2020 RMB80.15 per share Directors 873,264 – – 686,136
to 28 February 2020 The five highest 43,662 – – 43,662
paid individuals
Other employees 48,749,253 – 53,640 48,882,741
From 26 April 2021 RMB72.92 per share Directors 959,784 – – 754,116
to 29 April 2021 The five highest 27,970 – – 27,970
paid individuals
Other employees 56,378,508 – 8,070 56,576,106
From 18 March 2022 RMB47.56 per share Directors 1,471,562 – – 1,156,227
to 25 March 2022 The five highest 23,124 – – 23,124
paid individuals
Other employees 91,818,990 – 6,071 92,128,254
From 16 March 2023 RMB46.06 per share Directors – 1,302,305 – 976,729
to 23 March 2023 The five highest – 35,812 – 35,812
paid individuals
Other employees – 95,270,247 805 95,595,018
[1] The closing price of the domestic listed A shares on the trading day before the period of purchase was RMB45.95 per share.
Shares shall be vested and awarded to the employees when they retire from the Company, and the number of shares eligible
for vesting is determined according to their performance.
[2] The weighted average price of the domestic listed A shares on the trading day before the grant date was RMB49.17 per share.
[3] From 1 January 2023 to 31 December 2023, there was no share lapse or cancellation under the Long-term Service Plan.
FINANCIAL STATEMENTS
[4] Shares shall be vested and awarded to the employees participating in the Long-term Service Plan, subject to the confirmation
of their applications made and the payment of relevant taxes when they retire from the Company.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 287
F-109
F-109
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
40. TREASURY SHARES
(in RMB million) 31 December 2022 Additions Disposals 31 December 2023
Treasury shares 10,996 – (5,995) 5,001
As at 31 December 2023, 102,592,612 uncancelled A shares had been purchased from the Shanghai Stock
Exchange by centralized bidding (31 December 2022: 172,599,415 shares). The total repurchasing cost was
RMB5,001 million (31 December 2022: RMB10,996 million) (transaction expenses included).
41. DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS
(in RMB million) 31 December 2023 31 December 2022
Deposits from other banks and financial institutions 526,452 457,688
Due to the Central Bank 208,783 191,916
Short-term borrowings 93,322 121,945
Long-term borrowings 135,161 151,539
963,718 923,088
42. ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE
(in RMB million) 31 December 2023 31 December 2022
Bonds 228,250 262,798
Others 13,553 8,939
241,803 271,737
As at 31 December 2023, bonds with a carrying amount of RMB171,868 million (31 December 2022: RMB168,705
million) were pledged as collateral for financial assets sold under agreements to repurchase resulted from
repurchase transactions entered into by the Group in the inter-bank market. The collaterals are restricted
from trading during the period of the repurchase transactions.
As at 31 December 2023, the carrying amount of bonds deposited in the collateral pool was RMB304,409
million (31 December 2022: RMB321,996 million). The collaterals are restricted from trading during the period
of the repurchase transactions. The Group can withdraw the exchange-traded bonds from the collateral
pool in short time provided that the value of the bonds is no less than the balance of related repurchase
transactions.
For bonds repurchase transactions through stock exchange, the Group is required to deposit certain
exchange traded bonds and/or bonds transferred under new pledged repurchase transactions with fair
value converted at a standard rate pursuant to stock exchange’s regulation no less than the balance of
related repurchase transactions into a collateral pool.
288 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-110
F-110
43. INSURANCE CONTRACT ASSETS AND LIABILITIES
(1) THE ANALYSIS OF LIABILITIES FOR REMAINING COVERAGE AND LIABILITIES FOR
INCURRED CLAIMS IS AS FOLLOWS:
2023
Contracts not measured under the premium allocation approach Contracts measured under the premium allocation approach
Liabilities for remaining coverage Liabilities for remaining coverage Liabilities for incurred claims
Estimates of
the present Risk adjustment
Excluding loss Loss Liabilities for Excluding loss Loss value of future for non-financial
(in RMB million) component component incurred claims Total component component cash flows risk Total
Net insurance contract liabilities as at
1 January 3,356,921 5,606 60,285 3,422,812 114,066 5,395 124,676 4,228 248,365
Including: Insurance contract liabilities 3,356,921 5,606 60,285 3,422,812 114,066 5,395 124,676 4,228 248,365
Insurance revenue (218,815) – – (218,815) (317,625) – – – (317,625)
Incurred claims and other expenses – (3,516) 97,347 93,831 – (5,200) 251,567 2,798 249,165
Amortization of insurance acquisition
cash flows 48,218 – – 48,218 72,490 – – – 72,490
Losses on onerous contracts and
reversal of those losses – 4,081 – 4,081 – 5,579 – – 5,579
Changes to liabilities for incurred
claims – – (7,630) (7,630) – – (23,040) (2,516) (25,556)
Insurance service expenses 48,218 565 89,717 138,500 72,490 379 228,527 282 301,678
Insurance service result (170,597) 565 89,717 (80,315) (245,135) 379 228,527 282 (15,947)
Insurance finance expenses 288,799 161 247 289,207 2,566 18 2,840 100 5,524
Total changes in the statement of
comprehensive income 118,202 726 89,964 208,892 (242,569) 397 231,367 382 (10,423)
Investment components (216,298) – 216,298 – (6,843) – 6,843 – –
FINANCIAL STATEMENTS
Premiums received 612,322 – – 612,322 349,777 – – – 349,777
Insurance acquisition cash flows (45,806) – – (45,806) (73,582) – – – (73,582)
Claims and other expenses paid – – (302,075) (302,075) – – (228,934) – (228,934)
Other cash flows 624 – – 624 (18,280) – – – (18,280)
Total cash flows 567,140 – (302,075) 265,065 257,915 – (228,934) – 28,981
Other movements (821) – (1,673) (2,494) (150) – (1,251) 1 (1,400)
Net insurance contract liabilities as at
31 December 3,825,144 6,332 62,799 3,894,275 122,419 5,792 132,701 4,611 265,523
Including: Insurance contract liabilities 3,825,144 6,332 62,799 3,894,275 122,427 5,792 132,696 4,611 265,526
Insurance contract assets – – – – (8) – 5 – (3)
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 289
F-111
F-111
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(1) THE ANALYSIS OF LIABILITIES FOR REMAINING COVERAGE AND LIABILITIES FOR
INCURRED CLAIMS IS AS FOLLOWS (CONTINUED):
2022 (Restated)
Contracts not measured under the premium allocation approach Contracts measured under the premium allocation approach
Liabilities for remaining coverage Liabilities for remaining coverage Liabilities for incurred claims
Estimates of
the present Risk adjustment
Excluding loss Loss Liabilities for Excluding loss Loss value of future for non-financial
(in RMB million) component component incurred claims Total component component cash flows risk Total
Net insurance contract liabilities as at
1 January 3,065,997 6,746 46,816 3,119,559 107,342 3,014 107,427 3,528 221,311
Including: Insurance contract liabilities 3,065,997 6,746 46,816 3,119,559 107,342 3,014 107,427 3,528 221,311
Insurance revenue (231,233) – – (231,233) (294,748) – – – (294,748)
Incurred claims and other expenses – (3,960) 108,581 104,621 – (2,955) 216,043 2,471 215,559
Amortization of insurance acquisition
cash flows 47,078 – – 47,078 66,132 – – – 66,132
Losses on onerous contracts and
reversal of those losses – 2,639 – 2,639 – 5,330 – – 5,330
Changes to liabilities for incurred
claims – – (7,209) (7,209) – – (10,069) (1,860) (11,929)
Insurance service expenses 47,078 (1,321) 101,372 147,129 66,132 2,375 205,974 611 275,092
Insurance service result (184,155) (1,321) 101,372 (84,104) (228,616) 2,375 205,974 611 (19,656)
Insurance finance expenses 149,295 181 256 149,732 2,602 6 2,525 86 5,219
Total changes in the statement of
comprehensive income (34,860) (1,140) 101,628 65,628 (226,014) 2,381 208,499 697 (14,437)
Investment components (181,355) – 181,355 – (6,387) – 6,387 – –
Premiums received 553,591 – – 553,591 324,519 – – – 324,519
Insurance acquisition cash flows (39,751) – – (39,751) (68,584) – – – (68,584)
Claims and other expenses paid – – (267,949) (267,949) – – (196,288) – (196,288)
Other cash flows (4,639) – – (4,639) (16,580) – – – (16,580)
Total cash flows 509,201 – (267,949) 241,252 239,355 – (196,288) – 43,067
Other movements (2,062) – (1,565) (3,627) (230) – (1,349) 3 (1,576)
Net insurance contract liabilities as at
31 December 3,356,921 5,606 60,285 3,422,812 114,066 5,395 124,676 4,228 248,365
Including: Insurance contract liabilities 3,356,921 5,606 60,285 3,422,812 114,066 5,395 124,676 4,228 248,365
290 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-112
F-112
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(2) THE ANALYSIS BY MEASUREMENT COMPONENT OF CONTRACTS NOT MEASURED UNDER
THE PREMIUM ALLOCATION APPROACH IS AS FOLLOWS:
2023
Estimates of the Risk adjustment
present value of for non-financial Contractual
(in RMB million) future cash flows risk service margin Total
Net insurance contract liabilities as at
1 January 2,455,001 144,589 823,222 3,422,812
Including: Insurance contract liabilities 2,455,001 144,589 823,222 3,422,812
Contractual service margin recognized
for services provided – – (77,864) (77,864)
Change in the risk adjustment for non-
financial risk for risk expired – (7,174) – (7,174)
Experience adjustments 8,272 – – 8,272
Changes that relate to current services 8,272 (7,174) (77,864) (76,766)
Contracts initially recognized in the
period (44,495) 3,055 42,547 1,107
Changes in estimates that adjust the
contractual service margin 32,717 9,257 (41,974) –
Changes in estimates that do not adjust
the contractual service margin 2,803 171 – 2,974
Changes that relate to future services (8,975) 12,483 573 4,081
Adjustments to liabilities for incurred
claims (7,194) (436) – (7,630)
Changes that relate to past services (7,194) (436) – (7,630)
Insurance service result (7,897) 4,873 (77,291) (80,315)
FINANCIAL STATEMENTS
Insurance finance expenses 254,534 9,166 25,507 289,207
Total changes in the statement of
comprehensive income 246,637 14,039 (51,784) 208,892
Premiums received 612,322 – – 612,322
Insurance acquisition cash flows (45,806) – – (45,806)
Claims and other expenses paid (302,075) – – (302,075)
Other cash flows 624 – – 624
Total cash flows 265,065 – – 265,065
Other movements (2,494) – – (2,494)
Net insurance contract liabilities as at
31 December 2,964,209 158,628 771,438 3,894,275
Including: Insurance contract liabilities 2,964,209 158,628 771,438 3,894,275
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 291
F-113
F-113
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(2) THE ANALYSIS BY MEASUREMENT COMPONENT OF CONTRACTS NOT MEASURED UNDER
THE PREMIUM ALLOCATION APPROACH IS AS FOLLOWS (CONTINUED):
2022 (Restated)
Estimates of the Risk adjustment
present value of for non-financial Contractual
(in RMB million) future cash flows risk service margin Total
Net insurance contract liabilities as at
1 January 2,099,128 140,880 879,551 3,119,559
Including: Insurance contract liabilities 2,099,128 140,880 879,551 3,119,559
Contractual service margin recognized
for services provided – – (83,460) (83,460)
Change in the risk adjustment for non-
financial risk for risk expired – (7,118) – (7,118)
Experience adjustments 11,044 – – 11,044
Changes that relate to current services 11,044 (7,118) (83,460) (79,534)
Contracts initially recognized in the
period (45,965) 4,694 42,126 855
Changes in estimates that adjust the
contractual service margin 41,507 733 (42,240) –
Changes in estimates that do not adjust
the contractual service margin 1,693 91 – 1,784
Changes that relate to future services (2,765) 5,518 (114) 2,639
Adjustments to liabilities for incurred
claims (6,800) (409) – (7,209)
Changes that relate to past services (6,800) (409) – (7,209)
Insurance service result 1,479 (2,009) (83,574) (84,104)
Insurance finance expenses 116,769 5,718 27,245 149,732
Total changes in the statement of
comprehensive income 118,248 3,709 (56,329) 65,628
Premiums received 553,591 – – 553,591
Insurance acquisition cash flows (39,751) – – (39,751)
Claims and other expenses paid (267,949) – – (267,949)
Other cash flows (4,639) – – (4,639)
Total cash flows 241,252 – – 241,252
Other movements (3,627) – – (3,627)
Net insurance contract liabilities as at
31 December 2,455,001 144,589 823,222 3,422,812
Including: Insurance contract liabilities 2,455,001 144,589 823,222 3,422,812
292 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-114
F-114
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(3) THE EFFECT ON THE MEASUREMENT COMPONENTS OF INSURANCE CONTACTS
ARISING FROM THE INITIAL RECOGNITION OF CONTRACTS NOT MEASURED UNDER THE
PREMIUM ALLOCATION APPROACH THAT WERE INITIALLY RECOGNIZED IN THE PERIOD
IS AS FOLLOWS:
2023
(in RMB million) Onerous contracts Others Total
Insurance acquisition cash flows 2,874 46,203 49,077
Other cash outflows 14,135 287,540 301,675
Estimates of the present value of
future cash outflows 17,009 333,743 350,752
Estimates of the present value of future cash inflows (16,412) (378,835) (395,247)
Risk adjustment for non-financial risk 510 2,545 3,055
Contractual service margin – 42,547 42,547
Losses recognized on initial recognition 1,107 – 1,107
2022 (Restated)
(in RMB million) Onerous contracts Others Total
Insurance acquisition cash flows 2,117 40,840 42,957
Other cash outflows 11,397 241,883 253,280
Estimates of the present value of
future cash outflows 13,514 282,723 296,237
Estimates of the present value of future cash inflows (13,021) (329,181) (342,202)
Risk adjustment for non-financial risk 362 4,332 4,694
Contractual service margin – 42,126 42,126
Losses recognized on initial recognition 855 – 855
FINANCIAL STATEMENTS
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 293
F-115
F-115
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(4) THE ANALYSIS OF CONTRACTUAL SERVICE MARGIN FOR CONTRACTS NOT MEASURED
UNDER THE PREMIUM ALLOCATION APPROACH IS AS FOLLOWS:
2023
Contracts under
Contracts under the modified
the fair value retrospective
(in RMB million) approach approach Other contracts Total
Contractual service margin as
at 1 January 124,149 659,970 39,103 823,222
Changes that relate to current
services
Contractual service margin
recognized for services
provided (9,247) (59,365) (9,252) (77,864)
Changes that relate to future
services
Contracts initially recognized
in the period – – 42,547 42,547
Changes in estimates that
adjust the contractual
service margin (3,436) (36,372) (2,166) (41,974)
Insurance service result (12,683) (95,737) 31,129 (77,291)
Insurance finance expenses 1,083 22,393 2,031 25,507
Total changes in the statement
of comprehensive income (11,600) (73,344) 33,160 (51,784)
Contractual service margin as
at 31 December 112,549 586,626 72,263 771,438
294 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-116
F-116
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(4) THE ANALYSIS OF CONTRACTUAL SERVICE MARGIN FOR CONTRACTS NOT MEASURED
UNDER THE PREMIUM ALLOCATION APPROACH IS AS FOLLOWS (CONTINUED):
2022 (Restated)
Contracts under
Contracts under the modified
the fair value retrospective
(in RMB million) approach approach Other contracts Total
Contractual service margin as
at 1 January 138,713 739,694 1,144 879,551
Changes that relate to current
services
Contractual service margin
recognized for services
provided (10,148) (68,752) (4,560) (83,460)
Changes that relate to future
services
Contracts initially recognized
in the period – – 42,126 42,126
Changes in estimates that
adjust the contractual
service margin (5,590) (36,333) (317) (42,240)
Insurance service result (15,738) (105,085) 37,249 (83,574)
Insurance finance expenses 1,174 25,361 710 27,245
Total changes in the statement
of comprehensive income (14,564) (79,724) 37,959 (56,329)
Contractual service margin as
at 31 December 124,149 659,970 39,103 823,222
As at 31 December 2023, the Group expects that 61% (31 December 2022: 60%) of the contractual service
FINANCIAL STATEMENTS
margin will be recognized in profit or loss within the next 10 years.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 295
F-117
F-117
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(5) THE ANALYSIS OF INSURANCE FINANCE EXPENSES/(INCOME) IS AS FOLLOWS:
2023
Insurance contracts Insurance contracts
not measured under measured under
the premium the premium
(in RMB million) allocation approach allocation approach Total
Insurance finance expenses/(income)
Changes in fair value of underlying items of
contracts with direct participation features 150,691 – 150,691
Interest accreted to insurance contracts using
locked-in rate and effect of changes in
financial assumptions 138,506 5,524 144,030
Foreign exchange gains 10 – 10
Total 289,207 5,524 294,731
Represented by:
Amounts recognized in profit or loss 118,436 5,523 123,959
Amounts recognized in other comprehensive
income 170,771 1 170,772
2022 (Restated)
Insurance contracts Insurance contracts
not measured under measured under
the premium the premium
(in RMB million) allocation approach allocation approach Total
Insurance finance expenses/(income)
Changes in fair value of underlying items of
contracts with direct participation features 66,843 – 66,843
Interest accreted to insurance contracts using
locked-in rate and effect of changes in
financial assumptions 82,902 5,219 88,121
Foreign exchange losses (13) – (13)
Total 149,732 5,219 154,951
Represented by:
Amounts recognized in profit or loss 94,709 5,224 99,933
Amounts recognized in other comprehensive
income 55,023 (5) 55,018
296 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-118
F-118
43. INSURANCE CONTRACT ASSETS AND LIABILITIES (CONTINUED)
(6) THE COMPOSITION OF THE UNDERLYING ITEMS FOR CONTRACTS WITH DIRECT
PARTICIPATION FEATURES AND THEIR FAIR VALUES ARE AS FOLLOWS:
(in RMB million) 2023 2022
(Restated)
Financial assets at fair value through profit or loss 517,595 456,174
Debt financial assets at fair value through
other comprehensive income 1,484,003 1,411,309
Equity financial assets at fair value through
other comprehensive income 187,127 193,884
Others 102,325 94,263
2,291,050 2,155,630
(7) THE RECONCILIATION OF CUMULATIVE AMOUNTS INCLUDED IN OTHER
COMPREHENSIVE INCOME FOR FINANCIAL ASSETS MEASURED AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME RELATED TO THE GROUPS OF CONTRACTS
TO WHICH THE GROUP APPLIED THE MODIFIED RETROSPECTIVE APPROACH OR THE
FAIR VALUE APPROACH AS AT 1 JANUARY 2022, IS PROVIDED IN THE TABLE BELOW.
(in RMB million) 2023 2022
(Restated)
Carrying amount as at 1 January 53,463 39,553
Changes in fair value 83,169 17,411
Amounts reclassified to profit or loss 991 (481)
Amounts reclassified to retained profits 3,601 1,617
Income tax (21,940) (4,637)
Carrying amount as at 31 December 119,284 53,463
44. CUSTOMER DEPOSITS AND PAYABLES TO BROKERAGE CUSTOMERS
FINANCIAL STATEMENTS
(in RMB million) 31 December 2023 31 December 2022
Current and savings accounts
Corporate customers 868,022 842,380
Individual customers 290,352 297,141
Term deposits
Corporate customers 1,321,068 1,415,106
Individual customers 938,713 751,544
Subtotal 3,418,155 3,306,171
Payables to brokerage customers
Individual customers 90,301 96,810
Corporate customers 26,083 29,018
Subtotal 116,384 125,828
Total 3,534,539 3,431,999
As at 31 December 2023, bonds classified as financial assets carried at amortized costs with a carrying
amount of RMB31,059 million (31 December 2022: RMB22,945 million) were pledged as main collaterals for
term deposit with the Central Bank.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 297
F-119
F-119
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
45. BONDS PAYABLE
The information of the Group’s main bonds payable is as follows:
(in RMB million)
Early
redemption/
Selling back Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option Par value year type (per annum) 2023 2022
Ping An Financial Leasing Corporate bonds None 5 years End of the third 2,474 2019 Fixed 3.00%-3.45% 2,513 2,518
year
Ping An Financial Leasing Corporate bonds None 5 years End of the third 1,840 2020 Fixed 3.60%-3.70% 1,869 2,799
year
Ping An Financial Leasing Corporate bonds None 4 years End of the 718 2020 Fixed 3.00%-3.10% 729 731
second year
Ping An Financial Leasing Corporate bonds None 2-4 years End of the 2,400 2021 Fixed 3.85%-4.40% 2,437 3,155
second year
Ping An Financial Leasing Corporate bonds None 3-5 years End of the third 1,700 2021 Fixed 3.89%-4.08% 1,726 1,730
year
Ping An Financial Leasing Corporate bonds None 3-4 years End of the 8,800 2022 Fixed 3.09%-3.65% 8,937 8,957
second year
Ping An Financial Leasing Corporate bonds None 5 years End of the third 1,500 2022 Fixed 3.33%-3.80% 1,523 1,527
year
Ping An Financial Leasing Corporate bonds None 2 years End of the first 3,200 2022 Fixed 2.50%-3.15% 3,250 3,257
year
Ping An Financial Leasing Corporate bonds None 4 years End of the 5,600 2023 Fixed 3.37%-4.35% 5,687 –
second year
Ping An Financial Leasing Corporate bonds None 2 years End of the first 3,500 2023 Fixed 2.75%-3.62% 3,554 –
year
Ping An Financial Leasing Private corporate None 5 years End of the third 2,710 2018 Fixed 4.20%-4.30% – 2,758
bonds year
Ping An Financial Leasing Private corporate None 5 years End of the third 629 2019 Fixed 3.70% 639 640
bonds year
Ping An Financial Leasing Private corporate None 4 years End of the 2,700 2019 Fixed 4.10%-4.18% – 2,748
bonds second year
Ping An Bank Tier-2 Capital None 10 years End of the fifth 30,000 2019 Fixed 4.55% 30,907 30,908
bonds year
Ping An Bank Financial bonds None 3 years None 30,000 2020 Fixed 2.30% – 30,414
Ping An Bank Financial bonds None 3 years None 20,000 2021 Fixed 3.45% 20,630 20,629
Ping An Bank Tier-2 Capital None 10 years End of the fifth 30,000 2021 Fixed 3.69% 30,153 30,151
bonds year
Ping An Bank Financial bonds None 3 years None 20,000 2022 Fixed 2.45% 20,098 20,099
Ping An Bank Financial bonds None 3 years None 5,000 2022 Fixed 2.45% 5,020 5,020
Ping An Bank Financial bonds None 3 years None 5,000 2022 Fixed 2.45% 5,020 5,020
Ping An Bank Financial bonds None 3 years None 20,000 2022 Fixed 2.45% 20,069 20,070
Ping An Bank Financial bonds None 3 years None 30,000 2023 Fixed 2.77% 30,598 –
Ping An Life Capital None 10 years End of the fifth 20,000 2020 Fixed First 5 years: 3.58% 20,873 20,767
supplementary year Next 5 years: 4.58%
bonds (if not redeemed)
Ping An Property & Casualty Capital None 10 years End of the fifth 10,000 2019 Fixed First 5 years: 4.64% 10,543 10,487
supplementary year Next 5 years: 5.64%
bonds (if not redeemed)
Ping An Securities Corporate bonds None 5 years End of the third 100 2018 Fixed 3.00% – 100
year
298 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-120
F-120
45. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows (Continued):
(in RMB million)
Early
redemption/
Selling back Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option Par value year type (per annum) 2023 2022
Ping An Securities Corporate bonds None 5 years End of the third 1,500 2020 Fixed 3.40% – 1,548
year
Ping An Securities Private corporate None 3 years None 3,000 2020 Fixed 3.19% – 3,077
bonds
Ping An Securities Corporate bonds None 3 years None 4,000 2020 Fixed 3.58% – 4,062
Ping An Securities Corporate bonds None 3 years None 2,550 2020 Fixed 3.70% – 2,566
Ping An Securities Corporate bonds None 3 years None 3,000 2021 Fixed 3.40% 3,060 3,059
Ping An Securities Corporate bonds None 3 years None 2,400 2021 Fixed 3.48% 2,446 2,445
Ping An Securities Corporate bonds None 3 years None 1,200 2021 Fixed 3.50% 1,222 1,221
Ping An Securities Corporate bonds None 2 years None 2,000 2021 Fixed 3.35% – 2,034
Ping An Securities Corporate bonds None 3 years None 1,800 2021 Fixed 3.25% 1,826 1,825
Ping An Securities Corporate bonds None 3 years None 3,000 2021 Fixed 3.05% 3,035 3,034
Ping An Securities Corporate bonds None 5 years None 2,000 2021 Fixed 3.47% 2,025 2,024
Ping An Securities Corporate bonds None 3 years None 2,600 2021 Fixed 3.37% 2,617 2,616
Ping An Securities Private corporate None 2 years None 2,000 2021 Fixed 3.25% – 2,009
bonds
Ping An Securities Private corporate None 2 years None 1,500 2021 Fixed 3.20% – 1,501
bonds
Ping An Securities Private corporate None 2 years None 1,500 2022 Fixed 3.07% 1,544 1,544
bonds
Ping An Securities Corporate bonds None 3 years None 2,300 2022 Fixed 3.00% 2,349 2,348
Ping An Securities Corporate bonds None 5 years None 500 2022 Fixed 3.42% 512 512
FINANCIAL STATEMENTS
Ping An Securities Subordinated None 3 years None 1,900 2022 Fixed 3.10% 1,937 1,936
corporate bonds
Ping An Securities Subordinated None 5 years None 1,100 2022 Fixed 3.56% 1,124 1,124
corporate bonds
Ping An Securities Corporate bonds None 3 years None 3,000 2022 Fixed 2.80% 3,035 3,034
Ping An Securities Corporate bonds None 9 months None 2,000 2022 Fixed 1.95% – 2,015
Ping An Securities Corporate bonds None 3 years None 500 2022 Fixed 2.75% 505 505
Ping An Securities Corporate bonds None 5 years None 1,000 2022 Fixed 3.22% 1,012 1,011
Ping An Securities Corporate bonds None 3 years None 2,500 2022 Fixed 2.65% 2,518 2,518
Ping An Securities Corporate bonds None 6 months None 500 2022 Fixed 2.80% – 501
Ping An Securities Corporate bonds None 5 years None 1,800 2023 Fixed 3.60% 1,855 –
Ping An Securities Corporate bonds None 3 years None 1,200 2023 Fixed 3.33% 1,234 –
Ping An Securities Corporate bonds None 5 years None 750 2023 Fixed 3.60% 772 –
Ping An Securities Corporate bonds None 3 years None 500 2023 Fixed 3.39% 514 –
Ping An Securities Corporate bonds None 3 years None 1,000 2023 Fixed 3.15% 1,021 –
Ping An Securities Corporate bonds None 2 years None 2,000 2023 Fixed 3.02% 2,041 –
Ping An Securities Corporate bonds None 3 years None 1,000 2023 Fixed 3.03% 1,018 –
Ping An Securities Corporate bonds None 2 years None 1,500 2023 Fixed 2.90% 1,526 –
Ping An Securities Corporate bonds None 3 years None 2,000 2023 Fixed 2.95% 2,031 –
Ping An Securities Corporate bonds None 2 years None 1,000 2023 Fixed 2.78% 1,015 –
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 299
F-121
F-121
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
45. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows (Continued):
(in RMB million)
Early
redemption/
Selling back Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option Par value year type (per annum) 2023 2022
Ping An Securities Corporate bonds None 5 years None 1,500 2023 Fixed 3.25% 1,521 –
Ping An Securities Corporate bonds None 3 years None 500 2023 Fixed 2.95% 506 –
Ping An Securities Corporate bonds None 3 years None 1,500 2023 Fixed 3.00% 1,504 –
Ping An Securities Corporate bonds None 3 years None 800 2023 Fixed 3.00% 800 –
Ping An Securities Corporate bonds None 2 years None 1,200 2023 Fixed 2.98% 1,200 –
Ping An Real Estate Corporate bonds None 7 years End of the fifth 750 2019 Fixed 4.40% 766 765
year
Ping An Real Estate Corporate bonds None 7 years End of the fifth 940 2019 Fixed 4.30% 957 957
year
Ping An Real Estate Corporate bonds None 7 years End of the fifth 244 2016 Fixed 3.28% – 245
year
Ping An Financial Private corporate None 5 years End of the third 120 2019 Fixed 3.85% – 121
Technology bonds year
Ping An Financial Private corporate None 5 years End of the third 2,000 2020 Fixed 3.40% – 2,046
Technology bonds year
Ping An Financial Private corporate None 5 years End of the third 150 2020 Fixed 4.00% 153 3,063
Technology bonds year
Ping An Financial Private corporate None 3 years End of the 950 2020 Fixed 3.60% – 956
Technology bonds second year
Lianxin Investment Private corporate None 5 years End of the third 2,000 2020 Fixed 5.40% – 2,003
bonds year
Lianxin Investment Private corporate None 3 years End of the 1,000 2021 Fixed 4.50% – 1,031
bonds second year
Founder Securities Corporate bonds None 2 years None 1,000 2022 Fixed 3.49% 1,026 1,025
Founder Securities Corporate bonds None 366 days None 800 2022 Fixed 3.18% – 817
Founder Securities Corporate bonds None 2 years None 700 2022 Fixed 3.40% 716 716
Founder Securities Corporate bonds None 2 years None 600 2022 Fixed 3.18% 611 611
Founder Securities Corporate bonds None 3 years None 1,000 2022 Fixed 2.95% 1,007 1,007
Founder Securities Corporate bonds None 2 years None 700 2022 Fixed 2.75% 703 702
Founder Securities Corporate bonds None 3 years None 1,300 2022 Fixed 2.94% 1,305 1,304
Founder Securities Corporate bonds None 2 years None 400 2022 Fixed 4.30% 400 400
Founder Securities Corporate bonds None 2 years None 1,600 2023 Fixed 3.56% 1,648 –
Founder Securities Subordinated None 3 years None 1,200 2023 Fixed 4.10% 1,234 –
corporate bonds
Founder Securities Subordinated None 2 years None 1,500 2023 Fixed 3.68% 1,534 –
corporate bonds
Founder Securities Subordinated None 3 years None 500 2023 Fixed 3.80% 511 –
corporate bonds
Founder Securities Corporate bonds None 3 years None 3,000 2023 Fixed 3.23% 3,035 –
Founder Securities Corporate bonds None 3 years None 500 2023 Fixed 3.28% 504 –
Founder Securities Corporate bonds None 3 years None 3,000 2023 Fixed 3.50% 3,016 –
Founder Securities Corporate bonds None 2 years None 2,000 2023 Fixed 3.14% 2,005 –
Founder Securities Corporate bonds None 2 years None 2,000 2023 Fixed 3.20% 2,000 –
300 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-122
F-122
45. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows (continued):
As at 31 December 2023, the original terms of interbank certificates of deposit and certificates of deposit
issued by Ping An Bank, but unmatured were from 3 months to 1 year, and the annual interest rates were
from 2.22% to 5.32% (31 December 2022: the original terms were from 1 month to 1 year, and the annual
interest rates were from 1.65% to 3.01%). The carrying amount was RMB565,833 million (31 December 2022:
RMB529,764 million).
As at 31 December 2023, the original terms of short-term financial bonds issued by Ping An Securities,
but unmatured were from 91 days to 274 days, and the annual interest rates were from 2.20% to 2.79% (31
December 2022: the original terms were from 92 days to 365 days, and the annual interest rates were from
1.84% to 2.66%). The carrying amount was RMB16,107 million (31 December 2022: RMB11,109 million).
As at 31 December 2023, the original terms of short-term financial bonds issued by Ping An Financial
Leasing, but unmatured were from 120 days to 365 days, and the annual interest rates were from 2.16% to
3.40% (31 December 2022: the original terms were from 63 days to 365 days, and the annual interest rates
were from 2.64% to 4.10%). The carrying amount was RMB12,745 million (31 December 2022: RMB3,970 million).
As at 31 December 2023, there is no unmatured short-term financial bond issued by Ping An Real Estate (31
December 2022: the original term was 210 days, the annual interest rate was 3.38%, and the carrying amount
was RMB1,520 million).
As at 31 December 2023, the original terms of short-term financial bonds issued by Founder Securities,
but unmatured were from 140 days to 365 days, and the annual interest rates were from 2.70% to 3.40% (31
December 2022: the original terms were from 175 days to 365 days, and the annual interest rates were from
3.05% to 4.20%). The carrying amount was RMB7,711 million (31 December 2022: RMB8,999 million).
As at 31 December 2023, the original terms of income certificates issued by Ping An Securities, but
unmatured were from 14 days to 90 days, and the annual interest rates were from 2.30% to 5.10% (31
FINANCIAL STATEMENTS
December 2022: the original term was 14 days, and the annual interest rates were from 4.48% to 5.11%). The
carrying amount was RMB122 million (31 December 2022: RMB81 million).
As at 31 December 2023, the original terms of income certificates issued by Founder Securities, but
unmatured were from 366 days to 733 days, and the annual interest rates were from 3.00% to 4.40% (31
December 2022: the original terms were from 366 days to 733 days, and the annual interest rates were from
3.20% to 4.45%). The carrying amount was RMB7,262 million (31 December 2022: RMB5,569 million).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 301
F-123
F-123
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
46. DEFERRED TAX ASSETS AND LIABILITIES
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Deferred tax assets 101,337 89,321
Deferred tax liabilities (14,148) (14,217)
The deferred tax assets are analysed as follows:
2023
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss 5,668 589 – 6 6,263 (25,052)
Fair value adjustments on financial
assets at fair value through other
comprehensive income 2,087 – (1,414) 91 764 (3,056)
Insurance contract liabilities 41,897 (16,152) 43,589 – 69,334 (277,336)
Impairment provisions 53,815 1,016 101 – 54,932 (219,728)
Others 19,940 17,870 (1,038) (97) 36,675 (146,700)
123,407 3,323 41,238 – 167,968 (671,872)
2022 (Restated)
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss 1,018 4,650 – – 5,668 (22,672)
Fair value adjustments on financial
assets at fair value through other
comprehensive income 3,181 – (1,098) 4 2,087 (8,348)
Insurance contract liabilities 39,215 (11,474) 14,156 – 41,897 (167,588)
Impairment provisions 48,307 6,018 (510) – 53,815 (215,260)
Others 7,764 11,629 128 419 19,940 (79,760)
99,485 10,823 12,676 423 123,407 (493,628)
302 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-124
F-124
46. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
The deferred tax liabilities are analysed as follows:
2023
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss (2,606) (542) – – (3,148) 12,592
Fair value adjustments on financial
assets at fair value through other
comprehensive income (28,669) – (35,654) – (64,323) 257,292
Intangible assets-core deposits (1,610) 188 – – (1,422) 5,688
Intangible assets valuation premium
from acquisition of Autohome Inc. (1,884) 39 – – (1,845) 7,380
Assets valuation premium from
disposal of subsidiaries (3,615) – – – (3,615) 14,460
Others (9,919) 3,848 (81) (274) (6,426) 25,704
(48,303) 3,533 (35,735) (274) (80,779) 323,116
2022 (Restated)
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss (10,552) 7,952 – (6) (2,606) 10,424
Fair value adjustments on financial
assets at fair value through other
FINANCIAL STATEMENTS
comprehensive income (22,404) – (6,265) – (28,669) 114,676
Intangible assets-core deposits (1,799) 189 – – (1,610) 6,442
Intangible assets valuation premium
from acquisition of Autohome Inc. (1,923) 39 – – (1,884) 7,536
Assets valuation premium from
disposal of subsidiaries (3,615) – – – (3,615) 14,460
Others (8,508) 1,122 73 (2,606) (9,919) 39,676
(48,801) 9,302 (6,192) (2,612) (48,303) 193,214
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 303
F-125
F-125
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
46. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
As at 31 December 2023, unrecognized tax losses of the Group were RMB53,158 million (31 December 2022:
RMB38,697 million).
The following table shows unrecognized tax losses based on its expected expiry date:
(in RMB million) 31 December 2023 31 December 2022
2023 – 2,992
2024 5,855 5,864
2025 7,261 7,077
2026 7,267 6,041
2027 11,572 16,723
2028 21,203 –
53,158 38,697
The net amounts of deferred tax assets and liabilities after offsetting are as follows:
31 December 2023 31 December 2022 (Restated)
(in RMB million) Offsetting Net Offsetting Net
Deferred tax assets (66,631) 101,337 (34,086) 89,321
Deferred tax liabilities 66,631 (14,148) 34,086 (14,217)
47. OTHER LIABILITIES
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Other payables 168,866 195,705
Payables to non-controlling interests of consolidated structured
entities 10,207 22,260
Salaries and welfare payable 49,771 47,723
Other tax payable 8,571 9,886
Contingency provision 18,795 15,401
Insurance guarantee fund 1,000 1,161
Provision payables 5,140 5,781
Accruals 10,638 11,538
Deferred income 1,765 1,909
Contract liabilities 5,345 6,382
Finance lease deposits 10,035 15,232
Others 66,892 83,710
357,025 416,688
304 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-126
F-126
48. FIDUCIARY ACTIVITIES
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Assets under trust schemes 650,133 537,178
Assets under annuity investments and annuity schemes 750,293 669,251
Assets under asset management schemes 1,800,776 1,848,567
Entrusted loans of banking operations 155,382 178,386
Entrusted investments of banking operations 1,013,060 886,840
4,369,644 4,120,222
49. RISK AND CAPITAL MANAGEMENT
(1) INSURANCE RISK
Type of insurance risk
Insurance risk refers to the risk that actual indemnity might exceed expected indemnity due to the
frequency and severity of insurance accidents, as well as the possibility that insurance surrender rates are
being underestimated. The principal risk the Group faces under such contracts is that the actual claims and
benefit payments exceed the carrying amount of insurance contract liabilities. This could occur due to any
of the following factors:
(i) Occurrence risk – the possibility that the number of insured events will differ from those expected.
(ii) Severity risk – the possibility that the cost of the events will differ from those expected.
(iii) Development risk – the possibility that changes may occur in the amount of an insurer’s obligation at
the end of the contract period.
The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance
FINANCIAL STATEMENTS
contracts as a more diversified portfolio is less likely to be affected across the board by change in any
subset of the portfolio. The variability of risks is also improved by careful selection and implementation of
underwriting strategies and guidelines.
The insurance business of the Group mainly comprises long-term life insurance contracts, property
and casualty and short-term life insurance contracts. For contracts where death is the insured risk, the
significant factors that could increase the overall frequency of claims are epidemics, widespread changes
in lifestyles and natural disasters, resulting in earlier or more claims than expected. For contracts where
survival is the insured risk, the most significant factor is continuing improvement in medical science and
social conditions that would increase longevity. For property and casualty insurance contracts, claims are
often affected by natural disasters, calamities, terrorist attacks, etc.
These risks currently do not vary significantly in relation to the location of the risk insured by the Group
whilst undue concentration by amounts could have an impact on the severity of benefit payments on a
portfolio basis.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 305
F-127
F-127
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Type of insurance risk (Continued)
There would be no significant mitigating terms and conditions that reduce the insured risk accepted for
contracts with fixed and guaranteed benefits and fixed future premiums. However, for contracts with
discretionary participation features, the participating nature of these contracts results in a significant
portion of the insurance risk being shared with the insured party.
Insurance risk is also affected by the policyholders’ rights to terminate the contract, pay reduced
premiums, refuse to pay premiums or exercise annuity conversion option, etc. Thus, the resultant insurance
risk is subject to policyholders’ behaviour and decisions.
Concentration of insurance risks
The Group runs its insurance business primarily within the PRC. Hence the geographical insurance risk is
concentrated primarily within the PRC.
Assumptions and sensitivities
(a) Long-term life insurance contracts
Assumptions
Significant judgements are required in determining and choosing discount rates/investment return,
mortality, morbidity, lapse rates, policy dividend, and expenses assumptions relating to long-term life
insurance contracts.
Sensitivities
The Group has measured the impact on long-term life insurance contract liabilities using sensitivity analysis,
of varying independently certain assumptions under reasonable and possible circumstances. The following
changes in assumptions have been considered:
(i) a 10% increase in mortality, morbidity, accident rates, etc. (a 10% increase in mortality rates of annuity
policies before the payment period, a 10% decrease in the payment period);
(ii) a 10% increase or decrease in policy lapse rates (depends on which situation results in the
unfavourable changes in fulfilment cash flows by insurance product); and
(iii) a 5% increase in maintenance expense rates.
306 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-128
F-128
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(a) Long-term life insurance contracts (Continued)
Sensitivities (continued)
31 December 2023
Increase/(decrease) in profit before tax Increase/(decrease) in equity before tax
Change in
(in RMB million) assumptions Gross of reinsurance Net of reinsurance Gross of reinsurance Net of reinsurance
Mortality, morbidity, accident rates, etc. +10% (8,017) (7,487) (15,369) (14,486)
Policy lapse rates +/-10% (1,794) (1,775) (3,611) (3,562)
Maintenance expense rates +5% (477) (474) (706) (702)
31 December 2022 (Restated)
Increase/(decrease) in profit before tax Increase/(decrease) in equity before tax
Change in
(in RMB million) assumptions Gross of reinsurance Net of reinsurance Gross of reinsurance Net of reinsurance
Mortality, morbidity, accident rates, etc. +10% (7,665) (7,077) (13,300) (12,654)
Policy lapse rates +/-10% (1,567) (1,566) (2,831) (2,755)
Maintenance expense rates +5% (479) (479) (638) (638)
(b) Property and casualty and short-term life insurance contracts
Assumptions
The principal assumptions underlying the estimates includes assumptions in respect of average claim
costs, claims handling costs, claims inflation factors and claim numbers for each accident year which are
determined based on the Group’s past claim experiences. Judgement is used to assess the extent to which
external factors such as judicial decisions and government legislation affect the estimates.
FINANCIAL STATEMENTS
Other key assumptions include delays in settlement, etc.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 307
F-129
F-129
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities
The liabilities for incurred claims of property and casualty and short-term life insurance are sensitive to the
above key assumptions. The sensitivity of certain variables including legislative change, uncertainty in the
estimation process, etc., is not possible to quantify. Furthermore, because of delays that arise between the
occurrence of a claim and its subsequent notification and eventual settlement, the liabilities for incurred
claims are not known with certainty at the end of the reporting period.
Reproduced below is an exhibit that shows the development of gross liabilities for incurred claims of
property and casualty insurance and short-term life insurance by the accident year and reconciliation with
the aggregate carrying amount:
(in RMB million) 2019 2020 2021 2022 2023 Total
Estimates of undiscounted
cumulative claims:
As at the end of accident year 172,726 196,080 223,617 226,604 257,451
One year later 168,835 188,032 217,423 216,105
Two years later 163,992 185,344 211,506
Three years later 162,360 179,704
Four years later 160,563
Estimated cumulative claims 160,563 179,704 211,506 216,105 257,451 1,025,329
Cumulative claims paid (158,827) (175,433) (199,786) (190,811) (168,451) (893,308)
Subtotal 132,021
Prior year adjustments, unallocated
loss adjustment expenses, risk
adjustment for non-financial risk
and effect of discounting 11,366
Total gross liabilities for incurred
claims 143,387
308 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-130
F-130
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities (continued)
Reproduced below is an exhibit that shows the development of net liabilities for incurred claims of
property and casualty insurance and short-term life insurance by the accident year and reconciliation with
the aggregate carrying amount:
(in RMB million) 2019 2020 2021 2022 2023 Total
Estimates of undiscounted
cumulative claims:
As at the end of accident year 162,307 184,805 205,113 211,821 244,937
One year later 158,421 176,760 200,356 202,307
Two years later 153,834 174,567 194,925
Three years later 152,464 169,280
Four years later 150,790
Estimated cumulative claims 150,790 169,280 194,925 202,307 244,937 962,239
Cumulative claims paid (149,622) (165,854) (187,025) (180,831) (163,979) (847,311)
Subtotal 114,928
Prior year adjustments, unallocated
loss adjustment expenses, risk
adjustment for non-financial risk
and effect of discounting 11,126
Net liabilities for incurred claims 126,054
Amounts recoverable on incurred
FINANCIAL STATEMENTS
claims 17,333
Total gross liabilities for incurred
claims 143,387
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 309
F-131
F-131
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities (continued)
To illustrate the sensitivities of ultimate claims costs, for example, a respective percentage change in the
average claim costs alone results in a similar percentage change in liabilities for incurred claims:
31 December 2023
Increase/(decrease) in profit before tax Increase/(decrease) in equity before tax
Change in
(in RMB million) assumptions Gross of reinsurance Net of reinsurance Gross of reinsurance Net of reinsurance
Average claim costs
Property and casualty insurance +5% (6,551) (5,759) (6,551) (5,759)
Short-term life insurance +5% (618) (543) (618) (543)
31 December 2022 (Restated)
Increase/(decrease) in profit before tax Increase/(decrease) in equity before tax
Change in
(in RMB million) assumptions Gross of reinsurance Net of reinsurance Gross of reinsurance Net of reinsurance
Average claim costs
Property and casualty insurance +5% (6,251) (5,467) (6,251) (5,467)
Short-term life insurance +5% (648) (538) (648) (538)
(c) Reinsurance
The Group limits its exposure to losses from insurance operations mainly through participation in
reinsurance arrangements. The majority of the business ceded is placed on the quota share basis and
the surplus basis with retention limits varying by product lines. Amounts recoverable from reinsurers are
estimated in a manner consistent with the assumptions used for ascertaining the underlying policy benefits
and are presented in the statement of financial position as reinsurance contract assets or liabilities.
Even though the Group may have reinsurance arrangements, it is not relieved of its direct obligations to its
policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any
reinsurer is unable to meet its obligations assumed under such reinsurance agreements.
310 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-132
F-132
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK
Market risk is the risk of changes in fair value of financial instruments and future cash flows from
fluctuation of market prices, which includes three types of risks from volatility of foreign exchange rates
(foreign currency risk), market interest rates (interest rate risk) and market prices (price risk).
(a) Foreign currency risk
Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates.
Fluctuations in exchange rates between the RMB and other currencies in which the Group conducts
business may affect its financial position and results of operations. The foreign currency risk facing the
Group mainly comes from movements in the USD/RMB and HKD/RMB exchange rates. The Group sets
limitation to its position of foreign currency, monitors the size of foreign currency position, and limits the
foreign currency position within the threshold set by utilizing hedging strategy.
The analysis below is performed for reasonably possible movements in key variables with all other variables
held constant, showing the pre-tax impact on profit and equity (due to changes in fair value of foreign
currency-denominated non-monetary assets and liabilities measured at fair value, as well as monetary
assets and liabilities). The correlation of variables will have a significant effect on determining the ultimate
impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis.
31 December 2023 31 December 2022 (Restated)
Increase/ Increase/ Increase/ Increase/
Change in (decrease) in (decrease) in (decrease) in (decrease) in
(in RMB million) variables profit before tax equity before tax profit before tax equity before tax
USD +5% 2,528 4,304 1,292 2,745
HKD +5% (320) 209 484 1,185
Other currencies +5% 449 821 397 774
2,657 5,334 2,173 4,704
FINANCIAL STATEMENTS
USD -5% (2,528) (4,304) (1,292) (2,745)
HKD -5% 320 (209) (484) (1,185)
Other currencies -5% (449) (821) (397) (774)
(2,657) (5,334) (2,173) (4,704)
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 311
F-133
F-133
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(a) Foreign currency risk (Continued)
The main monetary assets and liabilities of the Group and non-monetary assets and liabilities measured at
fair value are analysed as follows by currency:
31 December 2023
USD HKD Others RMB
(RMB (RMB (RMB equivalent
(in RMB million) RMB equivalent) equivalent) equivalent) total
Assets
Cash and amounts due from banks and
other financial institutions 719,538 70,282 8,074 6,183 804,077
Balances with the Central Bank and
statutory deposits for insurance operations 282,634 2,830 415 – 285,879
Financial assets purchased under
reverse repurchase agreements 167,660 – – – 167,660
Accounts receivable 35,555 1 – 80 35,636
Insurance contract assets 3 – – – 3
Reinsurance contract assets 19,218 2,565 432 – 22,215
Finance lease receivable 180,674 – – – 180,674
Loans and advances to customers 3,170,396 84,875 31,833 31,018 3,318,122
Financial assets at fair value through
profit or loss 1,688,592 92,046 4,786 17,623 1,803,047
Financial assets at amortized cost 1,202,740 36,037 1,223 3,353 1,243,353
Debt financial assets at fair value
through other comprehensive income 2,605,544 29,574 1,876 14 2,637,008
Equity financial assets at fair value
through other comprehensive income 261,926 345 2,606 – 264,877
Other assets 103,979 1,244 2,239 182 107,644
10,438,459 319,799 53,484 58,453 10,870,195
Liabilities
Due to banks and other financial institutions 883,796 64,555 3,892 11,475 963,718
Financial liabilities at fair value
through profit or loss 47,645 974 – – 48,619
Assets sold under agreements to repurchase 237,017 4,786 – – 241,803
Accounts payable 8,858 – – – 8,858
Insurance contract liabilities 4,152,100 6,844 832 25 4,159,801
Reinsurance contract liabilities 53 – – – 53
Customer deposits and payables to
brokerage customers 3,337,590 166,007 13,407 17,535 3,534,539
Bonds payable 939,205 24,258 544 – 964,007
Other liabilities 272,251 4,582 854 58 277,745
9,878,515 272,006 19,529 29,093 10,199,143
Net position of foreign currency 47,793 33,955 29,360 111,108
Notional amount of foreign exchange
derivative financial instruments 38,294 (29,779) (12,936) (4,421)
86,087 4,176 16,424 106,687
Off-balance sheet credit commitments 1,914,722 20,232 2,764 9,251 1,946,969
312 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-134
F-134
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(a) Foreign currency risk (Continued)
The main monetary assets and liabilities of the Group and non-monetary assets and liabilities measured at
fair value are analysed as follows by currency (continued):
31 December 2022 (Restated)
USD HKD Others RMB
(RMB (RMB (RMB equivalent
(in RMB million) RMB equivalent) equivalent) equivalent) total
Assets
Cash and amounts due from banks
and other financial institutions 647,573 112,157 8,758 6,353 774,841
Balances with the Central Bank and
statutory deposits for insurance operations 289,046 6,116 397 – 295,559
Financial assets purchased under reverse
repurchase agreements 91,514 – – – 91,514
Accounts receivable 36,016 1 – 101 36,118
Reinsurance contract assets 18,955 1,242 418 – 20,615
Finance lease receivable 186,858 – – – 186,858
Loans and advances to customers 3,048,119 124,470 37,780 27,685 3,238,054
Financial assets at fair value through
profit or loss 1,516,727 96,929 9,131 17,732 1,640,519
Financial assets at amortized cost 1,072,439 46,441 2,356 2,799 1,124,035
Debt financial assets at fair value
through other comprehensive income 2,472,746 26,773 1,271 – 2,500,790
Equity financial assets at fair value
through other comprehensive income 258,239 688 5,844 – 264,771
Other assets 112,160 4,449 1,589 267 118,465
FINANCIAL STATEMENTS
9,750,392 419,266 67,544 54,937 10,292,139
Liabilities
Due to banks and other financial institutions 803,396 92,228 12,567 14,897 923,088
Financial liabilities at fair value
through profit or loss 81,784 2,787 – 88 84,659
Assets sold under agreements to repurchase 266,869 4,868 – – 271,737
Accounts payable 10,349 – – – 10,349
Insurance contract liabilities 3,667,025 3,353 775 24 3,671,177
Reinsurance contract liabilities 105 – – – 105
Customer deposits and payables to
brokerage customers 3,169,278 242,914 13,817 5,990 3,431,999
Bonds payable 901,191 29,907 – – 931,098
Other liabilities 317,192 3,198 527 619 321,536
9,217,189 379,255 27,686 21,618 9,645,748
Net position of foreign currency 40,011 39,858 33,319 113,188
Notional amount of foreign exchange
derivative financial instruments 14,888 (16,161) (17,841) (19,114)
54,899 23,697 15,478 94,074
Off-balance sheet credit commitments 1,790,679 25,879 1,003 9,399 1,826,960
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 313
F-135
F-135
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(b) Price risk
The Group’s price risk exposure relates to financial assets and liabilities whose values will fluctuate as a
result of changes in market prices (other than those arising from interest rate risk or foreign currency risk),
which mainly include listed equity securities and security investment funds classified as equity financial
assets at fair value through other comprehensive income and financial assets at fair value through profit or
loss, and related insurance contracts with direct participation features.
The above financial instruments and insurance contracts are exposed to price risk because of changes in
market prices, where changes are caused by factors specific to the individual financial instruments or their
issuers, or factors affecting all similar financial instruments traded in the market.
The Group manages price risks through balanced asset allocation, dynamic portfolio management and
diversification of investments, etc.
The analysis below is performed for a 10% increase or decrease in equity prices with all other variables held
constant, for the financial instruments and insurance contracts, showing the pre-tax impact on the Group’s
profit and equity.
31 December 2023 31 December 2022 (Restated)
Increase/ Increase/ Increase/ Increase/
(decrease) in (decrease) in (decrease) in (decrease) in
(in RMB million) Equity prices profit before tax equity before tax profit before tax equity before tax
Financial instruments +10% 30,668 48,436 24,653 42,057
Insurance contracts +10% (11,872) (24,839) (9,895) (22,825)
18,796 23,597 14,758 19,232
Financial instruments -10% (30,668) (48,436) (24,653) (42,057)
Insurance contracts -10% 11,871 24,837 9,866 22,796
(18,797) (23,599) (14,787) (19,261)
314 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-136
F-136
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(c) Interest rate risk
The interest rate risks facing the Group mainly comes from the insurance segment and the banking
segment.
The insurance segment
Interest rate risk of the Group’s insurance segment is the risk that the value/future cash flows of a financial
instrument (mainly include debt investments classified as financial assets at fair value through profit or loss
and financial assets at fair value through other comprehensive income) will fluctuate because of changes
in market interest rates, and the value of insurance contract liabilities will fluctuate because of changes in
market interest rates (discount rate). Since most markets do not have assets of sufficient tenor to match
insurance contract liabilities, an uncertainty arises around the reinvestment of maturing assets.
Floating rate instruments expose the Group to cash flow interest rate risk, whereas fixed rate instruments
expose the Group to fair value interest risk. The Group’s interest rate risk policy requires it to manage
the maturities of interest-bearing financial assets and interest-bearing financial liabilities by maintaining
an appropriate mix of fixed and variable rate instruments. The Group manages the interest rate risk by
extending assets duration, repricing products and adjusting the business structure to match the term
structure and to match the cost and benefit.
The analysis below is performed for a 10 basis points decrease or increase in interest rates with all other
variables held constant, for the financial instruments and life insurance contracts/reinsurance contracts,
showing the pre-tax impact on the Group’s profit and equity.
31 December 2023 31 December 2022 (Restated)
Increase/ Increase/ Increase/ Increase/
Interest (decrease) in (decrease) in (decrease) in (decrease) in
(in RMB million) rate profit before tax equity before tax profit before tax equity before tax
Financial instruments –10bps 2,349 35,669 1,547 30,390
FINANCIAL STATEMENTS
Insurance contracts, net of reinsurance
contracts held –10bps (1,142) (40,733) (912) (33,933)
1,207 (5,064) 635 (3,543)
Financial instruments +10bps (2,349) (35,669) (1,547) (30,390)
Insurance contracts, net of reinsurance
contracts held +10bps 1,116 40,304 880 33,582
(1,233) 4,635 (667) 3,192
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 315
F-137
F-137
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(c) Interest rate risk (Continued)
The banking segment
Interest rate risks of the Group’s banking segment mainly consist of transaction account interest rate risk
and bank account interest rate risk.
Transaction account interest rate risk arises from the change in interest rates and product price of the
transaction account resulting from the change in market interest rates, which in turn affects the profit
or loss for the year. The Group mainly manages the interest rate risk of transaction account by adopting
measures such as the interest rate sensitive limit and daily and monthly stop-loss limit to ensure that the
fluctuations of interest rate and market value of products are within the affordable scope of the Group.
Bank account interest rate risk arises from the mismatch of the maturity date or contract re-pricing date
between interest-earning assets and interest-bearing liabilities. The Group manages bank account interest
rate risk primarily by adjusting the asset/liability pricing structure, regularly monitoring sensitive gaps of
interest rate, analysing characteristics of asset/liability re-pricing, and using an asset/liability management
system to conduct scenario analysis on interest risk.
In respect of the financial assets and liabilities at fair value through profit or loss of the Group’s banking
segment, the interest rate risk arising from this portfolio is not significant. For other financial assets and
liabilities, the Group mainly uses a gap analysis to measure and control the related interest rate risk. As at
31 December 2023 and 31 December 2022, the gap analyses of the financial assets and liabilities (excluding
financial assets and liabilities at fair value through profit or loss) were as follows. The analysis of the net
interest income is based on the effect of a reasonable possible change in interest rates on the net interest
income before tax for one year, in respect of the financial assets and liabilities (excluding financial assets
and liabilities at fair value through profit or loss) held at the balance sheet date. The analysis of equity
is based on the effect of a reasonable possible change in interest rates on the equity before tax, which
calculated by revaluing the year end portfolio of fixed-rate financial assets at fair value through other
comprehensive income.
31 December 2023 31 December 2022
Increase/ Increase/
(decrease) in Increase/ (decrease) in Increase/
Interest net interest (decrease) in net interest (decrease) in
(in RMB million) rate income equity income equity
Financial assets and liabilities –50bps 2,105 1,540 2,891 1,697
Financial assets and liabilities +50bps (2,105) (1,540) (2,891) (1,697)
316 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-138
F-138
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK
Credit risks refer to the risk of losses incurred by the inabilities of debtors or counterparties to fulfil their
contractual obligations or by the adverse changes in their credit conditions. The Group is exposed to
credit risks primarily associated with its deposit arrangements with commercial banks, loans and advances
to customers, financial assets at amortized cost and debt financial assets at fair value through other
comprehensive income, reinsurance arrangement with reinsurers, policy loans, margin financing, financial
guarantee contracts and loan commitments, etc. The Group uses a variety of controls to identify, measure,
monitor and report credit risk.
(a) Credit risk management
Credit risk of banking business
The banking business of the Group has formulated a set of credit management processes and internal
control mechanisms, so as to carry out the whole process management of credit business. Credit
management procedures for its corporate and individual loans of comprise credit origination, credit review,
credit approval, disbursement, post credit management. In addition, the banking business of the Group has
formulated procedure manuals for credit management, which clarifies the duties of each part in the credit
management processes, effectively monitoring credit risk and enhancing credit compliance.
Credit risks arising from credit commitments are similar to those of loans and advances. Therefore, financial
guarantees and loan commitments are also subject to the same application, post credit management and
collateral requirements as loan and advances business.
Credit risk of investment business
As to debt investment, the Group rates these investments by internal credit rating policies, selects
counterparties with high credit quality and sets strict entry criteria.
The Group’s debt investment mainly includes domestic government bonds, the Central Bank bills, financial
institution bonds, corporate bonds and debt investment schemes, wealth management investments, etc.
FINANCIAL STATEMENTS
The Group manages the credit risk for these investments mainly through controlling the investment scales,
selecting counterparties within the financial institutions with appropriate credit quality prudently, balancing
the credit risks and rate of return of investment and considering the internal and external credit rating
information comprehensively.
Credit risk of insurance business
The Group evaluated the credit rating of the reinsurance companies before signing the reinsurance
contracts, and chose the reinsurance companies with higher credit quality to reduce the credit risk.
The limits of policy loans are based on the cash values of valid insurance policies, with appropriate
discounts, and the validity periods of policy loans are within the validity periods of insurance policies. The
credit risk associated with policy loans did not have material impact on the Group’s consolidated financial
statements.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 317
F-139
F-139
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss
The Group formulates the credit losses of financial assets at amortized cost, debt financial assets at FVOCI,
finance lease receivable and other financial assets, as well as loan commitment and financial guarantee
contracts using expected credit loss models according to IFRS 9 requirements.
Parameters of ECL model
The parameters and assumptions involved in ECL model are described below.
The Group considers the credit risk characteristics of different financial instruments when determining if
there is significant increase in credit risk. For financial instruments with or without significant increase in
credit risk, 12-month or lifetime expected credit losses are provided respectively. The expected credit loss
is the result of discounting the product of EAD, PD and LGD.
(i) Exposure at Default (EAD): EAD is based on the amounts the Group expects to be owed at the time of
default, over the next 12 months or over the remaining lifetime.
(ii) Probability of Default (PD): The PD represents the likelihood of a borrower defaulting on its financial
obligation, either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the
obligation.
(iii) Loss Given Default (LGD): LGD represents the Group’s expectation of the extent of loss on a defaulted
exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral
or other credit support.
The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile
looks at how defaults develop on a portfolio from the point of initial recognition throughout the Lifetime.
The maturity profile is based on historical observed data and is assumed to be the same across all assets
within a portfolio and credit grading band. This is supported by historical analysis.
Judgement of significant increase in credit risk (“SICR”)
Under IFRS 9, when considering the impairment stages for financial assets, the Group evaluates the credit
risk at initial recognition and also whether there is any significant increase in credit risk for each reporting
period. The Group considers various reasonable supporting information to judge if there is significant
increase in credit risk, including the forward-looking information, when determining the ECL staging for
financial assets, Major factor being considered include regulatory and operating environment, internal and
external credit ratings, solvency, and operational capabilities. The Group could base on individual financial
instruments or portfolios of financial instruments with similar credit risk characteristics to determine
ECL staging by comparing the credit risks of the financial instruments at the reporting date with initial
recognition.
The Group set quantitative and qualitative criteria to judge whether the credit risk has SICR after initial
recognition. The judgement criteria mainly include the PD changes of the debtors, changes of credit
risk categories and other indicators of SICR, etc. In the judgement of whether the financial instruments
have SICR after initial recognition, the Group considers the 30 days past due as one of criteria of SICR, in
accordance with the standard.
318 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-140
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The definition of credit-impaired assets
Under IFRS 9, in order to determine whether credit impairment occurs, the defined standards adopted by
the Group are consistent with the internal credit risk management objectives for relevant financial assets,
while considering quantitative and qualitative indicators. When the Group assesses whether the debtor has
credit impairment, the following factors are mainly considered:
(i) The debtor has overdue more than 90 days after the contract payment date;
(ii) Internal credit rating is default grade;
(iii) The lender gives the debtor concessions for economic or contractual reasons due to the debtor’s
financial difficulties, where such concessions are normally reluctant to be made by the lender;
(iv) The debtor has significant financial difficulties;
(v) The debtor is likely to go bankrupt or other financial restructuring;
(vi) The active market for financial assets disappears.
The credit impairment of financial assets may be caused by the joint effects of multiple events, and may
not be caused by separately identifiable events.
Forward-looking information
The determinations of 12 months and the lifetime EAD, PD and LGD also incorporates forward-looking
information. The Group has performed historical data analysis and identified the key macroeconomic
variables associated with credit risk and expected credit losses for each portfolio. The Group has
FINANCIAL STATEMENTS
developed macroeconomic forward looking adjustment model by establishing a pool of macro-
economic indicators, preparing data, filtering model factors and adjusting forward-looking elements,
and the indicators include gross domestic product (GDP) accumulated year on year percentage change,
customer price index (CPI) year on year percentage change, purchasing manager’s index (PMI) and other
macroeconomic variables. Through regression analysis, the relationship among these economic indicators
in history with EAD, PD and LGD is determined, and the EAD, PD, LGD are then determined through
forecasting economic indicator.
During the reporting period, the Group adjusted the predicted values of forward-looking economic
indicators by statistical analysis and also considered the range of possible outcomes represented by each
scenario, to determine the final macroeconomic scenarios and weights for measuring the relevant expected
credit loss. The impact of these economic indicators on PD and LGD varies to different businesses. The
Group comprehensively considers internal and external data, expert forecasts and statistical analysis to
determine the relationship between these economic indicators with PD and LGD. The Group evaluates
and forecasts these economic indicators at least annually, provides the best estimates for the future, and
regularly evaluates the results. Similar to other economic forecasts, the estimates of economic indicators
have high inherent uncertainties, actual results may have significant difference with estimates. The Group
considered the estimates above represented the optimal estimation of possible outcomes.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 319
F-141
F-141
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Forward-looking information (Continued)
In 2023, the key macroeconomic assumptions used by the Group to estimate expected credit losses in
different macroeconomic scenarios include GDP accumulated year on year percentage change, CPI year on
year percentage change, PMI and other macroeconomic variables. For the GDP accumulated year on year
percentage change, the average predictive value in the base scenario in year 2024 is about 5%, and is 0.49
percentage upper in the upside scenario while 0.4 percentage lower in the downside scenario. The average
predictive value in the base scenario in year 2025 is about 4.79%, and is 0.46 percentage upper in the upside
scenario while 0.48 percentage lower in the downside scenario.
Sensitivity analysis
Expected credit losses are sensitive to the parameters used in the model, the macroeconomic variables of
the forward-looking forecast, the weight probabilities in the three scenarios, and other factors considered
in the application of expert judgement. Changes in these input parameters, assumptions, models, and
judgements will have an impact on the significant increase in credit risk and the measurement of expected
credit losses.
The Group has the highest weight of the base scenario, and the weight of the base scenario is slightly
higher than the sum of the weight of other base scenarios. The banking business of the Group assumed
that if the weight of the upside scenario increased by 10% and the weight of the base scenario reduced
by 10%, the Group’s ECL impairment provision on 31 December 2023 would be reduced by RMB1,982 million
(31 December 2022: RMB1,177 million); if the weight of the downside scenario increased by 10% and the
weight of the base scenarios reduced by 10%, the Group’s ECL impairment provision would be increased by
RMB1,236 million (31 December 2022: RMB1,144 million).
In 2023, the Group’s management has also taken into account and consequently charged provision for
losses for situations such as the external environment that are not reflected in the model, thus further
increasing the risk offsetting capacity.
Credit exposure
Without considering the impact of collateral and other credit enhancements, for on-balance sheet assets,
the maximum exposures are based on net carrying amounts as reported in the consolidated financial
statements. The Group also assumes credit risk due to credit commitments and financial guarantee
contracts. The details are disclosed in Note 57.(2).
Please refer to Note 24.(2) and (5) for an analysis of concentration of loans and advances by industry and
geographical region.
320 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-142
F-142
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the
counterparty. Policies are established regarding to the selection of types of collateral and valuation
parameters.
The main types of collateral obtained are as follows:
(i) for policy loans, collaterals are cash value of policies;
(ii) for reverse repurchase transactions, collaterals are quoted securities;
(iii) for commercial loans, collaterals are real estate properties, inventories, equity investments and trade
receivables, etc.;
(iv) for retail lending loans to individuals, collaterals are residential properties mortgages.
Management monitors the market value of the collateral, and requires additional collateral when needed
according to contracts, when assessing the adequacy of impairment.
It is the Group’s policy to dispose collateral orderly. The proceeds are used to repay all or part of the
outstanding balance. Generally, the Group would not use the collateralised assets for business purpose.
Restructured loans and advances to customers
Restructured loans and advances to customers are those loans and advances to customers for which the
Group has renegotiated the contract terms with borrowers as a result of the deterioration in their financial
position or of their inability to make payments when due. Concessions are given by the Group that would
FINANCIAL STATEMENTS
not otherwise be granted to these borrowers for economic or legal reasons relating to their financial
difficulties. As at 31 December 2023, the Group’s restructured loans and advances to customers was
RMB32,030 million (31 December 2022: RMB17,107 million).
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 321
F-143
F-143
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following table presents the credit risk exposure of the financial assets under the scope of expected
credit loss. Without considering guarantee or any other credit enhancement measures, for on-balance sheet
assets, the maximum credit risk exposure is presented as the net carrying amount of the financial assets:
31 December 2023
Maximum credit
Carrying amount (in RMB million) Stage 1 Stage 2 Stage 3 risk exposure
Cash and amounts due from banks and other
financial institutions 804,077 – – 804,077
Balances with the Central Bank and statutory
deposits for insurance operations 285,879 – – 285,879
Financial assets purchased under reverse
repurchase agreements 167,073 200 387 167,660
Accounts receivable 35,528 46 62 35,636
Finance lease receivable 175,988 4,021 665 180,674
Loans and advances to customers 3,219,967 83,167 14,988 3,318,122
Financial assets at amortized cost 1,187,863 16,505 38,985 1,243,353
Debt financial assets at fair value through other
comprehensive income 2,631,520 3,564 1,924 2,637,008
Other assets 95,640 676 10,887 107,203
Subtotal 8,603,535 108,179 67,898 8,779,612
Credit commitments 1,932,131 4,621 320 1,937,072
Total 10,535,666 112,800 68,218 10,716,684
31 December 2022 (Restated)
Maximum credit
Carrying amount (in RMB million) Stage 1 Stage 2 Stage 3 risk exposure
Cash and amounts due from banks and other
financial institutions 774,841 – – 774,841
Balances with the Central Bank and statutory
deposits for insurance operations 295,559 – – 295,559
Financial assets purchased under reverse
repurchase agreements 91,109 – 405 91,514
Accounts receivable 35,909 169 40 36,118
Finance lease receivable 179,398 6,695 765 186,858
Loans and advances to customers 3,152,071 74,444 11,539 3,238,054
Financial assets at amortized cost 1,071,718 15,145 37,172 1,124,035
Debt financial assets at fair value through other
comprehensive income 2,497,506 1,000 2,284 2,500,790
Other assets 114,610 271 2,591 117,472
Subtotal 8,212,721 97,724 54,796 8,365,241
Credit commitments 1,826,854 6,193 147 1,833,194
Total 10,039,575 103,917 54,943 10,198,435
The Group closely monitors collateral of credit-impaired financial assets.
As at 31 December 2023, the fair value of collateral of credit-impaired loans and advances to customers
is RMB13,940 million (31 December 2022: RMB16,747 million). The fair value of collateral of credit-impaired
financial assets at amortized cost is RMB6,074 million (31 December 2022: RMB10,311 million).
322 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-144
F-144
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following tables explain the changes in the gross carrying amount and impairment provision of the
main financial assets between the beginning and the end of the annual period due to these factors:
(in RMB million) 2023
Stages transfers
Transfer Transfer Transfer
Net increase/ between between between
(decrease) Stage 1 Stage 1 Stage 2
Gross carrying amount Stage 1 January (Note) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 3,205,464 170,692 (106,821) 434 – – 3,269,769
to customers Stage 2 91,725 (21,507) 106,821 – (69,424) – 107,615
Stage 3 38,784 (1,098) – (434) 69,424 (68,585) 38,091
Total 3,335,973 148,087 – – – (68,585) 3,415,475
Financial assets Stage 1 1,079,637 132,684 (19,967) (254) – – 1,192,100
at amortized cost Stage 2 18,518 (515) 19,967 – (18,323) – 19,647
Stage 3 66,683 (6,018) – 254 18,323 (659) 78,583
Total 1,164,838 126,151 – – – (659) 1,290,330
Debt financial assets Stage 1 2,497,506 136,763 (2,564) (185) – – 2,631,520
at fair value through Stage 2 1,000 – 2,564 – – – 3,564
other comprehensive income
Stage 3 2,284 (545) – 185 – – 1,924
Total 2,500,790 136,218 – – – – 2,637,008
Note: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
(in RMB million) 2023
FINANCIAL STATEMENTS
Stages transfers
Charge/ Transfer Transfer Transfer
Net increase/ (recover) between between between
(decrease) for the year Stage 1 Stage 1 Stage 2
Impairment provision Stage 1 January (Note 1) (Note 2) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 56,531 24,435 (22,272) (6,782) 408 – – 52,320
to customers Stage 2 17,357 (3,870) 20,752 6,782 – (16,566) – 24,455
Stage 3 27,308 4,197 44,192 – (408) 16,566 (68,585) 23,270
Total 101,196 24,762 42,672 – – – (68,585) 100,045
Financial assets Stage 1 7,919 620 (3,645) (635) (22) – – 4,237
at amortized cost Stage 2 3,373 10 638 635 – (1,514) – 3,142
Stage 3 29,511 (816) 10,026 – 22 1,514 (659) 39,598
Total 40,803 (186) 7,019 – – – (659) 46,977
Debt financial assets Stage 1 3,175 (393) (425) (140) (53) – – 2,164
at fair value through Stage 2 227 – 602 140 – – – 969
other comprehensive income
Stage 3 5,155 (235) 712 – 53 – – 5,685
Total 8,557 (628) 889 – – – – 8,818
Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
Note 2: Changes in PDs, EADs, and LGDs in the current year, arising from regular update of inputs to models.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 323
F-145
F-145
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following tables explain the changes in the gross carrying amount and impairment provision of
the main financial assets between the beginning and the end of the annual period due to these factors
(continued):
(in RMB million) 2022 (Restated)
Stages transfers
Net Transfer Transfer Transfer
increase/ between between between
(decrease) Stage 1 Stage 1 Stage 2
Gross carrying amount Stage 1 January (Note) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 2,992,010 340,539 (126,378) (707) – – 3,205,464
to customers Stage 2 44,549 (14,009) 126,378 – (65,193) – 91,725
Stage 3 33,672 (986) – 707 65,193 (59,802) 38,784
Total 3,070,231 325,544 – – – (59,802) 3,335,973
Financial assets Stage 1 1,032,672 76,829 (26,700) (3,164) – – 1,079,637
at amortized cost Stage 2 10,075 (2,141) 26,700 – (16,116) – 18,518
Stage 3 51,180 (3,613) – 3,164 16,116 (164) 66,683
Total 1,093,927 71,075 – – – (164) 1,164,838
Debt financial assets Stage 1 2,259,808 237,643 55 – – – 2,497,506
at fair value through Stage 2 2,871 (1,432) (55) – (384) – 1,000
other comprehensive income
Stage 3 2,647 (723) – – 384 (24) 2,284
Total 2,265,326 235,488 – – – (24) 2,500,790
Note: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
(in RMB million) 2022 (Restated)
Stages transfers
Net Charge/ Transfer Transfer Transfer
increase/ (recover) between between between
(decrease) for the year Stage 1 Stage 1 Stage 2
Impairment provision Stage 1 January (Note 1) (Note 2) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 53,285 20,225 (11,847) (5,185) 53 – – 56,531
to customers Stage 2 10,088 (1,117) 26,245 5,185 – (23,044) – 17,357
Stage 3 26,829 2,631 34,659 – (53) 23,044 (59,802) 27,308
Total 90,202 21,739 49,057 – – – (59,802) 101,196
Financial assets Stage 1 5,556 2,210 6,191 (4,577) (1,461) – – 7,919
at amortized cost Stage 2 1,237 (107) 281 4,577 – (2,615) – 3,373
Stage 3 22,888 (366) 3,077 – 1,461 2,615 (164) 29,511
Total 29,681 1,737 9,549 – – – (164) 40,803
Debt financial assets Stage 1 3,056 190 (86) 15 – – – 3,175
at fair value through Stage 2 221 (67) 107 (15) – (19) – 227
other comprehensive income
Stage 3 5,505 (28) 178 – – 19 (519) 5,155
Total 8,782 95 199 – – – (519) 8,557
Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
Note 2: Changes in PDs, EADs, and LGDs in the current year, arising from regular update of inputs to models.
324 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-146
F-146
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The Group internally grades the financial instruments based on the credit quality and risk characteristics.
The credit rating of the financial instruments could further be classified as “low risk”, “medium risk”, “high
risk” and “default” according to the internal rating scale. “Low risk” means that the asset quality is good,
there is sufficient evidence to show that the asset is not expected to have default, or there is no reason
to suspect that the asset had incurred default. “Medium risk” means that the asset quality is acceptable or
there are factors revealing potential negative impact on the asset quality, but there is no sufficient reason
to suspect that the asset had incurred default. “High risk” means that there are factors revealing significant
adverse impact on the asset quality, but there is no event indicating incurred default. The criteria of
“default” are consistent with those of “credit-impaired”.
The following table contains an analysis of the credit risk grading of loans and advances to customers,
financial assets at amortized cost and debt financial assets at fair value through other comprehensive
income. The carrying amount of financial assets below also represents the Group’s maximum exposure to
credit risk on these assets:
Loans and advances to customers
31 December 2023
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 1,754,904 7,777 – 1,762,681
Medium risk 1,488,318 41,077 – 1,529,395
High risk 26,547 58,761 – 85,308
Default – – 38,091 38,091
Gross carrying amount 3,269,769 107,615 38,091 3,415,475
FINANCIAL STATEMENTS
Loss allowance (49,802) (24,448) (23,103) (97,353)
Carrying amount 3,219,967 83,167 14,988 3,318,122
31 December 2022
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 1,777,535 4,945 – 1,782,480
Medium risk 1,426,465 34,864 – 1,461,329
High risk 1,464 51,916 – 53,380
Default – – 38,784 38,784
Gross carrying amount 3,205,464 91,725 38,784 3,335,973
Loss allowance (53,393) (17,281) (27,245) (97,919)
Carrying amount 3,152,071 74,444 11,539 3,238,054
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 325
F-147
F-147
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Financial assets at amortized cost
31 December 2023
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 1,137,714 – – 1,137,714
Medium risk 40,564 5,316 – 45,880
High risk 13,822 14,331 – 28,153
Default – – 78,583 78,583
Gross carrying amount 1,192,100 19,647 78,583 1,290,330
Impairment provision (4,237) (3,142) (39,598) (46,977)
Carrying amount 1,187,863 16,505 38,985 1,243,353
31 December 2022 (Restated)
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 1,002,370 – – 1,002,370
Medium risk 65,555 2,925 – 68,480
High risk 11,712 14,101 – 25,813
Default – 1,492 66,683 68,175
Gross carrying amount 1,079,637 18,518 66,683 1,164,838
Impairment provision (7,919) (3,373) (29,511) (40,803)
Carrying amount 1,071,718 15,145 37,172 1,124,035
326 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-148
F-148
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Debt financial assets at fair value through other comprehensive income
31 December 2023
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 2,574,907 – – 2,574,907
Medium risk 53,509 1,000 – 54,509
High risk 3,104 2,564 – 5,668
Default – – 1,924 1,924
Carrying amount 2,631,520 3,564 1,924 2,637,008
31 December 2022 (Restated)
(in RMB million) Stage 1 Stage 2 Stage 3 Total
Credit grade
Low risk 2,450,027 – – 2,450,027
Medium risk 32,994 1,000 – 33,994
High risk 14,485 – – 14,485
Default – – 2,284 2,284
Carrying amount 2,497,506 1,000 2,284 2,500,790
(4) LIQUIDITY RISK
Liquidity risk is the risk of not having access to sufficient funds or being unable to realize an asset in a
timely manner at a reasonable price to meet the Group’s obligations as they become due.
FINANCIAL STATEMENTS
The Group is exposed to liquidity risk on insurance policies that permit surrender, withdrawal or other
forms of early termination. When surrender, withdrawal or other forms of early termination happens, the
Group determines the amounts that are payable on demand to policyholders in accordance with the terms
of insurance contracts, which are usually the unearned premiums or the cash values of the relevant part of
contracts, after deducting the applicable early termination fees. The Group seeks to manage its liquidity
risk by matching to the extent possible the duration of its investment assets with the duration of its
insurance policies and to ensure that the Group is able to meet its payment obligations and fund its lending
and investment operations on a timely basis.
The banking business of the Group is exposed to potential liquidity risk. The Group utilizes multiple
regulatory methods, establish comprehensive liquidity risk management framework, effectively recognize,
measure, monitor and control liquidity risk, maintain sufficient liquidity level to satisfy various funds
requirement and to face adverse market status. In case of monitoring liquidity risks effectively, the Group
pays attention to the funds resources and diversified utilization, keeps relatively high liquidity assets
consistently. The Group monitors the sourcing and usage of funds, deposit to loan ratio, and quick ratio
on a daily basis. Moreover, when adopting various benchmarks for management of liquidity risk, the Group
compares the expected results against the ones derived from stress tests, critically assesses the potential
impact to the future liquidity risk, and formulates remedial actions according to specific situations. The
Group seeks to mitigate the liquidity risk of the banking business by optimizing the assets and liabilities
structure, and maintaining stable deposits, etc.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 327
F-149
F-149
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
The table below summarizes the remaining contractual maturity profile of the financial assets, financial
liabilities, insurance contract liabilities and reinsurance contract liabilities of the Group based on
undiscounted contractual cash flows/expected cash flows:
31 December 2023
Repayable Less than 3 to 12 1 to 5 Over
(in RMB million) Undated on demand 3 months months years 5 years Total
Cash and amounts due from banks and
other financial institutions – 269,825 235,400 116,808 177,595 108 799,736
Balances with the Central Bank and
statutory deposits for
insurance operations 227,230 43,746 648 1,610 13,650 – 286,884
Financial assets purchased under
reverse repurchase agreements – 728 161,088 5,356 622 – 167,794
Accounts receivable – 277 7,695 18,493 9,804 461 36,730
Insurance contract assets – – (1) 8 (3) – 4
Reinsurance contract assets – – 3,112 7,244 9,396 37,733 57,485
Finance lease receivable – 1,854 29,223 72,867 99,471 640 204,055
Loans and advances to
customers – 12,050 835,038 955,224 1,246,550 718,242 3,767,104
Financial assets at fair value
through profit or loss 971,867 11,631 39,357 96,894 457,670 354,002 1,931,421
Financial assets at amortized cost – 21,212 112,933 231,570 520,938 657,214 1,543,867
Debt financial assets at fair value
through other comprehensive income – 809 54,303 179,775 694,082 3,150,720 4,079,689
Equity financial assets at fair
value through other
comprehensive income 264,877 – – – – – 264,877
Other assets – 75,107 25,703 24,523 4,580 1,298 131,211
1,463,974 437,239 1,504,499 1,710,372 3,234,355 4,920,418 13,270,857
Due to banks and other financial
institutions – 285,004 363,817 256,511 70,989 1,628 977,949
Financial liabilities at fair value
through profit or loss 120 2,190 44,337 1,857 146 – 48,650
Assets sold under agreements to
repurchase – – 236,229 5,700 – – 241,929
Accounts payable – 3,815 713 3,560 768 2 8,858
Insurance contract liabilities – – 73,294 60,148 3,474 8,465,604 8,602,520
Reinsurance contract liabilities – – – 82 100 – 182
Customer deposits and payables
to brokerage customers – 1,296,804 744,754 577,390 992,925 – 3,611,873
Bonds payable – – 300,756 436,516 216,078 41,389 994,739
Lease liabilities – 225 1,022 3,048 6,897 367 11,559
Other liabilities – 48,248 45,562 47,915 89,733 14,209 245,667
120 1,636,286 1,810,484 1,392,727 1,381,110 8,523,199 14,743,926
Derivative cash flows
Derivative financial instruments settled
on a net basis – (8) 552 (376) (119) 45 94
Derivative financial instruments settled
on a gross basis
Cash inflow – 3,344 1,146,342 1,047,088 235,881 – 2,432,655
Cash outflow – (4,303) (1,146,911) (1,050,180) (235,306) – (2,436,700)
– (959) (569) (3,092) 575 – (4,045)
328 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-150
F-150
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
31 December 2022 (Restated)
Repayable on Less than 3 to 12 1 to 5 Over
(in RMB million) Undated demand 3 months months years 5 years Total
Cash and amounts due from banks and
other financial institutions – 300,236 160,910 130,437 180,290 9 771,882
Balances with the Central Bank and
statutory deposits for insurance
operations 240,279 40,836 598 1,618 13,577 – 296,908
Financial assets purchased under reverse
repurchase agreements – 905 85,849 5,412 – – 92,166
Accounts receivable – 6,239 7,303 16,156 7,447 1 37,146
Reinsurance contract assets – – 783 9,831 8,291 50,965 69,870
Finance lease receivable – 2,055 32,166 81,560 93,346 494 209,621
Loans and advances to customers – 16,163 734,127 991,547 1,208,446 811,056 3,761,339
Financial assets at fair value through
profit or loss 892,336 15,394 40,912 156,246 394,406 246,982 1,746,276
Financial assets at amortized cost – 23,361 101,005 212,871 501,325 546,966 1,385,528
Debt financial assets at fair value through
other comprehensive income – 1,149 79,815 246,178 684,115 3,004,409 4,015,666
Equity financial assets at fair value
through other comprehensive income 264,771 – – – – – 264,771
Other assets – 69,351 29,775 32,111 7,031 1,176 139,444
1,397,386 475,689 1,273,243 1,883,967 3,098,274 4,662,058 12,790,617
Due to banks and other financial
institutions – 280,241 351,876 217,595 86,734 1,544 937,990
Financial liabilities at fair value through
profit or loss 260 2,231 76,451 3,434 2,501 – 84,877
FINANCIAL STATEMENTS
Assets sold under agreements to
repurchase – – 267,495 4,065 330 – 271,890
Accounts payable – 4,387 1,152 4,204 612 – 10,355
Insurance contract liabilities – – 59,480 51,194 (75,153) 8,013,239 8,048,760
Reinsurance contract liabilities – – 210 (14) (55) (19) 122
Customer deposits and payables to
brokerage customers – 1,284,564 805,516 593,162 824,090 – 3,507,332
Bonds payable – – 232,385 448,189 241,987 42,764 965,325
Lease liabilities – 259 1,232 3,959 8,678 539 14,667
Other liabilities – 61,261 38,291 66,424 101,343 15,746 283,065
260 1,632,943 1,834,088 1,392,212 1,191,067 8,073,813 14,124,383
Derivative cash flows
Derivative financial instruments settled
on a net basis – (38) (100) (456) 604 11 21
Derivative financial instruments settled
on a gross basis
Cash inflow – 8,006 1,277,050 762,245 129,244 – 2,176,545
Cash outflow – (8,885) (1,281,920) (767,601) (129,054) – (2,187,460)
– (879) (4,870) (5,356) 190 – (10,915)
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 329
F-151
F-151
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
The table below summarizes the remaining contractual maturity profile of the credit commitments of the
Group:
(in RMB million) Less than 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total
31 December 2023
Credit commitments 198,948 297,947 572,672 445,350 432,052 1,946,969
31 December 2022
Credit commitments 93,804 203,173 679,558 486,699 363,726 1,826,960
Management expects the credit commitments will not be entirely used during the commitment period.
(5) MISMATCHING RISK OF ASSETS AND LIABILITIES
The objective of the Group’s asset and liability management is to match the maturity and interest rates of
assets and liabilities. Under the current constraints of the shortage of long-term interest rate bond market,
however, the Group does not have sufficient long-duration assets for investment to match the duration of
insurance and investment contract liabilities. As permitted by law regulations and market conditions, the
Group actively invests in preferred stocks and other broad-term duration assets, and continuously improves
the allocation of long-duration assets, considering the requirements for asset-liability duration matching
and revenue-cost matching.
(6) OPERATIONAL RISK
Operational risk is the risk of loss resulting from inadequate or failure of proper internal controls on
business processes, employees and systems or from uncontrollable external events. Operational risk in this
context includes legal risk, but does not include strategic risk and reputational risk. The Group is exposed
to many types of operational risks in the conduct of its business. The Group manages operational risk by
establishing and continuously improving risk management framework, formalizing policies and standards,
using management tools and reporting mechanism, strengthening staff education and training.
(7) CAPITAL MANAGEMENT
The Group’s capital requirements are primarily dependent on the scale, products of insurance business,
and the type of business that it undertakes, as well as the industry and geographic location in which it
operates. The primary objectives of the Group’s capital management are to ensure that the Group complies
with externally imposed capital requirements and to maintain healthy capital ratios in order to support its
business and to maximize shareholders’ value.
330 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-152
F-152
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(7) CAPITAL MANAGEMENT (CONTINUED)
The Group manages its capital requirements by assessing shortfalls, if any, between the reported and
the required capital levels on a regular basis. Adjustments to current capital levels are made in light of
changes in economic conditions and risk characteristics of the Group’s activities. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to ordinary
shareholders or issue capital securities.
The Group computes solvency margin ratios and recognizes, assesses and manages related risks in
accordance with the Regulatory Rules on Solvency of Insurance Companies (II), the Notice on the
Implementation of Regulatory Rules on Solvency of Insurance Companies (II), and the National Financial
Regulatory Administration’s Circular on Improving Regulatory Standards for Solvency of Insurance
Companies. The Group was compliant with the requirements of regulatory authorities for solvency margin
ratios as of December 31, 2023.
The table below summarizes the minimum regulatory capital for the Group and its major insurance
subsidiaries and the regulatory capital held against each of them.
31 December 2023
Ping An
Property &
The Group Ping An Life Casualty
Core capital 1,320,654 415,458 102,875
Actual capital 1,714,110 770,771 126,230
Minimum capital 823,985 395,780 60,734
Core solvency margin ratio 160.3% 105.0% 169.4%
Comprehensive solvency margin ratio 208.0% 194.7% 207.8%
31 December 2022
Ping An
FINANCIAL STATEMENTS
Property &
The Group Ping An Life Casualty
Core capital 1,363,413 495,845 101,193
Actual capital 1,783,772 877,807 125,337
Minimum capital 819,568 399,557 56,976
Core solvency margin ratio 166.4% 124.1% 177.6%
Comprehensive solvency margin ratio 217.6% 219.7% 220.0%
The banking business subsidiary measures the capital adequacy ratio in accordance with the Capital Rules
for Commercial Banks (Provisional). According to the requirements, risk weighted assets for credit risk
is measured by Weighted Approach, risk weighted assets for market risk is measured by Standardised
Approach, and risk weighted assets for operation risk is measured by the Basic Indicator Approach.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 331
F-153
F-153
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(7) CAPITAL MANAGEMENT (CONTINUED)
The banking operation’s core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio and capital
adequacy ratio are shown below:
31 December 2023 31 December 2022
Core Tier 1 capital adequacy ratio 9.22% 8.64%
Tier 1 capital adequacy ratio 10.90% 10.40%
Capital adequacy ratio 13.43% 13.01%
(8) THE GROUP’S MAXIMUM EXPOSURE TO STRUCTURED ENTITIES
The Group uses structured entities in the normal course of business for a number of purposes, for example,
structured transactions for customers, to provide finance to public and private sector infrastructure
projects, and to generate fees from managing assets on behalf of third-party investors. These structured
entities are financed through the issue of beneficiary notes or trust units to investors. Refer to Note 3.(8)
for the Group’s consolidation consideration related to structured entities.
The following table also shows the size, the Group’s funding and the Group’s maximum exposure to
the unconsolidated structured entities representing the Group’s maximum possible risk exposure that
could occur as a result of the Group’s arrangements with structured entities. The maximum exposure is
contingent in nature and approximates the sum of direct investments made by the Group.
The size of unconsolidated structured entities and the Group’s funding and maximum exposure are shown
below:
Unconsolidated structured entities
The Group’s
31 December 2023 maximum
(in RMB million) Size Carrying amount exposure Interest held by the Group
Securitization 21,639 3,917 3,917 Investment income and
service fee
Assets management products 2,685,824 234,915 234,915 Investment income and
managed by affiliated entities service fee
Assets management products Note 1 580,243 580,243 Investment income
managed by third parties
Wealth management products 1,013,060 10,358 10,358 Investment income and
managed by affiliated entities service fee
Wealth management products Note 1 5,702 5,702 Investment income
managed by third parties
332 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-154
F-154
49. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(8) THE GROUP’S MAXIMUM EXPOSURE TO STRUCTURED ENTITIES (CONTINUED)
Unconsolidated structured entities
The Group’s
31 December 2022 (Restated) maximum
(in RMB million) Size Carrying amount exposure Interest held by the Group
Securitization 43,748 3,856 3,856 Investment income and
service fee
Assets management products 2,643,426 257,681 257,681 Investment income and
managed by affiliated entities service fee
Assets management products Note 1 616,070 616,070 Investment income
managed by third parties
Wealth management products 886,840 9,075 9,075 Investment income and
managed by affiliated entities service fee
Wealth management products Note 1 7,228 7,228 Investment income
managed by third parties
Note 1: These assets management products and wealth management products are sponsored by third party financial institutions and the
information related to size of these structured entities were not publicly available.
The Group’s interests in unconsolidated structured entities are recorded as wealth management
investments under FVPL, FVOCI and AC, and beneficial right under trust schemes under assets purchased
under reverse repurchase agreements.
The unconsolidated structured entities held by the Group included the trust plans consolidated by Lufax
Holding.
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group’s financial instruments mainly consist of cash and amounts due from banks and other financial
institutions, term deposits, bonds, funds, stocks, loans, borrowings, deposits from other banks and financial
FINANCIAL STATEMENTS
institutions, customer deposits and payables to brokerage customers, etc.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 333
F-155
F-155
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS
The following table sets out the carrying amount and fair value of the Group’s major financial instruments
by classification:
Carrying amount Fair value
31 December 31 December 31 December 31 December
2023 2022 2023 2022
(in RMB million) (Restated) (Restated)
Financial assets
Cash and amounts due from banks and other financial
institutions 804,077 774,841 804,077 774,841
Balances with the Central Bank and statutory deposits
for insurance operations 285,879 295,559 285,879 295,559
Financial assets purchased under reverse repurchase
agreements 167,660 91,514 167,660 91,514
Accounts receivable 35,636 36,118 35,636 36,118
Derivative financial assets 44,978 29,278 44,978 29,278
Finance lease receivable 180,674 186,858 180,674 186,858
Loans and advances to customers 3,318,122 3,238,054 3,318,122 3,238,054
Financial assets at fair value through profit or loss 1,803,047 1,640,519 1,803,047 1,640,519
Financial assets at amortized cost 1,243,353 1,124,035 1,272,437 1,142,252
Debt financial assets at fair value through other
comprehensive income 2,637,008 2,500,790 2,637,008 2,500,790
Equity financial assets at fair value through other
comprehensive income 264,877 264,771 264,877 264,771
Other assets 107,203 117,472 107,203 117,472
Financial liabilities
Due to banks and other financial institutions 963,718 923,088 963,718 923,088
Financial liabilities at fair value through profit or loss 48,619 84,659 48,619 84,659
Derivative financial liabilities 44,531 39,738 44,531 39,738
Assets sold under agreements to repurchase 241,803 271,737 241,803 271,737
Accounts payable 8,858 10,349 8,858 10,349
Customer deposits and payables to brokerage
customers 3,534,539 3,431,999 3,534,539 3,431,999
Bonds payable 964,007 931,098 962,802 927,784
Other liabilities 213,717 269,338 213,717 269,338
Fair value of financial instruments not carried at fair value
The following describes the methods and assumptions used to determine fair value of financial instruments
measured at amortized cost.
Financial instruments for which fair value approximates to carrying amount
For financial assets and financial liabilities that have a short-term maturity (less than three months), it is
assumed that the carrying amounts approximate to their fair value. This assumption is also applied to term
deposits, and savings accounts without a specific maturity. For other variable rate instruments, adjustment
is also made to reflect the subsequent changes in the market rate after initial recognition.
334 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-156
F-156
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair value of financial instruments not carried at fair value (Continued)
Fixed rate financial instruments
The fair value of fixed rate financial assets and liabilities carried at amortized cost is estimated by
comparing market interest rates when they were first recognized with current market rates for similar
financial instruments. The estimated fair value of fixed interest-bearing deposits is based on discounted
cash flows using prevailing money market interest rates for financial products with similar credit risk and
maturity. For quoted debts issued, the fair values are determined based on quoted market prices. For those
debts issued where quoted market prices are not available, a discounted cash flow model is used based on
a current interest rate yield curve appropriate for the remaining term to maturity and credit spreads.
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY
The Group uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation techniques:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and
those prices represent actual and regularly occurring market transactions on an arm’s length basis. The
main quoted market price used for financial assets held by the Group is the current closing price. Financial
instruments included in Level 1 comprise primarily equity investments, fund investments and bond
investments traded on stock exchanges and open-ended mutual funds;
Level 2: either directly (such as price) or indirectly (such as calculated based on price) other than quoted
prices included within Level 1 that are observable for the asset or liability. This valuation method maximizes
the use of observable market data and minimizes the use of unobservable inputs;
FINANCIAL STATEMENTS
Level 3: inputs which are based on parameters other than observable market data (unobservable inputs).
The level of fair value measurement is determined by the lowest level input that is significant to the
entire measurement. Assessing the significance of a particular input to the entire measurement requires
judgement, taking into account factors specific to the asset or liability.
Valuation methods for Level 2 and Level 3 financial instruments
For Level 2 financial instruments, valuations are generally using observable market inputs, or recent quoted
market prices. The valuation providers typically gather, analyse and interpret information related to market
transactions and other key valuation model inputs from multiple sources, and through the use of widely
accepted internal valuation models, provide a theoretical quote on various securities. Debt securities are
classified as Level 2 when they are valued at recent quoted price from Chinese interbank market or from
public valuation service providers. The fair value of debt investments denominated in RMB is determined
based upon the valuation results by the CCDC. All significant inputs are observable in the market.
For Level 3 financial instruments, the consideration of being classified as Level 3 is mainly based on the
significance of the unobservable factors to the overall fair value measurement.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 335
F-157
F-157
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy:
31 December 2023
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at fair value through profit or loss
Bonds 8,963 576,971 495 586,429
Funds 289,307 182,657 3,547 475,511
Stocks 155,131 1,269 114 156,514
Wealth management investments, debt schemes and
other investments 1,519 416,420 166,654 584,593
454,920 1,177,317 170,810 1,803,047
Derivative financial assets
Interest rate swaps – 14,070 – 14,070
Currency forwards and swaps – 27,015 – 27,015
Others – 3,575 318 3,893
– 44,660 318 44,978
Debt financial assets at fair value
through other comprehensive income
Bonds 11,101 2,389,281 605 2,400,987
Wealth management investments,
debt schemes and other investments – 232,180 3,841 236,021
11,101 2,621,461 4,446 2,637,008
Equity financial assets at fair value
through other comprehensive income
Stocks 177,673 – 13 177,686
Preferred shares – 81,893 – 81,893
Other equity investments – 2,021 3,277 5,298
177,673 83,914 3,290 264,877
Loans and advances to customers measured at
fair value through other comprehensive income – 453,930 – 453,930
Total financial assets 643,694 4,381,282 178,864 5,203,840
Financial liabilities
Derivative financial liabilities
Interest rate swaps – 12,718 – 12,718
Currency forwards and swaps – 27,780 – 27,780
Others – 3,973 60 4,033
– 44,471 60 44,531
Placements from banks and other financial institutions
measured at fair value through profit or loss 2,792 – – 2,792
Financial liabilities at fair value
through profit or loss 2,780 43,965 1,874 48,619
Total financial liabilities 5,572 88,436 1,934 95,942
336 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-158
F-158
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy (continued):
31 December 2022 (Restated)
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at fair value through profit or loss
Bonds 9,491 496,725 864 507,080
Funds 309,260 203,987 4,704 517,951
Stocks 82,343 1,154 498 83,995
Wealth management investments,
debt schemes and other investments 134 333,878 197,481 531,493
401,228 1,035,744 203,547 1,640,519
Derivative financial assets
Interest rate swaps – 11,893 – 11,893
Currency forwards and swaps – 15,602 – 15,602
Others – 1,718 65 1,783
– 29,213 65 29,278
Debt financial assets at fair value
through other comprehensive income
Bonds 6,426 2,185,367 766 2,192,559
Wealth management investments,
debt schemes and other investments – 257,845 50,386 308,231
6,426 2,443,212 51,152 2,500,790
Equity financial assets at fair value
through other comprehensive income
FINANCIAL STATEMENTS
Stocks 174,046 1 – 174,047
Preferred shares – 85,784 – 85,784
Other equity investments – 1,949 2,991 4,940
174,046 87,734 2,991 264,771
Placements with banks and other financial institutions
measured at fair value through other
comprehensive income – 2,777 – 2,777
Loans and advances to customers measured at
fair value through other comprehensive income – 331,880 – 331,880
Total financial assets 581,700 3,930,560 257,755 4,770,015
Financial liabilities
Derivative financial liabilities
Interest rate swaps – 10,062 – 10,062
Currency forwards and swaps – 23,498 – 23,498
Others – 6,128 50 6,178
– 39,688 50 39,738
Placements from banks and other financial institutions
measured at fair value through profit or loss 4,111 – – 4,111
Financial liabilities at fair value through profit or loss 2,747 78,093 3,819 84,659
Total financial liabilities 6,858 117,781 3,869 128,508
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 337
F-159
F-159
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments not recorded at fair value but for which fair
value is disclosed by level of the fair value hierarchy:
31 December 2023
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at amortized cost 383 1,107,349 164,705 1,272,437
Total 383 1,107,349 164,705 1,272,437
Financial liabilities
Bonds payable 22,088 940,714 – 962,802
Total 22,088 940,714 – 962,802
31 December 2022 (Restated)
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at amortized cost 170 1,007,389 134,693 1,142,252
Total 170 1,007,389 134,693 1,142,252
Financial liabilities
Bonds payable 19,599 907,886 299 927,784
Total 19,599 907,886 299 927,784
Financial assets and liabilities for which fair value approximates carrying amount are not included in the
above disclosure.
338 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-160
F-160
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
Reconciliation of movements in Level 3 financial instruments measured at fair value is as follows:
2022
(in RMB million) 2023 (Restated)
Financial assets at fair value through profit or loss
As at 1 January 203,547 201,032
Additions 27,022 65,906
Disposals (43,476) (61,689)
Transfers into Level 3 758 859
Transfers from Level 3 (2,232) (192)
Total gains/losses
Losses through profit or loss (14,809) (2,369)
As at 31 December 170,810 203,547
Debt financial assets at fair value through
other comprehensive income
As at 1 January 51,152 61,234
Purchase – 2,204
Disposals (209) (8,916)
Issue – 546,191
Settlement (49,132) (551,693)
Transfers into Level 3 2,779 –
Total gains/losses
Losses/gains through profit or loss (43) 2,759
Losses through other comprehensive income (101) (627)
As at 31 December 4,446 51,152
FINANCIAL STATEMENTS
Equity financial assets at fair value through
other comprehensive income
As at 1 January 2,991 2,559
Additions 554 784
Disposals (270) –
Total gains/losses
Gains/losses through other comprehensive income 15 (352)
As at 31 December 3,290 2,991
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 339
F-161
F-161
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
50. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The gains or losses of level 3 financial instruments included in the income statement for the year are
presented as follows:
2023
(in RMB million) Realized gains Unrealized gains Total
Financial assets at fair value through profit or loss 1,377 (16,186) (14,809)
Debt financial assets at fair value through
other comprehensive income – (43) (43)
1,377 (16,229) (14,852)
2022
(in RMB million) Realized gains Unrealized gains Total
Financial assets at fair value through profit or loss 2,394 (4,763) (2,369)
Debt financial assets at fair value through
other comprehensive income 2,759 – 2,759
5,153 (4,763) 390
Transfers
For the year ended 31 December 2023 and the year ended 31 December 2022, there were no significant
transfers between Level 1 and Level 2 fair value measurements.
51. TRANSFERRED FINANCIAL ASSETS
The Group enters into transactions in the normal course of business by which it transfers recognized
financial assets to third parties or to structured entities. When the Group has neither transferred nor
retained substantially all the risks and rewards of the financial asset and retained control of the asset, the
Group continues to recognize the financial asset to the extent of the Group’s continuing involvement, in
which case, the Group also recognizes an associated liability. In other cases where the transferred financial
assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of
these financial assets, the Group continued to recognize the transferred financial assets.
The Group’s subsidiaries, Ping An Bank and Ping An Financial Leasing, entered into loan securitization
transactions. The Group may retain risks or rewards in the securitization business which would give rise to
the Group’s continuing involvement in the transferred assets. Those financial assets are recognized on the
statement of financial position to the extent of the Group’s continuing involvement, otherwise the financial
assets are derecognized.
340 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-162
F-162
51. TRANSFERRED FINANCIAL ASSETS (CONTINUED)
Other transferred financial assets that do not qualify for derecognition mainly include debt securities
held by counterparties as collateral under repurchase agreements. The counterparties are allowed to sell
or repledge those securities sold under repurchase agreements in the absence of default by the Group,
but has an obligation to return the securities at the maturity of the contract. If the securities increase or
decrease in value, the Group may in certain circumstances require the counterparties to provide additional
or return collateral. The Group has determined that it retains substantially all the risks and rewards of these
securities and therefore has not derecognized them.
The following table analyses the carrying amount of the above-mentioned financial assets transferred to
third parties that did not qualify for derecognition or continuing involvement and their associated financial
liabilities:
31 December 2023 31 December 2022
Carrying amount Carrying amount
of transferred of transferred
or continuing Carrying amount or continuing Carrying amount
involvement of associated involvement of associated
(in RMB million) financial assets liabilities financial assets liabilities
Repurchase transactions 3,235 2,918 1,070 998
Assets securitization 1,487 1,487 2,115 2,115
52. CASH AND CASH EQUIVALENTS
(in RMB million) 31 December 2023 31 December 2022
(Restated)
Cash
Cash and amounts due from banks and other financial institutions
Cash on hand 3,690 4,165
Term deposits 20,158 11,357
Due from banks and other financial institutions 169,477 240,091
FINANCIAL STATEMENTS
Placements with banks and other financial institutions 80,373 58,175
Balances with the Central Bank 43,432 40,450
Subtotal 317,130 354,238
Cash equivalents
Bonds 3,995 5,225
Financial assets purchased under reverse repurchase agreements 159,347 84,739
Subtotal 163,342 89,964
Total 480,472 444,202
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 341
F-163
F-163
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
53. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(1) RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH FLOWS FROM OPERATING
ACTIVITIES:
(in RMB million) 2023 2022
(Restated)
Profit before tax 120,117 142,335
Adjustments for:
Depreciation of investment properties 4,692 3,645
Depreciation of property and equipment 7,808 7,508
Amortization of intangible assets 3,370 3,171
Depreciation of right-of-use assets 4,792 5,982
Amortization of long-term deferred expenses 591 47
Gains on disposal of investment properties, property and
equipment, intangible assets and other long-term assets (563) (311)
Investment income and interest revenue from
non-banking operations (156,452) (151,374)
Fair value losses/(gains) on investments at fair value through
profit or loss 9,039 36,936
Interest expenses on non-banking operations 24,346 22,698
Foreign exchange gains/(losses) (120) (3,144)
Net impairment losses of financial assets and other assets 79,071 81,920
Operating profit before working capital changes 96,691 149,413
Changes in operating assets and liabilities:
Changes in balances with the Central Bank and statutory deposits 12,661 (18,183)
Changes in amounts due from banks and other financial institutions (97,449) (59,251)
Changes in reinsurance contract assets/liabilities (1,332) (570)
Changes in account receivable 330 (3,529)
Changes in inventories 1,576 706
Changes in loans and advances to customers (165,754) (332,746)
Changes in assets purchased under agreements to resell of
banking and securities business (506) 588
Changes in other assets 69,876 (51,021)
Changes in due to banks and other financial institutions 90,799 127,431
Changes in customer deposits and payables to
brokerage customers 111,984 380,410
Changes in insurance contract assets/liabilities 317,849 275,281
Changes in assets sold under agreements to repurchase of
banking and securities business 51,034 (25,252)
Changes in other liabilities (100,698) 62,146
Cash generated from operations 387,061 505,423
Less: Current income tax charged for the year (17,699) (27,643)
Changes in income tax payable (8,959) (1,004)
Net cash flows from operating activities 360,403 476,776
342 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-164
F-164
53. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(CONTINUED)
(2) NET DEBT RECONCILIATION:
This section sets out an analysis of net debt and movements in net debt of current year.
Short-term Long-term
(in RMB million) borrowings borrowings Bonds payable Total
As at 1 January 2023 108,500 61,045 910,237 1,079,782
Cash flows (29,377) (12,194) 11,453 (30,118)
Foreign exchange adjustments 94 111 206 411
Other non-cash movements – – 22,852 22,852
As at 31 December 2023 79,217 48,962 944,748 1,072,927
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL
(1) KEY MANAGEMENT PERSONNEL COMPRISE THE COMPANY’S DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT
The summary of compensation of key management personnel for the year is as follows:
(in RMB million) 2023 2022
Salaries and other short-term employee benefits after tax 63 66
Individual income tax 40 42
The estimated amount of total compensation has been provided in the Group’s 2023 financial statements.
The final remunerations of the Company’s full-time directors, supervisors and senior management are being
recognized, and will be disclosed after recognition in accordance with applicable rules.
Parts of the performance-based remunerations of the Company’s senior management will be deferred
and paid over a period of 3 years in accordance with the Code of Corporate Governance of Banking and
FINANCIAL STATEMENTS
Insurance Institutions and the Guidelines for Insurance Companies’ Remuneration Management (Trial).
The deferred, unpaid parts are included in the total remunerations received by the Company’s senior
management from the Company during the Reporting Period.
(2) COMPENSATION OF KEY MANAGEMENT PERSONNEL OTHER THAN DIRECTORS AND
SUPERVISORS IS AS FOLLOWS
(in RMB million) 2023 2022
Salaries and other short-term employee benefits after tax 29 26
Individual income tax 20 17
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 343
F-165
F-165
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS
The remuneration of every director and supervisor is set out below:
For the year ended 31 December 2023:
2023
Emoluments
received or
receivable in
respect of director’s
other services
Remunerations in connection
received or with the management
Employer’s receivable in of the affairs of
Other contribution to respect of the Company or
Discretionary Housing employee a retirement accepting office its subsidiary Individual
(in RMB thousand) Fees Salaries bonuses(ii) allowance benefits benefit scheme as director undertaking Total income tax
Ma Mingzhe (iii) – 2,853 725 2 7 – – – 3,587 2,513
Xie Yonglin – 3,743 – 34 53 80 – – 3,910 2,797
Cai Fangfang – 3,000 469 34 49 68 – – 3,620 2,242
Yao Jason Bo (iv) 378 1,802 – – 9 14 – – 2,203 1,449
Tan Sin Yin – 5,708 1,702 – 33 43 – – 7,486 5,520
Soopakij Chearavanont 548 – – – – – – – 548 142
Yang Xiaoping 548 – – – – – – – 548 142
He Jianfeng (v) 500 – – – – – – – 500 130
Cai Xun (vi) 548 – – – – – – – 548 142
Ouyang Hui (vii) 304 – – – – – – – 304 77
Ng Sing Yip 548 – – – – – – – 548 142
Chu Yiyun 548 – – – – – – – 548 142
Liu Hong 548 – – – – – – – 548 142
Ng Kong Ping Albert 548 – – – – – – – 548 142
Jin Li 548 – – – – – – – 548 142
Wang Guangqian (viii) 244 – – – – – – – 244 66
Michael Guo (ix) – 1,506 641 – 9 16 – – 2,172 1,358
Sun Jianyi – 2,130 1,940 2 7 – – – 4,079 2,930
Wang Zhiliang – 1,383 735 34 15 75 – – 2,242 1,191
Zhu Xinrong (x) 548 – – – – – – – 548 142
Liew Fui Kiang (xi) 548 – – – – – – – 548 142
Hung Ka Hai Clement (xii) 548 – – – – – – – 548 142
344 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-166
F-166
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
For the year ended 31 December 2022:
2022
Emoluments
received or
receivable in
respect of director’s
Remunerations other services
received or in connection
receivable with the management
Employer’s in respect of the affairs of
Other contribution to of accepting the Company or
Discretionary Housing employee a retirement office as its subsidiary Individual
(in RMB thousand) Fees Salaries bonuses(ii) allowance benefits benefit scheme director undertaking Total income tax
Ma Mingzhe (iii) – 2,850 1,099 2 8 – – – 3,959 2,821
Xie Yonglin – 4,091 233 31 49 79 – – 4,483 2,966
Tan Sin Yin – 5,708 2,500 – 25 42 – – 8,275 6,172
Yao Jason Bo (iv) – 5,708 1,246 – 21 42 – – 7,017 5,146
Cai Fangfang – 3,000 769 31 46 68 – – 3,914 2,602
Soopakij Chearavanont 520 – – – – – – – 520 110
Yang Xiaoping 520 – – – – – – – 520 110
He Jianfeng (v) 255 – – – – – – – 255 65
Cai Xun (vi) 255 – – – – – – – 255 65
Ouyang Hui (vii) 535 – – – – – – – 535 115
Ng Sing Yip 520 – – – – – – – 520 110
Chu Yiyun 510 – – – – – – – 510 130
Liu Hong 503 – – – – – – – 503 127
Ng Kong Ping Albert 520 – – – – – – – 520 110
Jin Li 510 – – – – – – – 510 130
Huang Wei (xiii) 248 – – – – – – – 248 62
FINANCIAL STATEMENTS
Sun Jianyi – 2,130 1,940 2 8 – – – 4,080 2,930
Wang Zhiliang – 1,201 464 111 13 70 – – 1,859 787
Gu Liji (xiv) 270 – – – – – – – 270 67
Zhang Wangjin (xv) 287 – – – – – – – 287 51
Huang Baokui (xvi) 270 – – – – – – – 270 67
Zhu Xinrong (x) 234 – – – – – – – 234 58
Liew Fui Kiang (xi) 236 – – – – – – – 236 57
Hung Ka Hai Clement (xii) 236 – – – – – – – 236 57
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 345
F-167
F-167
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(i) Other non-monetary benefits include the Key Employee Share Purchase Plan and the Long-Term Service Plan
The participation of the Company’s directors and supervisors in the Key Employee Share Purchase Plan is as follows:
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Name 2023 the year the year 2023
From 24 February 2020 RMB80.17 per share Ma Mingzhe 100,000 – 100,000 –
to 27 February 2020 Xie Yonglin 119,705 – 119,705 –
Cai Fangfang 39,901 – 39,901 –
Yao Jason Bo 59,853 – 59,853 –
Tan Sin Yin 74,816 – 74,816 –
Wang Zhiliang 2,495 – 2,495 –
From 26 April 2021 RMB73.13 per share Ma Mingzhe 333,334 – 166,666 166,668
to 29 April 2021 Xie Yonglin 307,643 – 153,821 153,822
Cai Fangfang 109,365 – 54,682 54,683
Yao Jason Bo 153,111 – 76,555 76,556
Tan Sin Yin 174,984 – 87,491 87,493
Wang Zhiliang 5,468 – 2,734 2,734
From 18 March 2022 RMB47.56 per share Ma Mingzhe 777,593 – 259,197 518,396
to 25 March 2022 Xie Yonglin 741,021 – 247,007 494,014
Cai Fangfang 264,074 – 88,024 176,050
Yao Jason Bo 447,689 – 149,229 298,460
Tan Sin Yin 455,256 – 151,752 303,504
Wang Zhiliang 17,445 – 5,815 11,630
From 16 March 2023 RMB46.13 per share Ma Mingzhe – 832,946 – 832,946
to 23 March 2023 Xie Yonglin – 798,619 – 798,619
Cai Fangfang – 302,440 – 302,440
Yao Jason Bo – 205,441 – 205,441
Tan Sin Yin – 536,227 – 536,227
Wang Zhiliang – 15,546 – 15,546
346 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
F-168
F-168
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(i) Other non-monetary benefits include the Key Employee Share Purchase Plan and the Long-Term Service Plan (continued)
The participation of the Company’s directors and supervisors in the Long-term Service Plan is as follows:
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Name 2023 the year the year 2023
From 7 May 2019 RMB79.10 per share Ma Mingzhe 252,762 – – 252,762
to 14 May 2019 Xie Yonglin 189,571 – – 189,571
Cai Fangfang 126,381 – – 126,381
Yao Jason Bo 126,381 – – 126,381
Tan Sin Yin 189,571 – – –
Sun Jianyi 126,381 – – 126,381
Wang Zhiliang 12,638 – – 12,638
From 24 February 2020 RMB80.15 per share Ma Mingzhe 249,504 – – 249,504
to 28 February 2020 Xie Yonglin 187,128 – – 187,128
Cai Fangfang 124,752 – – 124,752
Yao Jason Bo 124,752 – – 124,752
Tan Sin Yin 187,128 – – –
Wang Zhiliang 18,712 – – 18,712
From 26 April 2021 RMB72.92 per share Ma Mingzhe 274,224 – – 274,224
to 29 April 2021 Xie Yonglin 205,668 – – 205,668
Cai Fangfang 137,112 – – 137,112
Yao Jason Bo 137,112 – – 137,112
Tan Sin Yin 205,668 – – –
Wang Zhiliang 13,985 – – 13,985
From 18 March 2022 RMB47.56 per share Ma Mingzhe 420,446 – – 420,446
to 25 March 2022 Xie Yonglin 315,335 – – 315,335
Cai Fangfang 210,223 – – 210,223
Yao Jason Bo 210,223 – – 210,223
FINANCIAL STATEMENTS
Tan Sin Yin 315,335 – – –
Wang Zhiliang 23,124 – – 23,124
From 16 March 2023 RMB46.06 per share Ma Mingzhe – 434,102 – 434,102
to 23 March 2023 Xie Yonglin – 325,576 – 325,576
Cai Fangfang – 217,051 – 217,051
Tan Sin Yin – 325,576 – –
Wang Zhiliang – 23,875 – 23,875
(ii) Discretionary bonuses for the Group’s executive directors and senior management are determined on the bonus scheme approved
by the Board of Directors and the personal performance of senior management.
(iii) MA Mingzhe is the Founder, Chairman (Executive Director) of the Company.
(iv) Yao Jason Bo was re-designated from an Executive Director to a Non-executive Director of the Company on 26 April 2023.
(v) He Jianfeng was appointed as a Non-executive Director of the Company on 1 July 2022.
(vi) Cai Xun was appointed as a Non-executive Director of the Company on 1 July 2022.
(vii) Ouyang Hui resigned as an Independent Non-executive Director on 20 July 2023 since his term of office exceed six years.
(viii) Wang Guangqian was appointed as an Independent Non-executive Director of the Company on 20 July 2023.
(ix) Michael Guo took office as a Co-CEO of the Company on 27 September 2023 and as a Senior Vice President of the Company on 20
December 2023. Pursuant to Paragraph 24.5 of Appendix 16 to the SEHK Listing Rules, persons disclosed in this table include Mr.
Michael Guo.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 347
F-169
F-169
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
54. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(x) Zhu Xinrong was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xi) Liew Fui Kiang was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xii) Hung Ka Hai Clement was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xiii) Huang Wei ceased to be a Non-executive Director of the Company on 1 July 2022 due to the change of his personal work
arrangements.
(xiv) Gu Liji resigned as an Independent Supervisor on 18 July 2022 since his term of office exceed six years.
(xv) Zhang Wangjin resigned as a Shareholder Representative Supervisor on 18 July 2022 due to personal work arrangements.
(xvi) Huang Baokui resigned as an Independent Supervisor on 18 July 2022 since his term of office exceed six years.
55. FIVE HIGHEST PAID INDIVIDUALS
The total emoluments of the five highest paid individuals in the Group, except for key management
personnel whose emoluments were reflected in Note 54, are as follows:
(in RMB million) 2023 2022
Salaries and other short-term employee benefits after tax 91 122
The number of five highest paid individuals in the Group whose emoluments after tax fell within the
following bands is as follows:
2023 2022
RMB5,000,001 – RMB10,000,000 2 1
RMB10,000,001 – RMB15,000,000 1 1
RMB15,000,001 – RMB20,000,000 – –
RMB20,000,001 – RMB25,000,000 – 1
RMB25,000,001 – RMB30,000,000 – –
RMB30,000,001 – RMB35,000,000 2 –
RMB35,000,001 – RMB40,000,000 – 2
The five highest paid individuals in the Group pay individual income tax in strict accordance with the local
tax rules. The tax rate is between 15% and 45%.
56. SIGNIFICANT RELATED PARTY TRANSACTIONS
(1) SHAREHOLDERS HOLDING MORE THAN 5% OF THE COMPANY’S SHARE ARE AS SET OUT
BELOW:
Name of related parties Relationship with the Company
Charoen Pokphand Group Co., Ltd. (“CP Group”) Parent of shareholders
Shenzhen Investment Holdings Co., Ltd. (“SIHC”) Shareholder
As at 31 December 2023, CP Group indirectly held 5.84% (31 December 2022: 6.52%) equity interests in the
Company and is the largest shareholder of the Company.
348 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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56. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(2) THE SUMMARY OF SIGNIFICANT MAJOR RELATED PARTY TRANSACTIONS IS AS
FOLLOWS:
(in RMB million) 2023 2022
CP Group
Premiums received 60 63
Claims paid 33 29
Rental revenue from 27 26
Interest expenses to 2 –
Other revenues from 5 –
Other expenses to 6 10
SIHC
Rental revenue from – 1
Premiums received 4 5
Claims paid 3 –
Interest revenue from 33 7
Interest expenses to 59 62
Other expenses to 6 2
Lufax Holding
Interest revenue from 11 21
Interest expenses to 464 624
Other revenues from 1,998 2,948
Other expenses to 1,609 2,879
Ping An Health
Interest expenses to 71 144
Other revenues from 578 440
Other expenses to 1,772 2,071
FINANCIAL STATEMENTS
Ping An HealthKonnect
Interest revenue from 28 32
Interest expenses to 51 27
Other revenues from 104 306
Other expenses to 9 47
OneConnect
Interest revenue from – 3
Interest expenses to 18 10
Other revenues from 1,407 1,708
Other expenses to 2,233 2,598
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 349
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F-171
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
56. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(3) THE SUMMARY OF BALANCES OF THE GROUP WITH MAJOR RELATED PARTIES IS AS
FOLLOWS:
(in RMB million) 31 December 2023 31 December 2022
CP Group
Customer deposits 117 101
SIHC
Customer deposits 2,657 3,266
Loans and advances to customers 745 590
Lufax Holding
Customer deposits 10,880 14,316
Loans and advances to customers – 821
Derivative financial liabilities – 447
Accounts payable and other payables 2,698 4,457
Accounts receivable and other receivables 147 4,304
Ping An Health
Customer deposits 2,704 4,083
Accounts payable and other payables 1,211 2,885
Accounts receivable and other receivables 93 82
Ping An HealthKonnect
Customer deposits 667 1,286
Loans and advances to customers 871 818
Accounts payable and other payables 126 213
Accounts receivable and other receivables 177 5,289
OneConnect
Customer deposits 785 788
Derivative financial assets – 10
Derivative financial liabilities 38 56
Accounts payable and other payables 1,302 1,511
Accounts receivable and other receivables 866 1,110
In addition to transactions and balances stated above, the Group transferred 100% shareholding of Gem
Alliance Limited to Lufax Holding, which issued convertible bonds amounting to USD1,953.8 million to the
Group as the consideration in 2016, and pay interest to the Group every six months at an annual rate of
0.7375%. In December 2022, Lufax Holding entered into an amended and supplemental agreement with the
Group pursuant to which the maturity date of 50% of the outstanding principal amount of the convertible
bonds was extended from October 2023 to October 2026 and the remaining 50% outstanding principal
amount was redeemed. As at 31 December 2023, the par value of these convertible bonds held by the Group
amounted to USD976.9 million.
350 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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57. COMMITMENTS
(1) CAPITAL COMMITMENTS
The Group had the following capital commitments relating to investments and property development
projects.
(in RMB million) 31 December 2023 31 December 2022
Contracted, but not provided for 9,751 10,031
Authorized, but not contracted for 6,469 9,517
16,220 19,548
(2) CREDIT COMMITMENTS
(in RMB million) 31 December 2023 31 December 2022
Bank acceptances 744,855 703,902
Guarantees issued 92,852 111,005
Letters of credit issued 148,823 122,487
Subtotal 986,530 937,394
Unused limit of credit cards 960,439 889,566
Total 1,946,969 1,826,960
Credit risk weighted amounts of credit commitments 594,788 506,034
Credit commitments disclosed in the table above do not include the financial guarantees accounted for as
insurance contracts by the Group.
(3) INVESTMENT COMMITMENTS
The Group’s investment commitments to associates and joint ventures are as follows:
FINANCIAL STATEMENTS
(in RMB million) 31 December 2023 31 December 2022
Contracted but not provided for 7,839 11,784
58. EMPLOYEE BENEFITS
(1) PENSION
The employees of the Group are mainly covered by various defined contribution pension plans. The Group
makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
relevant government authorities that are responsible for the pension liability to retired employees. Under
such plans, the Group has no other significant legal or constructive obligations for retirement benefits
beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
group life insurance but the amounts involved are insignificant.
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 351
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F-173
Notes to Consolidated Financial Statements
For the year ended 31 December 2023
58. EMPLOYEE BENEFITS (CONTINUED)
(2) HOUSING BENEFITS
The employees of the Group are entitled to participate in and make contributions to various government
sponsored funds for housing purposes. The Group contributes on a monthly basis to these funds based
on certain percentages of the salaries of the employees. The Group’s liability in respect of these funds is
limited to the contributions payable in each period.
(3) MEDICAL BENEFITS
The Group makes monthly contributions for medical benefits to the local authorities in accordance with
relevant local regulations for the employees. The Group’s liability in respect of employee medical benefits is
limited to the contributions payable in each period.
(4) KEY EMPLOYEE SHARE PURCHASE PLAN
The Group has adopted a Key Employee Share Purchase Plan for the key employees of the Company and
its subsidiaries. Refer to Note 38 for more details.
(5) LONG-TERM SERVICE PLAN
The Company has adopted a Long-term Service Plan for the employees of the Company and its
subsidiaries. Refer to Note 39 for more details.
59. CONTINGENT LIABILITIES
Owing to the nature of the insurance, bank and other related business, the Group is involved in
contingencies and legal proceedings in the ordinary course of business, including, but not limited to, being
the plaintiff or the defendant in litigations and arbitrations. Legal proceedings mostly involve claims on the
Group’s insurance policies and other claims. Provision has been made for probable losses to the Group,
including those claims where management can reasonably estimate the outcome of the lawsuits taking into
account any applicable legal advice.
No provision has been made for pending assessments, lawsuits or possible violations of contracts when
the outcome cannot be reasonably estimated or management believes the probability is low or remote. For
pending lawsuits, management also believes that any resulting liabilities will not have a material adverse
effect on the financial position or operating results of the Group or any of its subsidiaries.
60. EVENTS AFTER THE REPORTING PERIOD
(1) PROFIT DISTRIBUTION
On 21 March 2024, the Board of Directors of the Company approved the Profit Distribution Plan of the
Company for 2023, and declared a final cash dividend of 2023 in the amount of RMB1.50 (tax inclusive) per
share as disclosed in Note 17.
61. COMPARATIVE FIGURES
As stated in Note 2.(2), due to the adoption of IFRS 17, the accounting treatment and presentation of
certain items and balances in the consolidated financial statements have been revised to comply with the
new requirements. Accordingly, certain prior year adjustments have been made, and certain comparative
amounts have been restated to conform with the current year’s presentation and accounting treatment,
and a third statement of financial position as at 1 January 2022 has been presented.
352 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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62. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE
COMPANY
(1) STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(in RMB million) 31 December 2023 31 December 2022
Assets
Cash and amounts due from banks and other financial institutions 20,627 31,324
Financial assets purchased under reverse repurchase agreements 2,440 1,770
Financial assets at fair value through profit or loss 9,070 8,452
Financial assets at amortized cost 30,654 1,214
Debt financial assets at fair value through other
comprehensive income 8,000 8,531
Investments in subsidiaries and associates 238,113 236,919
Investment properties 1,055 1,020
Property and equipment 28 27
Intangible assets 995 995
Right-of-use assets 169 31
Other assets 456 11,335
Total assets 311,607 301,618
Equity and liabilities
Equity
Share capital 18,210 18,280
Reserves 139,075 144,503
Treasury shares (5,001) (10,996)
Retained profits 137,648 128,895
Total equity 289,932 280,682
Liabilities
Due to banks and other financial institutions 20,011 19,417
FINANCIAL STATEMENTS
Income tax payable – 10
Lease liabilities 172 31
Other liabilities 1,492 1,478
Total liabilities 21,675 20,936
Total equity and liabilities 311,607 301,618
The statement of financial position of the Company was approved by the Board of Directors on 21 March
2024 and was signed on its behalf.
MA Mingzhe XIE Yonglin
Director Director
Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd. 353
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Notes to Consolidated Financial Statements
For the year ended 31 December 2023
62. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE
COMPANY (CONTINUED)
(2) RESERVE MOVEMENT OF THE COMPANY
For the year ended 31 December 2023
Financial
assets at Surplus
Share FVOCI reserve General Retained
(in RMB million) premium reserves Others fund reserve profits Total
As at 1 January 128,737 215 2,992 12,164 395 128,895 273,398
Profit for the year – – – – – 52,755 52,755
Other comprehensive income – 32 7 – – – 39
Dividend declared – – – – – (44,002) (44,002)
Employee Share Purchase Plan – – 456 – – – 456
Cancellation of repurchased
shares (5,925) – – – – – (5,925)
Others – – 2 – – – 2
As at 31 December 122,812 247 3,457 12,164 395 137,648 276,723
For the year ended 31 December 2022
Financial
assets at Surplus
Share FVOCI reserve General Retained
(in RMB million) premium reserves Others fund reserve profits Total
As at 1 January 128,737 211 2,976 12,164 395 108,854 253,337
Profit for the year – – – – – 63,861 63,861
Other comprehensive income – 4 (36) – – – (32)
Dividend declared – – – – – (43,820) (43,820)
Employee Share Purchase Plan – – 44 – – – 44
Others – – 8 – – – 8
As at 31 December 128,737 215 2,992 12,164 395 128,895 273,398
According to the Company’s articles of association, the Company shall set aside 10% of its net profit
determined in its statutory financial statements, prepared in accordance with PRC Accounting Standards,
to a statutory surplus reserve fund. The Company can cease such profit appropriation to this fund
if its balance reaches 50% of the Company’s registered share capital. The Company may also make
appropriations from its net profit to the discretionary surplus reserve fund provided the appropriation is
approved by a resolution of the shareholders. These reserves cannot be used for purposes other than those
for which they are created. Profits are used to offset prior year losses before allocations to such reserves.
Subject to resolutions passed in shareholders’ meetings, the statutory surplus reserve fund, discretionary
surplus reserve fund and capital reserve can be transferred to share capital. The balance of the statutory
surplus reserve fund after transfers to share capital shall not be less than 25% of the registered capital.
In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic
or other losses as incurred by companies operating in the insurance, banking, trust, securities, futures
and fund businesses. The Group’s respective entities engaged in such businesses would need to make
appropriations for such reserves based on their respective year-end profit or risk assets, as determined in
accordance with PRC Accounting Standards, and based on the applicable PRC financial regulations, in their
annual financial statements. Such reserves are not available for profit distribution or transfer to capital.
In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
Standards and (ii) the retained profits determined in accordance with IFRSs.
354 Annual Report 2023 Ping An Insurance (Group) Company of China, Ltd.
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F-176
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of Ping An Insurance (Group) Company of China,
Ltd. (the “Company”) and its subsidiaries (the “Group”) set out on pages 176 to 334, which comprise
the consolidated statement of financial position as at 31 December 2022, and the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 December 2022, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting
Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and have been
properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
BASIS FOR OPINION
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by
the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code
of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
168 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
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KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our assessment of the risks
of material misstatement of the consolidated financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion
on the accompanying consolidated financial statements.
Key audit matter How our audit addressed the key audit matter
Classification of financial assets at amortized cost
As at 31 December 2022, the Group’s “financial We reviewed the Group’s accounting policies in
assets at amortized cost” amounted to relation to the classification of financial assets
RMB3,004,502 million, representing 27% of total at amortized cost, and understood the Group’s
assets. We identified the classification of these methodologies and processes of business model
debt instruments as a key audit matter as it assessment and SPPI testing.
requires complex management judgement in:
We evaluated and tested the design and operating
– Business model assessment: determining the effectiveness of key controls over SPPI testing.
Group’s business model for managing these
debt instruments. We evaluated the appropriateness of business model
assessment for managing these debt instruments, and
– Solely payments of principal and interest tested the supporting evidence.
(“SPPI”) testing.
We evaluated the design of SPPI testing logic and
FINANCIAL STATEMENTS
Relevant disclosures are included in Note 2.(12), re-performed SPPI testing on a sampling basis by
Note 3.(2) and Note 28 to the consolidated examining the contracts of these debt instruments.
financial statements.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 169
F-178
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Impairment assessment of loans and advances
to customers and financial assets at amortized
cost
As at 31 December 2022, the Group’s “loans and We evaluated and tested the design and operating
advances to customers” and “financial assets at effectiveness of key controls over the approval
amortized cost” represented 29% and 27% of total process, post approval credit management, credit
assets and the amounts of expected credit loss rating system, collateral monitoring, deferred
provision for “loans and advances to customers” principal and interest payments as well as impairment
and “financial assets at amortized cost” were assessment of “loans and advances to customers” and
RMB101,196 million and RMB44,827 million, “financial assets at amortized cost”, including relevant
respectively. data quality and information systems.
We identified the impairment assessment of “loans We adopted a risk-based sampling approach in our
and advances to customers” and “financial assets credit review procedures on “loans and advances
at amortized cost” as a key audit matter, as it to customers” and “financial assets at amortized
involves significant management judgements and cost”. We assessed the debtors’ repayment capacity
assumptions. and evaluated the Group’s credit rating, taking into
consideration post lending or investing investigation
The Group uses a number of models and reports, debtors’ financial information, collateral
assumptions in the measurement of expected valuation reports and other available information.
credit losses, for example:
With the support of our internal experts, we
– Significant increase in credit risk – The evaluated and tested the important parameters of the
selection of criteria for identifying significant expected credit loss model, management’s significant
increase in credit risk is highly dependent on judgements and related assumptions, mainly focusing
judgement and may have a significant impact on the following aspects.
on the expected credit losses for “loans and
advances to customers” and “financial assets 1) Expected credit loss model:
at amortized cost” with longer remaining
periods to maturity. – In response to the macroeconomic changes, we
assessed the reasonableness of the expected
– Models and parameters – Inherently complex credit loss model methodology and related
models are used to measure expected credit parameters, including probability of default, loss
losses. Modelled parameters have numerous given default, exposure at default, and significant
inputs and the parameter estimation involves increase in credit risk.
many judgements and assumptions.
– Assessed the forward-looking information
management used to determine expected credit
losses, including the forecasts of macroeconomic
variables and the assumptions and weightings of
multiple macroeconomic scenarios.
– Evaluated the models and the related
assumptions used in individual impairment
assessment and analysed the amount, timing and
likelihood of management’s estimated future cash
flows, especially cash flows from collateral.
170 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-179
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Impairment assessment of loans and advances
to customers and financial assets at amortized
cost (continued)
– Forward-looking information – Expert 2) Design and operating effectiveness of key
judgement is used to create macroeconomic controls:
forecasts and to consider the impact on
expected credit losses under multiple – Evaluated and tested the data and processes
economic scenarios given different weights. used to determine expected credit losses,
including business data, internal credit rating
– Individual impairment assessment – data, macroeconomic data, as well as impairment
Identifying credit impaired “loans and system computational logic, inputs and interfaces
advances to customers” and “financial assets among relevant systems.
at amortized cost” requires consideration of
a range of factors, and individual impairment – Evaluated and tested key controls over expected
assessments are dependent upon estimates credit loss models, including approval of
of future cash flows. model changes, ongoing monitoring of model
performance, model validation and parameter
Relevant disclosures are included in Note 2.(12), calibration.
Note 3.(3), Note 26, Note 28 and Note 53.(3) to the
consolidated financial statements. We evaluated and tested the design and operating
effectiveness of internal controls related to
disclosures of credit risk and impairment allowance.
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 171
F-180
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
KEY AUDIT MATTERS (CONTINUED)
Key audit matter How our audit addressed the key audit matter
Valuation of insurance contract liabilities
As at 31 December 2022, the Group’s significant With the support of our internal experts, we
life insurance contract liabilities (long-term life performed the following audit procedures:
insurance policyholders’ reserves) and non-life
insurance contract liabilities (unearned premium – Evaluated and tested the design and operating
reserves and claim reserves) amounted to effectiveness of key controls over the valuation
RMB2,742,989 million, representing 28% of total of insurance contract liabilities.
liabilities. We identified the valuation of insurance
contract liabilities as a key audit matter, as it – Assessed key actuarial assumptions by
requires significant estimates and judgements, and comparing them to historical experience of the
could be significantly impacted by the changes in Group and industry data.
actuarial assumptions.
– Assessed the appropriateness of the actuarial
The valuation of insurance contract liabilities valuation methodologies adopted by the
involves significant judgement over uncertain Group. Independently built models to perform
future cash flows. Complex actuarial models and recalculation on insurance contract liabilities
actuarial assumptions with highly judgemental of selected typical life insurance products; and
nature are used to support the valuation of performed independent recalculation on non-life
insurance contract liabilities. Key assumptions insurance contract liabilities, and compared our
include mortality, morbidity, lapse rates, discount results to the management record.
rates, expenses and loss ratios, etc.
– Tested the completeness and accuracy of
Relevant disclosures are included in Note 2.(2), the underlying data used in the valuation of
Note 2.(30), Note 3.(4), Note 48 and Note 53.(1) to insurance contract liabilities.
the consolidated financial statements.
– Evaluated the overall reasonableness of the
insurance contract liabilities by performing
movement analysis and assessing the impact of
changes in assumptions.
172 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
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OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The directors of the Company are responsible for the other information. The other information comprises
the information included in the Annual Report, other than the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial statements
that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements
of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors of the Company are responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors of the Company either
intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.
The directors of the Company are assisted by the Audit and Risk Management Committee in discharging
their responsibilities for overseeing the Group’s financial reporting process.
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 173
F-182
Independent Auditor’s Report
To the shareholders of Ping An Insurance (Group) Company of China, Ltd.
(Incorporated in the People’s Republic of China with limited liability)
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
174 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-183
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)
We communicate with the Audit and Risk Management Committee regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Audit and Risk Management Committee with a statement that we have complied with
relevant ethical requirements regarding independence and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit and Risk Management Committee, we determine those
matters that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Benny Bing Yin
Cheung.
Ernst & Young
Certified Public Accountants
Hong Kong
15 March 2023
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 175
F-184
Consolidated Income Statement
For the year ended 31 December 2022
(in RMB million) Notes 2022 2021
Gross written premiums 6 769,633 760,843
Less: Premiums ceded to reinsurers (21,967) (30,208)
Net written premiums 6 747,666 730,635
Change in unearned premium reserves (5,248) 9,298
Net earned premiums 742,418 739,933
Reinsurance commission revenue 6,150 5,908
Interest revenue from banking operations 7 228,784 213,439
Interest revenue from non-banking operations 8 124,276 125,474
Fees and commission revenue from non-insurance operations 9 45,982 51,524
Investment income 10 2,781 78,039
Share of profits and losses of associates and joint ventures 10,165 7,346
Other revenues and other gains/(losses) 11 60,795 66,012
Total revenue 1,221,351 1,287,675
Gross claims and policyholders’ benefits 12 (645,263) (638,866)
Less: Reinsurers’ share of claims and policyholders’ benefits 12 14,125 20,204
Claims and policyholders’ benefits (631,138) (618,662)
Commission expenses on insurance operations (70,380) (80,711)
Interest expenses on banking operations 7 (97,688) (92,071)
Fees and commission expenses on non-insurance operations 9 (9,928) (9,940)
Net impairment losses on financial assets 13 (80,553) (90,494)
Net impairment losses on other assets 14 (3,096) (14,548)
Foreign exchange gains/(losses) 3,342 1,267
General and administrative expenses (169,840) (177,061)
Interest expenses on non-banking operations (22,888) (28,082)
Other expenses (33,367) (37,793)
Total expenses (1,115,536) (1,148,095)
Profit before tax 15 105,815 139,580
Income tax 16 1,617 (17,778)
Profit for the year 107,432 121,802
Attributable to:
– Owners of the parent 83,774 101,618
– Non-controlling interests 23,658 20,184
107,432 121,802
Earnings per share attributable to ordinary
equity holders of the parent: RMB RMB
– Basic 18 4.80 5.77
– Diluted 18 4.73 5.72
176 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-185
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
(in RMB million) 2022 2021
Profit for the year 107,432 121,802
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Changes in the fair value of debt instruments at
fair value through other comprehensive income (1,741) 2,094
Credit risks provision of debt instruments at
fair value through other comprehensive income 1,483 2,076
Shadow accounting adjustments 310 (1,432)
Reserve from cash flow hedging instruments (350) (341)
Exchange differences on translation of foreign operations 3,914 (1,275)
Share of other comprehensive income of associates and
joint ventures 35 117
Others – (171)
Items that will not be reclassified to profit or loss:
Changes in the fair value of equity instruments
at fair value through other comprehensive income 6,255 (6,257)
Shadow accounting adjustments (4,886) 4,256
Share of other comprehensive income of associates
and joint ventures 59 (1,143)
Other comprehensive income for the year, net of tax 5,079 (2,076)
Total comprehensive income for the year 112,511 119,726
Attributable to:
– Owners of the parent 88,097 99,281
– Non-controlling interests 24,414 20,445
112,511 119,726
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 177
F-186
Consolidated Statement of Financial Position
As at 31 December 2022
(in RMB million) Notes 31 December 2022 31 December 2021
Assets
Cash and amounts due from banks
and other financial institutions 19 770,751 584,995
Balances with the Central Bank 20 281,115 308,348
Financial assets purchased under reverse repurchase
agreements 21 91,315 61,429
Premium receivables 22 72,280 79,834
Accounts receivable 36,118 26,628
Derivative financial assets 23 29,278 30,957
Reinsurers’ share of insurance liabilities 24 24,969 26,852
Policy loans 188,765 178,298
Finance lease receivable 25 186,858 200,701
Loans and advances to customers 26 3,238,054 2,980,975
Financial assets at fair value through profit or loss 27 1,631,416 1,426,677
Financial assets at amortized cost 28 3,004,502 2,768,995
Debt financial assets at fair value
through other comprehensive income 29 467,031 428,530
Equity financial assets at fair value
through other comprehensive income 30 255,103 268,215
Investments in associates and joint ventures 31 280,793 284,061
Statutory deposits for insurance operations 32 14,444 12,606
Investment properties 33 114,763 86,041
Property and equipment 34 53,657 49,758
Intangible assets 35 99,411 68,462
Right-of-use assets 36 12,580 14,185
Deferred tax assets 50 92,846 65,360
Other assets 37 168,026 154,117
Policyholder account assets in respect of
insurance contracts 38 19,467 31,847
Policyholder account assets in respect of
investment contracts 38 3,626 4,155
Total assets 11,137,168 10,142,026
Equity and liabilities
Equity
Share capital 39 18,280 18,280
Reserves 40 255,730 234,186
Treasury shares 43 (10,996) (9,895)
Retained profits 40 595,661 569,834
Equity attributable to owners of the parent 858,675 812,405
Non-controlling interests 40 316,623 265,318
Total equity 1,175,298 1,077,723
178 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-187
(in RMB million) Notes 31 December 2022 31 December 2021
Liabilities
Due to banks and other financial institutions 44 918,977 797,646
Financial liabilities at fair value through profit or loss 88,770 57,376
Derivative financial liabilities 23 39,738 35,049
Assets sold under agreements to repurchase 45 271,737 127,477
Accounts payable 10,349 6,663
Income tax payable 16,076 16,247
Insurance payables 153,508 150,767
Policyholder dividend payable 71,445 67,276
Customer deposits and payables to brokerage customers 46 3,431,999 3,002,049
Bonds payable 47 931,098 1,097,523
Insurance contract liabilities 48 3,567,749 3,261,354
Investment contract liabilities for policyholders 49 73,862 72,839
Lease liabilities 36 13,013 14,208
Deferred tax liabilities 50 14,217 13,605
Other liabilities 51 359,332 344,224
Total liabilities 9,961,870 9,064,303
Total equity and liabilities 11,137,168 10,142,026
The financial statements on pages 176 to 334 were approved and authorized for issue by the Board of
Directors on 15 March 2023 and were signed on its behalf.
MA Mingzhe XIE Yonglin YAO Jason Bo
Director Director Director
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 179
F-188
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
For the year ended 31 December 2022
Reserves
Exchange
Financial differences
assets at Shadow Surplus on translation Non-
Share Share FVOCI accounting reserve General of foreign Treasury Retained controlling Total
(in RMB million) capital premium reserves adjustments Others funds reserves operations shares profits interests equity
As at 1 January 18,280 111,598 (36,413) 25,957 21,345 12,164 101,108 (1,573) (9,895) 569,834 265,318 1,077,723
Profit for the year – – – – – – – – – 83,774 23,658 107,432
Other comprehensive income for the year – – 5,504 (4,548) (252) – – 3,619 – – 756 5,079
Total comprehensive income for the year – – 5,504 (4,548) (252) – – 3,619 – 83,774 24,414 112,511
Dividends declared (Note 17) – – – – – – – – – (43,820) – (43,820)
Appropriations to general reserves – – – – – – 13,996 – – (13,996) – –
Transfer of loss on disposal of equity investments
at fair value through other comprehensive
income to retained profits – – 131 – – – – – – (131) – –
Dividend paid to non-controlling interests – – – – – – – – – – (6,585) (6,585)
Acquisition of subsidiaries – – – – – – – – – – 42,437 42,437
Equity transactions with non-controlling interests – – – – 96 – – – – – (2,959) (2,863)
Contributions from non-controlling interests – – – – – – – – – – 916 916
Key Employee Share Purchase Plan (Note 41) – – – – 85 – – – – – – 85
Long-term Service Plan (Note 42) – – – – (4,113) – – – – – – (4,113)
Acquisition of shares (Note 43) – – – – – – – – (1,101) – – (1,101)
Other equity instruments issued/redeemed by
subsidiaries – – – – – – – – – – (7,164) (7,164)
Others – 6,497 – – 529 – – – – – 246 7,272
As at 31 December 18,280 118,095 (30,778) 21,409 17,690 12,164 115,104 2,046 (10,996) 595,661 316,623 1,175,298
For the year ended 31 December 2021
Reserves
Exchange
Financial differences
assets at Shadow Surplus on translation Non-
Share Share FVOCI accounting reserve General of foreign Treasury Retained controlling Total
(in RMB million) capital premium reserves adjustments Others funds reserves operations shares profits interests equity
As at 1 January 18,280 111,598 (33,923) 23,147 26,858 12,164 88,789 (362) (5,995) 522,004 225,345 987,905
Profit for the year – – – – – – – – – 101,618 20,184 121,802
Other comprehensive income for the year – – (2,490) 2,810 (1,446) – – (1,211) – – 261 (2,076)
Total comprehensive income for the year – – (2,490) 2,810 (1,446) – – (1,211) – 101,618 20,445 119,726
Dividends declared (Note 17) – – – – – – – – – (41,469) – (41,469)
Appropriations to general reserves – – – – – – 12,319 – – (12,319) – –
Dividend paid to non-controlling interests – – – – – – – – – – (5,452) (5,452)
Acquisition of subsidiaries – – – – – – – – – – 13,621 13,621
Equity transactions with non-controlling interests – – – – (1,029) – – – – – 3,085 2,056
Contributions from non-controlling interests – – – – 739 – – – – – 2,844 3,583
Key Employee Share Purchase Plan (Note 41) – – – – (170) – – – – – – (170)
Long-term Service Plan (Note 42) – – – – (3,890) – – – – – – (3,890)
Acquisition of shares – – – – – – – – (3,900) – – (3,900)
Other equity instruments issued/redeemed by
subsidiaries – – – – – – – – – – 7,068 7,068
Others – – – – 283 – – – – – (1,638) (1,355)
As at 31 December 18,280 111,598 (36,413) 25,957 21,345 12,164 101,108 (1,573) (9,895) 569,834 265,318 1,077,723
180 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-189
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
(in RMB million) Notes 2022 2021
Net cash flows from operating activities 57 485,905 90,116
Cash flows from investing activities
Purchases of property and equipment,
intangibles and other long-term assets (8,871) (12,186)
Proceeds from disposal of property and equipment,
intangibles and other long-term assets, net 568 679
Proceeds from disposal of investments 1,967,313 2,016,480
Purchases of investments (2,367,474) (2,198,579)
Acquisition of subsidiaries, net (37,620) (366)
Disposal of subsidiaries, net 507 5,234
Interest received 148,496 168,173
Dividends received 76,974 60,234
Rentals received 6,178 4,620
Increase in policy loans, net (10,120) (16,356)
Net cash flows (used in)/from investing activities (224,049) 27,933
Cash flows from financing activities
Capital injected into subsidiaries by non-controlling interests 3,104 14,383
Proceeds from bonds issued 773,258 1,252,176
Increase/(decrease) in assets sold under agreements to
repurchase of insurance operations, net 118,446 (169,860)
Proceeds from borrowings 186,022 197,965
Repayment of borrowings (1,206,226) (1,335,187)
Interest paid (28,209) (45,887)
Dividends paid (49,582) (46,942)
Increase in insurance placements from banks and
other financial institutions, net 2,266 4,300
Payment of acquisition of shares (1,101) (3,900)
FINANCIAL STATEMENTS
Payment of shares purchased for Long-term Service Plan (4,439) (4,184)
Repayment of lease liabilities (6,533) (7,634)
Payment of redemption for other equity instruments
by subsidiaries (10,100) (3,051)
Others (7,565) 11,409
Net cash flows used in financing activities (230,659) (136,412)
Net increase/(decrease) in cash and cash equivalents 31,197 (18,363)
Net foreign exchange differences 8,569 (3,260)
Cash and cash equivalents at the beginning of the year 403,125 424,748
Cash and cash equivalents at the end of the year 56 442,891 403,125
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 181
F-190
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
1. CORPORATE INFORMATION
Ping An Insurance (Group) Company of China, Ltd. (the “Company”) was registered in Shenzhen, the
People’s Republic of China (the “PRC”) on 21 March 1988. The business scope of the Company includes
investing in insurance enterprises, supervising and managing various domestic and overseas businesses of
subsidiaries, conducting insurance funds investment, domestic and overseas insurance and other business
approved by regulators. The Company and its subsidiaries are collectively referred to as the Group. The
Group mainly provides integrated financial products and services and is engaged in life insurance, property
and casualty insurance, trust, securities, banking and other businesses.
The registered office address of the Company is 47th, 48th, 109th, 110th, 111th and 112th Floors, Ping An
Finance Center, No. 5033 Yitian Road, Futian District, Shenzhen, Guangdong Province, China.
These consolidated financial statements are presented in millions of Renminbi (“RMB”) unless otherwise
stated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) BASIS OF PREPARATION
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRSs”), amendments to IFRSs and interpretations issued by the International
Accounting Standards Board (“IASB”), also comply with the applicable disclosure provisions of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the applicable
disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the
historical cost convention, except for some financial instruments and insurance contract liabilities.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial statements are disclosed in
Note 3.
To the extent that a topic is not covered explicitly by IFRSs, the IFRSs framework permits reference to
another comprehensive body of accounting principles, and therefore the Group has chosen to refer to the
accounting practices currently adopted by insurance companies reporting under Accounting Standards for
Business Enterprises.
(2) CHANGES IN ACCOUNTING POLICIES AND ESTIMATES
Changes in accounting estimates
Significant judgement is required in determining the economic assumptions, e.g., discount rates/
investment return, and non-economic assumptions, e.g., mortality, morbidity, lapse rates, policy dividend,
and expenses, used in the measurement of insurance contract liabilities for the long-term life insurance
contracts. Such assumptions should be determined based on current information available at the end of the
reporting period. The Group has changed the above assumptions based on current information available as
at 31 December 2022 (mainly due to change of the benchmark yield curve for the measurement of insurance
contract liabilities), and updated the estimate of future cash flows, with the result of changes in the long-
term life insurance contract liabilities being recognized in profit or loss. Consequently, the long-term life
insurance policyholders’ reserves were increased by RMB26,813 million as at 31 December 2022 and the profit
before tax for the year ended 31 December 2022 was decreased by RMB26,813 million (the long-term life
insurance policyholders’ reserves were increased by RMB22,566 million as at 31 December 2021 and the profit
before tax for the year ended 31 December 2021 was decreased by RMB22,566 million).
182 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-191
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(3) ISSUED BUT NOT YET EFFECTIVE STANDARDS, AMENDMENTS AND INTERPRETATIONS
The Group has not applied the following new standards, which have been issued but are not yet effective.
IFRS 17, Insurance Contracts, was published on 18 May 2017. IFRS 17 established principles for the
recognition, measurement, presentation and disclosure of insurance contracts issued. It replaces IFRS
4, which currently permits a wide variety of practices. IFRS 17 requires a current measurement model,
where estimates are remeasured in each reporting period. The measurement is based on the building
blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin
representing the unearned profit of the contract. In June 2020, the IASB published the revised version
of IFRS 17, stating that IFRS 17 is effective for financial years beginning on or after 1 January 2023. On
9 December 2021, the IASB amended IFRS 17 to add a transition option for a “classification overlay” to
address possible accounting mismatches between financial assets and insurance contract liabilities in the
comparative information presented on initial application of IFRS 17. The Group will adopt IFRS 17 on 1
January 2023. Compared with IFRS 4, IFRS 17 brings about significant changes on the following aspects:
Adjusting the recognition principles for insurance revenue and insurance service expenses. In
accordance with IFRS 17, insurance revenue will be recognized over the coverage period based on the
provision of services, and the investment component in insurance contracts will be excluded from profit or
loss. As a result, revenue from long-term life insurance contracts will decrease significantly.
Investment component is an amount that an insurance contract requires the entity to repay to a
policyholder in all circumstances, regardless of whether an insured event occurs.
Several amendments to the measurement of insurance contract liabilities. Main changes are as follows:
Revising measurement models for insurance contracts. Measurement methods include the general model,
the variable fee approach, and the premium allocation approach by the nature of insurance contracts.
The variable fee approach applies to long-term insurance contracts with direct participation features; the
general model applies to other long-term insurance contracts; and the premium allocation approach applies
FINANCIAL STATEMENTS
to short-term insurance contracts.
Revising the measurement of contractual service margin (“CSM”). The effect of changes in fulfillment
cash flows that relate to future service will be added to or deducted from the remaining CSM, while under
the Group’s current accounting policies, the residual margin will be locked at inception and amortized over
the coverage period. For insurance contracts subject to the variable fee approach, the insurer’s share of
the change in the fair value of the underlying items and changes in other financial risks shall be regarded as
changes in future service, for which the CSM shall be adjusted. Under IFRS 17, CSM will be more volatile.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 183
F-192
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(3) ISSUED BUT NOT YET EFFECTIVE STANDARDS, AMENDMENTS AND INTERPRETATIONS
(CONTINUED)
Revising the method for determining the discount rate of insurance contract liabilities. In accordance
with IFRS 17, the discount rate will be based on observable current market interest rates reflecting the
characteristics of the insurance contracts, and the “top-down” approach or the “bottom-up” approach may
be used. The Group has chosen the “bottom-up” approach, and the discount rate assumption is determined
based on the risk-free interest rate with consideration of the tax and liquidity premium. Under IFRS 4, for
long-term life insurance and long-term health insurance contracts where the future insurance benefits are
not impacted by investment returns on the underlying asset portfolio, and with consideration of the Cai
Kuai [2017] No.637 issued by the former CIRC and other relevant regulations, the discount rate assumption
is based on the “benchmark yield curve for the measurement of insurance contract liabilities” published by
the China Central Depository & Clearing Co., Ltd. (“CCDC”), with consideration of the impact of the tax and
liquidity premium. For insurance contracts where the future insurance benefits are impacted by investment
returns on the underlying asset portfolio, the discount rates are determined based on expected future
investment returns on the underlying asset portfolio backing those liabilities. Under the general model,
the Group chose to recognize changes in insurance contract liabilities arising from changes in financial
variables (including the discount rate) in other comprehensive income; Under the variable fee approach,
the Group chose to disaggregate insurance finance income or expenses between profit or loss and other
comprehensive income, so that the insurance finance income or expenses recognised in profit or loss can
exactly match the income or expenses included in profit or loss for the underlying items.
Methods for measuring CSM at the transition date. Under IFRS 17, if full retrospective application is
impracticable for a group of insurance contracts at the transition date, we shall apply either the modified
retrospective approach or the fair value approach to estimate the CSM. The CSMs of most of the Group’s
contracts are measured under the modified retrospective approach, while those of the remaining contracts
are measured under the fair value approach.
Redetermining the classifications of financial assets and optimizing the accounting match between
assets and liabilities. Under IFRS 17, at the initial application date, the reporting entity may reassess the
business models for managing financial assets and redetermine the classifications of financial assets held
for activities related to insurance contracts. On the basis of the measurement of cash flows arising from
performance of insurance contract liabilities linked to some debt investments measured at amortized
cost, the Group reassessed the business model at the initial application date, and reclassified such debt
investments measured at amortized cost as debt investments measured at fair value through other
comprehensive income, to optimize the accounting match between insurance contract liabilities and related
financial assets.
Optimizing the presentation of financial statements. IFRS 17 requires insurance companies to present the
combination of rights and obligations arising from a group of insurance contracts or reinsurance contracts
as a single insurance contract or reinsurance contract asset or liability in the statement of financial position.
Accounting items such as policy loans and premium receivables shall no longer be presented separately.
Moreover, IFRS 17 requires insurance companies to disaggregate the amounts recognized in profit or loss
into the insurance service result and the investment service result according to profit drivers. This will make
insurance companies’ sources of profit clearer and more transparent.
Except for IFRS 17, there are no amendments to IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Group.
184 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-193
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(4) BUSINESS COMBINATIONS AND GOODWILL
Business combinations that are not under common control are accounted for using the acquisition method.
The cost of an acquisition is measured at the acquisition date fair value which is the sum of the acquisition
date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners
of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For
each business combination, the Group elects whether to measure the non-controlling interests in the
acquiree that are present ownership interests and entitle their holders to a proportionate share of net
assets in the event of liquidation at fair value or at the proportionate share of the acquiree’s identifiable
net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related
costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition
date. Contingent consideration classified as an asset or a liability that is a financial instrument and within
the scope of IFRS 9 is measured at fair value with changes in fair value either recognized in profit or loss or
as a change to other comprehensive income. If the contingent consideration is not within the scope of IFRS
9, it is measured in accordance with the appropriate IFRSs. Contingent consideration that is classified as
equity is not remeasured and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred,
the amount recognized for non-controlling interests and any fair value of the Group’s previously held equity
interests in the acquiree over the net identifiable assets acquired and liabilities assumed. If the sum of this
FINANCIAL STATEMENTS
consideration and the amount recognized for non-controlling interests and any fair value of the Group’s
previously held equity interests in the acquiree is lower than the fair value of the net assets acquired, the
difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill
is tested for impairment annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31
December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units,
that are expected to benefit from the synergies of the combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-
generating units) to which the goodwill relates. Where the recoverable amount of the
cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss
is recognized. An impairment loss recognized for goodwill is not reversed in subsequent periods.
Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and
part of the operation within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain or loss on the disposal.
Goodwill disposed of in these circumstances is measured based on the relative value of the operation
disposed of and the portion of the cash-generating unit retained.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 185
F-194
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(5) BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial statements
of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra-
group transactions and dividends, are eliminated on consolidation in full, unless the transaction provides
evidence of an impairment of the transferred asset.
Total comprehensive income within a subsidiary is still attributed to the non-controlling interest even if it
results in a deficit balance. If the Group loses control over a subsidiary, it:
– Derecognizes the assets (including goodwill) and liabilities of the subsidiary;
– Derecognizes the carrying amount of any non-controlling interest;
– Derecognizes the cumulative translation differences recorded in equity;
– Recognizes the fair value of the consideration received;
– Recognizes the fair value of any investment retained;
– Recognizes any surplus or deficit in profit or loss; and
– Reclassifies the Group’s share of components previously recognized in other comprehensive income to
profit or loss or retained earnings, as appropriate.
186 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-195
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(6) SUBSIDIARIES
A subsidiary is an entity (including structured entities) over which the Company has control. The Company
controls an entity when the Company has power over an entity, is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect these returns through its power
over the entity. The results of subsidiaries are included in the Company’s income statement to the extent
of dividends received and receivable. The Company’s investments in subsidiaries are stated at cost less any
impairment losses.
(7) STRUCTURED ENTITIES
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant
factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks
only, and the relevant activities are directed by means of contractual or related arrangements.
The Group determines whether it is an agent or a principal in relation to those structured entities in which
the Group acts as an asset manager on management’s judgement. If an asset manager is agent, it acts
primarily on behalf of others and so does not control the structured entity. It may be principal if it acts
primarily for itself, and therefore controls the structured entity.
The Group has determined that all of its trust products, debt investment plans, equity investment plans
and asset funding plans, which are not controlled by the Group, are unconsolidated structured entities.
Trust products, equity investment plans and asset funding plans are managed by affiliated or unaffiliated
trust companies or asset managers and invest the funds raised in loans or equities of other companies.
Debt investment plans are managed by affiliated or unaffiliated asset managers and its major investment
objectives are infrastructure funding projects. Trust products, debt investment plans, equity investment
plans and asset funding plans finance their operations by issuing beneficiary certificates which entitle the
holders to agreed stake according to contractual terms in the respective trust products’, debt investment
plans’, equity investment plans’ and asset funding plans’ income.
The Group holds beneficiary certificates in its trust products, debt investment plans, equity investment
FINANCIAL STATEMENTS
plans and asset funding plans.
(8) ASSOCIATES
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has a long-term
interest of generally not less than 20% of the equity voting rights and over which it is in a position to
exercise significant influence.
The Group’s investments in associates are stated in the consolidated statement of financial position at
the Group’s share of net assets under the equity method of accounting, less any impairment losses. The
Group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post-
acquisition movements in other comprehensive income is recognized in other comprehensive income with
a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in
an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the
Group does not recognize further losses, unless it has incurred legal or constructive obligations or made
payments on behalf of the associate. Unrealized gains and losses resulting from transactions between the
Group and its associates are eliminated to the extent of the Group’s investments in the associates, except
where unrealized losses provide evidence of an impairment of the asset transferred. Goodwill arising from
the acquisition of associates is included in the carrying amount of the investment and is neither amortized
nor individually tested for impairment.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 187
F-196
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(8) ASSOCIATES (CONTINUED)
The financial statements of the associates are prepared for the same reporting period as the Group. Where
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognize
impairment losses on the Group’s investments in its associates. The Group determines at each reporting
date whether there is any objective evidence that the investment in the associate is impaired. If this is the
case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value and recognizes the amount in the income statement.
Upon loss of significant influence over the associate, the Group measures and recognizes any remaining
investment at its fair value. Any differences between the carrying amount of the associate upon loss of
significant influence and the fair value of the remaining investment, as well as the gain on disposal of the
associates, are recognized in profit or loss.
The results of associates are included in the Group’s income statement to the extent of dividends received
and receivable. The Group’s investments in associates are treated as non-current assets and are stated at
cost less any impairment losses.
(9) JOINT VENTURES
The Group has assessed the nature of its joint ventures and determined them to be joint ventures. The
Group has rights to the net assets of these joint ventures. The Group’s investments in its joint ventures are
accounted for using the equity method of accounting, less any impairment losses. Refer to Note 2.(8) for
details of the equity method of accounting.
(10) FOREIGN CURRENCIES
These financial statements are presented in RMB, which is the Company’s functional and presentation
currency. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency.
Foreign currency transactions recorded by the entities in the Group are initially recorded using their
respective functional currency rates prevailing at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated at the functional currency rates of exchange
ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items
are recognized in the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as at the dates of initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was determined.
The gain or loss on change arising on translation of a non-monetary item measured at fair value is treated
in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference
on the item whose fair value gain or loss is recognized in other comprehensive income or profit or loss is
also recognized in profit or loss and other comprehensive income, respectively).
188 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-197
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(10) FOREIGN CURRENCIES (CONTINUED)
The functional currency of most of overseas subsidiaries is the Hong Kong dollar. At the end of the
reporting period, the assets and liabilities of these overseas subsidiaries are translated into the presentation
currency of the Company at the exchange rates prevailing at the end of the reporting period and their
income statements are translated into RMB at the average exchange rate for the year. The resulting
exchange differences are recognized in other comprehensive income and accumulated in the exchange
differences on translation of foreign operations reserve. On disposal of a foreign operation, the component
of other comprehensive income relating to that particular foreign operation is recognized in the income
statement.
For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are
translated into RMB at the exchange rates for their functional and currencies ruling at the dates of the
cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are
translated into RMB at the weighted average exchange rate for the year.
(11) CASH AND CASH EQUIVALENTS
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash on
hand, demand deposits, current accounts with the Central Bank and short term highly liquid investments
including assets purchased under reverse repurchase agreements and others which are readily convertible
into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short
maturity of generally within three months when acquired.
(12) FINANCIAL ASSETS
Recognition
The Group shall recognize a financial asset or a financial liability in its statement of financial position when,
and only when, it becomes a party to the contractual provisions of the instrument.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
FINANCIAL STATEMENTS
asset not at fair value through profit or loss, transaction costs that are incremental and directly attributable
to the acquisition or issue of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Classification and measurement
The Group classifies its financial assets in the following measurement categories, which depends on the
Group’s business model for managing the financial assets and the contractual terms of the cash flows:
– those to be measured at amortized cost (“AC”);
– those to be measured at fair value through other comprehensive income (“FVOCI”); or
– those to be measured at fair value through profit or loss (“FVPL”).
The Group determines the classification of debt investments according to its business model and the
contractual cash flow characteristics of the financial assets. The debt investments shall be classified as
FVPL if the cash flows characteristics cannot pass the test on solely payments of principal and interest on
the principal amount. Otherwise, the classification of debt investments will depend on the business model
provided the fair value option is not elected. Investments in equity instruments are classified as FVPL in
general, except those designated as at FVOCI.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 189
F-198
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Classification and measurement (Continued)
Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s
perspective, such as loans, government and corporate bonds, etc. Subsequent measurement of
debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Group classifies its
debt instruments:
– Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest, and that are not designated at FVPL are measured
at amortized cost. Interest income from these financial assets is included in the interest revenue
using the effective interest rate method. Any gain or loss arising from derecognition or impairment is
recognized directly in profit or loss. Such assets held by the Group mainly include cash and amounts
due from banks and other financial institution, balances with the Central Bank, accounts receivable,
finance lease receivable, financial assets at AC, loans and advances to customers measured at AC, etc.
– FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets,
where the assets’ cash flows represent solely payments of principal and interest, and that are not
designated at FVPL are measured at FVOCI. Movements in the carrying amount are taken through
other comprehensive income, except for the recognition of impairment gains or losses, interest income
and foreign exchange gains and losses on the instrument’s amortized cost which are recognized
in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously
recognized in other comprehensive income is reclassified from equity to profit or loss. Interest income
from these financial assets is included in the interest revenue using the effective interest rate method.
Such assets held by the Group mainly include debt financial assets at FVOCI and loans and advances
to customers measured at FVOCI, etc.
– FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. The
gains or losses from fair value changes on the debt investments measured at FVPL are recognized
in profit or loss. The Group also irrevocably designate financial assets at fair value through profit or
loss if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being
measured on different bases.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has
elected to present fair value gains and losses on equity investments in other comprehensive income, there
is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition
of the investment. Dividends, representing a return on such investments, continue to be recognized in
profit or loss when the Group’s right to receive payments is established.
190 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-199
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Impairment
Expected credit loss refers to the weighted average amount of credit loss of financial instruments based
on the probability of default. Credit loss refers to the difference between all contractual cash flows that are
due to the entity in accordance with the contract and all the cash flows that the entity expects to receive,
discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or
originated credit-impaired financial assets).
The Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortized cost and FVOCI, and with the exposure arising from loan commitments
and financial guarantee contracts that are not accounted for as “insurance contracts”. A number of
significant judgements are required in measuring the expected credit loss(“ECL”), such as:
i) Choosing appropriate models and assumptions for the measurement of ECL including exposure at
default (EAD), probability of default (PD), loss given default (LGD), etc.;
ii) Determining criteria for significant changes in credit risk;
iii) Forward-looking information.
For the financial instruments subject to ECL measurement, the Group assesses the significant increase in
credit risk since initial recognition or whether an instrument is considered to be credit impaired, outlines a
“three-stage” model expected credit loss models are established and staging definition are set for each of
these financial assets class. Incorporating forward-looking information, expected credit losses for financial
assets are recognized into the different stages and measured the impairment provisions respectively.
Stage 1: A financial instrument that is not credit-impaired on initial recognition is classified in “Stage 1” and
has its credit risk continuously monitored by the Group. The impairment provisions are measured
at an amount equal to the 12-month expected credit losses for the financial assets which are not
FINANCIAL STATEMENTS
considered to have significantly increased in credit risk since initial recognition;
Stage 2: If a significant increase in credit risk (“SICR”) since initial recognition is identified, the financial
instrument is moved to “Stage 2” but is not yet deemed to be credit-impaired. The impairment
provisions are measured based on expected credit losses on a lifetime basis;
Stage 3: If the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”.
The impairment provisions are measured based on expected credit losses on lifetime basis.
For the financial instruments at Stage 1 and Stage 2, the interest income is calculated based on its gross
carrying amount (i.e., amortized cost) before adjusting for impairment provision using the effective interest
method. For the financial instruments at Stage 3, the interest income is calculated based on the carrying
amount of the asset, net of the impairment provision, using the effective interest method. Financial assets
that are originated or purchased credit impaired are financial assets that are impaired at the time of initial
recognition, and the impairment provision for these assets is the expected credit loss for the entire lifetime
since initial recognition as purchased or originated credit-impaired financial assets.
The Group recognizes or reverses the impairment provision through profit or loss. For debt instruments
measured at FVOCI, impairment gains or losses are included in the net impairment losses on financial
instruments and correspondingly reduce the accumulated changes in fair value included in the other
comprehensive income reserves of equity.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 191
F-200
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(12) FINANCIAL ASSETS (CONTINUED)
Impairment (Continued)
For account receivables, the Group refers to historical experience of credit loss, combines with current
situation and forward-looking information, formulate the lifetime expected credit loss of the financial
assets.
For loan commitments’ the loss allowance is recognized as a provision. However, for contracts that include
both a loan and an undrawn commitment and the Group cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit
losses on the undrawn commitment are recognized together with the loss allowance for the loan. To
the extent that the combined expected credit losses exceed the gross carrying amount of the loan, the
expected credit losses are recognized as a provision.
Derecognition
Financial assets are derecognized when:
(a) the contractual rights to receive the cash flows from the financial assets have expired;
(b) they have been transferred and the Group transfers substantially all the risks and rewards of
ownership;
(c) they have been transferred and the Group neither transfers nor retains substantially all the risks and
rewards of ownership and the Group has not retained control.
When the equity financial assets measured at FVOCI are derecognized, the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to retained profits. When
the other financial assets are derecognized, the cumulative gain or loss previously recognized in other
comprehensive income is reclassified from equity to profit or loss.
The Group writes off financial assets, in whole or in part, when it has exhausted all practical recovery
efforts and has concluded there is no expectation of recovery. Indicators that there is no reasonable
expectation of recovery include (i) ceasing enforcement activity and (ii) where the Group’s recovery
method is foreclosing on collateral and the value of the collateral is such that there is no reasonable
expectation of recovering in full.
(13) FINANCIAL LIABILITIES
At initial recognition, the Group classifies a financial liability at fair value through profit or loss or other
financial liabilities. The Group measures a financial liability at its fair value plus, in the case of a financial
liability not at fair value through profit or loss, transaction costs that are incremental and directly
attributable to the acquisition or issue of the financial liability. Transaction costs of financial liabilities
carried at FVPL are expensed in profit or loss.
When a financial liability (or part of it) is extinguished, the Group derecognizes the financial liability (or
part of it). The difference between the carrying amount of the derecognized liability and the consideration
is recognized in profit or loss.
192 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-201
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(13) FINANCIAL LIABILITIES (CONTINUED)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and other
financial liabilities designated as such at initial recognition. Financial liabilities held for trading are the
financial liabilities that:
(a) are incurred principally for the purpose of repurchasing in the near term;
(b) on initial recognition are part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) are derivatives (except for a derivative that is a designated and effective hedging instrument or a
financial guarantee contract).
The above financial liabilities are subsequently measured at fair value. All the realized and unrealized gains/
(losses) are recognized in profit or loss.
The Group may, at initial recognition, designate a financial liability as at fair value through profit or loss
when one of the following criteria is met:
(a) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise from measuring assets or liabilities or recognizing the gains and losses on them on different
bases;
(b) a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy, and information about the
group is provided internally on that basis to the entity’s key management personnel;
(c) a contract contains one or more embedded derivatives, with the host being not an asset within the
FINANCIAL STATEMENTS
scope of IFRS 9, and the embedded derivative(s) do(es) significantly modify the cash flows.
Once designated as financial liabilities at fair value through profit or loss at initial recognition, the financial
liabilities shall not be reclassified to other financial liabilities in subsequent periods. Financial liabilities
designated at FVPL are subsequently measured at fair value. Any changes in fair value are recognized in
profit or loss, except for changes in fair value arising from changes in the Group’s own credit risk which are
recognized in other comprehensive income. Changes in fair value due to changes in the Group’s own credit
risk are not subsequently reclassified to profit or loss upon derecognition of the liabilities.
Other financial liabilities
The Group measures other financial liabilities subsequently at amortized cost, using the effective interest
method. Other financial liabilities of the Group mainly include customer deposits and payables to brokerage
customers, short-term borrowings, long-term borrowings and bonds payable, etc.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 193
F-202
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(13) FINANCIAL LIABILITIES (CONTINUED)
Financial guarantee contracts
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made
to reimburse the holder for a loss, which incurs because the specified debtor fails to make a payment
when due in accordance with the terms of a debt instrument. The Group initially measures such contracts
at fair value. The fair value at inception is likely to equal the premium received. This amount is recognized
rateably over the period of the contract in fees and commission income. Subsequently, the liabilities
arising from the financial guarantee contracts are measured at the higher of premium received on the
initial recognition less income recognized in accordance with the principles of IFRS 15, and the amount of
impairment provision calculated as described in Note 2.(12) -impairment.
Apart from the above financial guarantee contracts issued by the Group’s banking operations which are
accounted for under IFRS 9, the Group has also regarded certain financial guarantee contracts as insurance
contracts and has elected to apply IFRS 4 to such financial guarantee contracts.
(14) DERIVATIVE FINANCIAL INSTRUMENTS
The Group’s derivative financial instruments mainly include interest rate swaps, forward currency contracts
and swap transaction, credit swap and stock index futures, etc. Such derivative financial instruments are
initially recognized at fair value on the date of which the related derivative contracts are entered into and
are subsequently measured at fair value. All derivatives are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Except for those related to hedge accounting, the gains or losses from fair value changes of derivatives are
recognized in profit or loss.
An embedded derivative is a component of a hybrid contract that also includes a non-derivative host-with
the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone
derivative.
If a hybrid contract contains a host that is not an asset within the scope of IFRS 9, an embedded derivative
shall be separated from the host and accounted for as a derivative if, and only if:
(a) the economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host;
(b) a separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative; and
(c) the hybrid contract is not measured at fair value with changes in fair value recognized in profit or loss
(i.e., a derivative that is embedded in the hybrid contract at fair value through profit or loss is not
separated).
For the above assets, the Group may bifurcate the embedded derivative and measured it at fair value
through profit or loss, or designate the entire hybrid instrument to be measured at fair value through profit
or loss.
194 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-203
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(15) FAIR VALUE OF FINANCIAL INSTRUMENTS
For financial instruments where there is active market, the fair value is determined by quoted prices in
active markets. For financial instruments where there is no active market, the fair value is determined
by using valuation techniques. Such techniques should be appropriate in the circumstances for which
sufficient data is available, and the inputs should be consistent with the objective of estimating the price at
which an orderly transaction to sell the asset or to transfer the liability would take place between market
participants at the measurement date under current market conditions, and maximize the use of relevant
observable inputs and minimize the use of unobservable inputs.
Such techniques include using recent prices in arm’s length transactions, reference to the current
market value of another instrument which is substantially the same, discounted cash flow analysis and/
or option pricing models. For discounted cash flow techniques, estimated future cash flows are based on
management’s best estimates and the discount rate used is a market rate for similar instruments. Certain
financial instruments, including derivative financial instruments, are valued using pricing models that
consider, among other factors, contractual and market prices, correlation, time value of money, credit risk,
yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different
pricing models and assumptions could produce materially different estimates of fair values.
Determining whether to classify financial instruments into level 3 of the fair value hierarchy is generally
based on the significance of the unobservable factors involved in valuation methodologies.
(16) OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis or realize the assets and settle the liabilities
simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the
Group or the counterparty.
FINANCIAL STATEMENTS
(17) ASSETS PURCHASED UNDER REVERSE REPURCHASE AGREEMENTS AND ASSETS SOLD
UNDER REPURCHASE AGREEMENTS
Assets sold under repurchase agreements continue to be recognized but a liability is recognized and
presented as “assets sold under agreements to repurchase” for the proceeds from selling such assets. The
Group may be required to provide additional collateral based on the fair value of the underlying assets and
such non-cash collateral assets continue to be recognized on the balance sheet. The difference between
the selling price and repurchasing price is recognized as interest expense over the term of the agreement
using the effective interest method.
The amounts advanced under these agreements are recognized and presented as “financial assets
purchased under reverse repurchase agreements”. The Group may not take physical possession of assets
purchased under such agreements. In the event of default by the counterparty to repurchase the assets,
the Group has the right to the underlying assets. The difference between the purchasing price and reselling
price is recognized as interest income over the term of the agreement using the effective interest method.
Sale of assets under repurchase agreements and purchase of assets under reverse repurchase agreements
conducted in the bank and securities businesses are included in the operating activities of consolidated
statement of cash flows and sale of assets under repurchase agreements and purchase of assets under
reverse repurchase agreements conducted in the insurance business are included in the financing and
investing activities of consolidated statement of cash flows.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 195
F-204
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(18) FINANCE LEASE RECEIVABLE AND UNEARNED FINANCE INCOME
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of
the leased asset to the lessee. At the commencement of the lease term, the Group recognizes the minimum
lease payments receivable by the Group, the initial direct costs and the unguaranteed residual value in
the finance lease receivable. The difference between (a) the aggregate of the minimum lease payments,
the unguaranteed residual value and the initial direct costs and (b) the aggregate of their present values
is recognized as unearned finance lease income. Finance lease receivable net of unearned finance lease
income which represents the Group’s net investment in the finance lease is presented as finance lease
receivable in the consolidated statement of financial position. Unearned finance lease income is allocated
over the lease term based on a pattern reflecting a constant periodic return on the Group’s net investment
in the finance lease, and is recognized as “other revenues and other gains/(losses)”.
The impairment provision measurement and derecognition of finance lease receivable are complied with
the basic accounting policy of the financial assets (Note 2.(12)).The Group incorporates forward looking
information in estimating the expected credit loss for finance lease receivable. The Group derecognizes
finance lease receivables when the rights to receive cash flows from the finance lease have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership. Refer
to Note 13 and Note 25 for details.
(19) PRECIOUS METALS
The Group’s precious metals represent gold and other precious metals. Precious metals that are not related
to the Group’s precious metals trading activities are initially measured at acquisition cost and subsequently
measured at the lower of cost and net recoverable amount. Precious metals acquired by the Group for
trading purposes are initially measured at fair value and subsequent changes in fair value are recorded in
income statement.
(20) INVESTMENT PROPERTIES
Investment properties are interests in land and buildings that are held to earn rental income and/
or for capital appreciation, rather than for use in the production or supply of goods or services or for
administrative purposes.
Investment properties are initially measured at cost, which is the fair value of the consideration given to
acquire them, including transaction costs. Subsequently, all investment properties are stated at cost less
accumulated depreciation and accumulated impairment losses.
Depreciation is computed on a straight-line basis, after taking into account the estimated residual value (1%
to 10% of original cost), over the estimated useful lives. The estimated useful lives of investment properties
vary from 15 to 40 years.
The useful life and depreciation methods are reviewed periodically to ensure that the method and period of
depreciation are consistent with the expected pattern of economic benefits from the individual investment
properties.
Fully depreciated assets are retained in the financial statements until they are no longer in use and no
further charge for depreciation is made in respect of these assets.
Transfers to, or from, investment properties are made when, and only when, there is evidence of a change
in use or the investment property is sold.
196 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-205
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(21) PROPERTY AND EQUIPMENT
Property and equipment, other than construction in progress, are stated at cost less accumulated
depreciation and any impairment losses. An item of property and equipment is derecognized upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal
or retirement recognized in the income statement in the year the asset is derecognized is the difference
between the net sales proceeds and the carrying amount of the relevant asset.
The cost of an item of property and equipment comprises its purchase price and any directly attributable
costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred
after items of property and equipment have been put into operation, such as repairs and maintenance,
is normally charged to the income statement in the year in which it is incurred. In situations where it can
be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of an item of property and equipment, and where the cost of the
item can be measured reliably, the expenditure is capitalized as an additional cost of that asset or as a
replacement.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property and
equipment to its residual value over its estimated useful life. The principal assumptions used for this
purpose are as follows:
Estimated residual values Estimated useful lives
Leasehold improvements – Over the shorter of economic
useful lives and terms of the leases
Buildings 0% – 10% 15 – 40 years
Equipment, furniture and fixtures 0% – 10% 3 – 15 years
Motor vehicles 0% – 15% 3 – 25 years
The useful lives and depreciation methods are reviewed periodically to ensure that the method and period
FINANCIAL STATEMENTS
of depreciation are consistent with the expected pattern of economic benefits from the items of property
and equipment.
Fully depreciated assets are retained in the financial statements until they are no longer in use and no
further charge for depreciation is made in respect of these assets.
(22) CONSTRUCTION IN PROGRESS
Construction in progress mainly represents costs incurred in the construction of building premises, as well
as the cost of equipment pending installation, less any impairment losses.
No provision for depreciation is made on construction in progress until such time the relevant assets are
completed and ready for use.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 197
F-206
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(23) INTANGIBLE ASSETS (OTHER THAN GOODWILL)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is the fair value as at the date of acquisition. The useful
lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
are subsequently amortized on the straight-line basis over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortization
period and the amortization method for an intangible asset with a finite useful life are reviewed at least at
each financial year end.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the
cash-generating unit level. Such intangible assets are not amortized. The useful life of an intangible asset
with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to
be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on
a prospective basis.
Core deposits
Core deposits are accounts that a financial institution expects to maintain for an extended period of time
due to ongoing business relationships. The intangible asset value associated with core deposits reflects
the present value of additional cash flow resulted from the use of the deposits at a lower cost alternative
source of funding in the future periods.
Expressway operating rights
Expenditures on acquiring the expressway operating rights are capitalized as intangible assets and
subsequently amortized on the straight-line basis over the contract terms.
Prepaid land premiums
Prepaid land premiums are prepayments for land under PRC law for fixed periods. Prepaid land premiums
are initially stated at cost and subsequently amortized on the straight-line basis over the lease terms. All
lands related to the Group’s prepaid land premiums are located in Mainland China.
Trademarks
Trademarks are initially stated at cost and subsequently amortized on the straight-line basis over the
estimated useful lives.
The estimated useful lives of intangible assets are set as below:
Estimated useful lives
Expressway operating rights 20 – 30 years
Prepaid land premiums 30 – 50 years,
indefinite
Core deposits 20 years
Trademarks 10 – 40 years,
indefinite
Software and others (including patents and know-how, customer relationships and
contract rights, etc.) 2 – 25 years
198 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-207
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(24) FORECLOSED ASSETS
Foreclosed assets are initially recognized at fair value. The difference between the initial fair value and the
sum of the related loan principal, interest receivable and impairment provision is taken into the income
statement. At the end of the reporting period, the foreclosed assets are measured at the lower of their
carrying value and net recoverable amount. When the carrying value of the foreclosed assets is higher
than the net recoverable amount, a provision for the decline in value of foreclosed assets is recognized as
impairment losses in the income statement.
(25) INVENTORIES
The Group’s inventories comprise raw materials, product in progress, finished goods, other supplemental
materials, etc. and lands purchased for property development by real estate subsidiaries. Inventory is
initially measured at cost which includes purchasing cost, processing cost and other costs which made the
inventory to the present place and condition.
The actual cost of inventory is priced based on moving weighted average method.
At the end of the reporting period, inventory is measured at the lower of its cost and net realizable value. If
the net realizable value is lower than cost, inventory impairment provisions are allotted.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale and related taxes. Estimates of net
recoverable amount are based on the most reliable evidence available at the time the estimates are made,
also taking into consideration the purpose for which the inventory is held and the influence of events after
the end of the reporting period.
Inventory impairment provisions should be accrued when the cost of individual inventory item is higher
than its net realizable value.
After allotting inventory impairment provisions, if the influencing factors of previous inventory impairment
FINANCIAL STATEMENTS
provisions have disappeared, and hence the net realizable value of the inventories are higher than their
cost, the previous written down amount should be recovered and the reversed amount which is within the
amount of original allotted inventory impairment provisions should be included in current profit and loss.
(26) IMPAIRMENT OF NON-FINANCIAL ASSETS
The Group assesses at each reporting date whether there is an indication that a non-financial asset other
than deferred tax assets may be impaired. If any such indication exists, or when annual impairment testing
for a non-financial asset is required, the Group makes an estimate of the asset’s recoverable amount. A
non-financial asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s fair value
less costs to sell and its value in use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or groups of assets, in which
case the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where
the carrying amount of a non-financial asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs to disposal, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 199
F-208
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(26) IMPAIRMENT OF NON-FINANCIAL ASSETS (CONTINUED)
For non-financial assets other than goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment losses may no longer exist or may have
decreased. If such an indication exists, the Group makes an estimate of the recoverable amount. A
previously recognized impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognized for the asset in prior years. Such a reversal is recognized in the income statement.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable
amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. The
recoverable amount is the higher of its fair value less costs to disposal and its value-in-use, determined
on an individual asset (or cash-generating unit) basis, unless the individual asset (or cash-generating unit)
does not generate cash flows that are largely independent from those of other assets or groups of assets
(or groups of cash-generating units). Impairment losses recognized in relation to goodwill are not reversed
for subsequent increases in its recoverable amount.
Intangible assets with indefinite useful lives are tested for impairment annually at each year end either
individually or at the cash-generating unit level, as appropriate.
(27) INSURANCE GUARANTEE FUND
The Group calculates the insurance guarantee fund as follows:
0.8% of the premium income for non-investment type property insurance, 0.08% of the consideration
received for investment type property insurance with guaranteed return, and 0.05% of the
consideration received for investment type property insurance without guaranteed return;
0.15% of the consideration received for life insurance with guaranteed return, and 0.05% of the
consideration received for life insurance without guaranteed return;
0.8% of the premium income for short-term health insurance, and 0.15% of the premium income for
long-term health insurance; and
0.8% of the premium income for non-investment type accident insurance; 0.08% of the consideration
received for investment type accident insurance with guaranteed return, and 0.05% of the
consideration received for investment type accident insurance without guaranteed return.
No additional provision is required when the accumulated insurance guarantee fund balances of Ping An
Life Insurance Company of China, Ltd. (“Ping An Life”), Ping An Annuity Insurance Company of China, Ltd.
(“Ping An Annuity”) and Ping An Health Insurance Company of China, Ltd. (“Ping An Health Insurance”)
reach 1% of their respective total assets. For Ping An Property & Casualty Insurance Company of China,
Ltd. (“Ping An Property & Casualty”), no additional provision is required when the accumulated balance
reaches 6% of its total assets. Insurance guarantee fund levy is charged to expenses as incurred.
The consideration received and premium income used in the calculation of the insurance guarantee fund is
the amount agreed in the insurance policies.
200 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-209
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(28) INSURANCE CONTRACTS
Insurance contracts are those contracts under which the Group has accepted insurance risk from the
policyholders by agreeing to compensate the policyholders if a specified uncertain future event (the
insured event) adversely affects the policyholders. Insurance contracts are classified as direct insurance
contracts and reinsurance contracts. The significance of insurance risk as determined by the Group is
mainly dependent on the magnitude of its potential effect.
Some insurance contracts contain both an insurance component and a deposit component. The Group
chooses to unbundle those components, if the insurance component and the deposit component are
distinct and separately measurable. The unbundled insurance component is accounted for according to
IFRS 4 and the unbundled deposit component is accounted for according to relevant accounting policies.
If the insurance component and the deposit component are not distinct and separately measurable, the
whole contract is accounted for as an insurance contract.
(29) SIGNIFICANT INSURANCE RISK TESTING
For other insurance contracts issued by the Group, tests are performed to determine if the contracts
contain significant insurance risk, and contracts of similar nature are grouped together for this purpose.
When performing the significant insurance risk test, the Group makes judgements in sequence as to
whether the contract transfers insurance risk, whether the contract has commercial substance, and whether
the transferred insurance risk is significant.
(30) INSURANCE CONTRACT LIABILITIES
The insurance contract liabilities of the Group include long-term life insurance policyholders’ reserves,
unearned premium reserves and claim reserves.
When measuring insurance contract liabilities, the Group classifies insurance contracts whose insurance
risks are of similar nature as a measurement unit. Property and casualty and short-term life insurance
policies are grouped into certain measurement units by lines of business. For long-term life insurance
policies, the Group mainly considers the characteristics of the policies, including product type, gender, age,
FINANCIAL STATEMENTS
and durations of policies, when determining the measurement units.
Insurance contract liabilities are measured based on a reasonable estimate of amount of payments when
the Group fulfills the relevant obligations under the insurance contracts, which represents the difference
between expected future cash outflows and inflows under such contracts, i.e., the expected future net cash
outflows.
Expected future cash outflows represent reasonable cash outflows which are necessary for the
Group to fulfill the obligations under the insurance contracts (including benefits attributable to the
policyholders), and mainly include:
– Guaranteed benefits under the insurance contracts, including claims, mortality benefits, disability
benefits, morbidity benefits, survival benefits and maturity benefits;
– Non-guaranteed benefits under the insurance contracts arising from constructive obligations,
including policyholder dividends, etc.;
– Reasonable expenses necessary for policy administration and claims handling, including policy
maintenance expenses, claim expenses, etc.
Expected future cash inflows represent cash inflows arising from assuming liabilities under the
insurance contracts, including premium income and other charges.
A reasonable estimate of expected future net cash flows is determined based on information currently
available as at the end of the reporting period.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 201
F-210
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(30) INSURANCE CONTRACT LIABILITIES (CONTINUED)
Margins are considered and separately measured in determining insurance contract liabilities. Margins are
released in the income statement over the insurance coverage period using systematic and reasonable
methods. Margins include risk margin and residual margin.
Risk margin represents provision for the uncertainty and the degree of impact associated with the
future net cash flows. The Group determines risk margins of the long-term life insurance policyholders’
reserves using the scenario comparison method. The unfavourable scenarios are determined according
to the uncertainty and impact of expected net cash outflows.
At inception of an insurance contract, any “day-one” gain is not recognized in the income statement,
but included in the insurance contract liabilities as a residual margin. The residual margin is calculated
net of certain acquisition costs, mainly consisting of commission expenses on insurance operations.
At inception of an insurance contract, any “day-one” loss is recognized in the income statement. Any
residual margin is subsequently measured based on the assumptions of the years when the policies
become effective, and will not be adjusted for future change in assumptions. For non-life insurance
contracts, the Group amortizes the residual margin which is embedded in the unearned premium
reserves on a time basis during the whole insurance coverage period and records it in profit or loss.
For life insurance contracts, the Group amortizes the residual margin on the basis of the sums insured
or the number of policies during the whole insurance coverage period.
When measuring insurance contract liabilities, the time value of money is considered. The related future
cash flows are discounted when the impact of time value of money is significant. For short duration
contracts whose duration is within one year, the cash flows are not discounted. The discount rates used in
the measurement of time value of money is determined with reference to information currently available as
at the end of the reporting period and is not locked.
When measuring insurance contract liabilities, the expected period of future net cash outflows is the entire
insurance period. For insurance policies with a guaranteed renewal option, the expected period is extended
to the date when the option to renew policy ceases if the probability that the policyholders may execute
the option is high and the Group does not have the right to reprice the premium.
Unearned premium reserves
The unearned premium reserves are provided for unexpired insurance obligations of property and casualty
and short-term life insurance contracts.
Unearned premium reserves are measured using the unearned premium approach. At inception of the
insurance contracts, unearned premium reserves are measured based on written premiums, with deductions
made for commissions, insurance guarantee fund, regulatory charges and other incremental costs.
Subsequent to initial recognition, unearned premium reserves are measured on a 1/365 basis.
202 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-211
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(30) INSURANCE CONTRACT LIABILITIES (CONTINUED)
Claim reserves
Claim reserves are insurance contract liabilities provided for insurance claims of the property and casualty
and short-term life insurance contracts. Claim reserves include incurred and reported reserves, incurred but
not reported (“IBNR”) reserves and claim expense reserves.
Incurred and reported reserves are measured at amounts not higher than the sum insured of the insurance
contracts, using the case-by-case estimate method and average claim per case method, based on a
reasonable estimate of ultimate claim amounts as well as margins.
IBNR are measured according to the nature and distribution of insurance risks, claims development,
experience data, etc., using the chain ladder method, the Bornhuetter-Ferguson method, the loss ratio
method and the average claim per case method, based on a reasonable estimate of ultimate claim amounts
as well as margins.
Claim expense reserves are measured based on a reasonable estimate of ultimate necessary claim expenses
in the future by using the case-by-case estimate method and ratio allocation method as well as margins.
Long-term life insurance policyholders’ reserves
Long-term life insurance policyholders’ reserves are insurance contract liabilities provided for long-term life
and health insurance contracts.
The Group determines risk margins of the long-term life insurance policyholders’ reserves using the
scenario comparison method. The unfavourable scenarios are determined according to the uncertainty and
impact of expected net cash outflows.
The key assumptions used in the measurement of long-term life insurance policyholders’ reserves include
insurance accident occurrence rates, lapse and surrender rates, expense assumptions, policy dividend
FINANCIAL STATEMENTS
assumptions, discount rate, etc. In deriving these assumptions, the Group uses information currently
available as at the end of the reporting period. Changes in assumptions are recognized immediately in the
income statement.
Liability adequacy test
At the end of each reporting period, liability adequacy tests are performed on the unearned premium
reserves, claim reserves and long-term life insurance policyholders’ reserves. If the insurance contract
liabilities re-calculated with the insurance actuarial methods exceeds their carrying amounts on date of
the liability adequacy test, an additional provision is made for the respective insurance contract liabilities
based on the difference and is charged in the income statement. Otherwise, no adjustment is made for the
respective insurance contract liabilities.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 203
F-212
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(31) DISCRETIONARY PARTICIPATION FEATURES IN LONG-TERM LIFE INSURANCE
CONTRACTS AND INVESTMENT CONTRACTS
Some of the Group’s long-term life insurance contracts and investment contracts contain a discretionary
participating feature, which is a contractual right to receive additional benefits as a supplement to
guaranteed benefits. These contracts are collectively called participating contracts. Under the current
PRC insurance regulations, the Group is obligated to pay to the policyholders of participating contracts
at least 70% of the distributable surplus in each period, which includes net investment spread arising from
the assets supporting these contracts and mortality gains or losses on the pool of contracts to which the
participating contract belongs. The amounts to be collectively allocated to the policyholders are referred
to as the eligible surplus. The amount and timing of the subsequent distribution of the eligible surplus
to individual policyholders of participating contracts is subject to future declarations by the Group. As
long as the eligible surplus has not been declared and paid, it is included in the long-term life insurance
policyholders’ reserves and investment contract reserves. To the extent that there is a subsequent
change in the expected future eligible surplus due to realized and unrealized gains, which may be paid to
policyholders of participating insurance contracts in the future under the policy terms, such a change in
surplus is included in long-term life insurance policyholders’ reserves and investment contract reserves.
A shadow accounting adjustment is applied to recognize the change in surplus in other comprehensive
income to the extent that such change is derived from unrealized gains or losses on supporting assets
recognized directly in other comprehensive income.
(32) INVESTMENT CONTRACTS
Insurance policies that are not considered insurance contracts under IFRS 4 are classified as investment
contracts. These policies do not contain significant insurance risk.
Premium receipts are recognized not as premium income, but rather as liabilities, presented as
investment contract liabilities. For those non-life investment type policies without guaranteed
benefits, the related contract liabilities are measured at fair value and the related transaction costs are
recognized in the income statement. For other investment contracts, the related liabilities are initially
measured at fair value and subsequently measured at amortized cost. Commissions, net of receipts
from initial charges that are meant to compensate such costs, are recognized as transaction costs in
the initial amount of the liabilities.
Charges including policy administration fees are recognized as other income during the period of
service provided.
(33) INVESTMENT-LINKED BUSINESS
The individual investment-linked contracts of the Group contain significant insurance risks and are
classified as insurance contracts. These policies also contain both insurance components and deposit
components. The deposit components are unbundled from these hybrid insurance contracts. The rest of
the contracts are accounted for as insurance contracts. The Group investment-linked contracts of the
Group that do not contain significant insurance risks are classified as investment contracts.
The assets and liabilities related to investment-linked contracts which are regarded as insurance contracts
are presented as policyholder account assets and liabilities in respect of insurance contracts. The assets
and liabilities related to investment-linked contracts which are regarded as investment contracts are
presented as policyholder account assets and liabilities in respect of investment contracts. The assets and
liabilities of each investment-linked fund are segregated from each other and from the rest of the Group’s
invested assets for record keeping purposes. As the investment risks of investment-linked contracts were
fully borne by policyholders, the assets and liabilities related to investment-linked contracts were not
included in the analysis of risk management in Note 53.
204 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-213
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(33) INVESTMENT-LINKED BUSINESS (CONTINUED)
The Group investment-linked contracts and the deposit component unbundled from the above individual
investment-linked insurance contracts are accounted for as follows:
Premium receipts are recognized not as premium income, but rather as liabilities, presented in
policyholder account liabilities. These liabilities are initially measured and subsequently carried at fair
value. Commissions, net of receipts from initial charges that are meant to compensate such costs, are
recognized as transaction costs in the income statement.
Charges including account management fees and surrender charges are calculated at a fixed amount
or certain percentage of policy account liabilities. Account management fees are recognized as other
income during the period of service provided and surrender charges are recognized as other income
as incurred.
Assets of investment-linked contracts are initially measured and subsequently carried at fair value,
presented as policyholder account assets.
(34) UNIVERSAL LIFE BUSINESS
The universal life contracts of the Group contain significant insurance risks are classified as insurance
contracts. These policies also contain both insurance components and deposit components. The deposit
components are separated from these hybrid insurance contracts. The rest of the contracts are accounted
for as insurance contracts as described in Note 2.(30).
The deposit components separated from the above universal life insurance contracts are accounted for as
follows:
Premium receipts are recognized not as premium income, but rather as liabilities, presented in
policyholder contract deposits. These liabilities are initially measured at fair value and subsequently
measured using a discounted cash flow model. Commissions, net of receipts from initial charges that
FINANCIAL STATEMENTS
are meant to compensate such costs, are recognized as transaction costs in the initial amount of the
liabilities.
Fair value changes on financial assets at FVOCI related to the universal life insurance portfolio are
recognized in other comprehensive income. Changes in the insurance liabilities for the universal life
insurance portfolio is also recognized in other comprehensive income to the extent that such change
is derived from fair value changes on financial assets at FVOCI related to the universal life insurance
portfolio attributable to policyholders.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 205
F-214
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(35) PROVISIONS
A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past
event and it is probable that a future outflow of resources will be required to settle the obligation, provided
that a reliable estimate can be made of the amount of the obligation. When the effect of discounting
is material, the amount recognized is the present value at the end of the reporting period of the future
expenditures expected to be required to settle the obligation.
Except for contingent considerations deriving from or contingent liabilities assumed in business
combinations and the provision recognized for the loss allowance of off-balance sheet credit exposure,
contingent liabilities are recognized as provisions if the following conditions are met:
An entity has a present obligation as a result of a past event;
It is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; and
A reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision shall be the best estimate of the expenditure required to settle the
present obligation at the end of the reporting period with the consideration of risks, uncertainties and the
present value. Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the
current best estimate.
The Group incorporates forward looking information in estimating the expected credit loss for loan
commitments and financial guarantee contracts. Refer to Note 13 and Note 51 for details.
(36) REVENUE RECOGNITION
The Group’s main revenue is recognized on the following bases:
Gross premium
Premium income and reinsurance premium income is recognized when the insurance contracts are issued,
related insurance risk is undertaken by the Group, it is probable that related economic benefits will flow to
the Group and related income can be reliably measured.
Premiums from long-term life insurance contracts with instalment or single payments are recognized
as revenue when due. Premiums from property and casualty and short-term life insurance contracts are
recognized as revenue based on the amount of total premium stated in the contracts.
Reinsurance premiums are recognized as revenue in accordance with the terms stated in the reinsurance
contracts. Accounting policies for reinsurance contracts are described in Note 2.(37).
Income from investment contracts
Revenues from investment contracts issued by the Group are fees charged for policy administration,
investment management, surrenders or other contract services. The fees may be for fixed amounts or vary
with the amounts being managed, and will generally be charged as an adjustment to the policyholders’
balance. The fees are recognized when, or as, the control of services is transferred to customers unless the
related services still need to be provided in the future periods, in which fees should be recognized over
the period of the contract by reference to the progress towards complete satisfaction of that performance
obligation. Initiation and other front-end fees are charged for certain investment contracts recorded at
amortized cost and are recognized through an adjustment to the effective yield.
206 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-215
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(36) REVENUE RECOGNITION (CONTINUED)
Interest income
Interest income for interest bearing financial instruments, is recognized in the income statement using the
effective interest rate method. When a financial asset is impaired, the Group reduces the carrying amount
to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument, and continues unwinding the discount as interest income.
Fees and commission income of non-insurance operations
The fees and commission income of non-insurance operations from a diverse range of services it provides
to its customers are recognized when the control of services is transferred to customers. Fee income can
be divided into the following main categories:
Fee income earned from services that are provided over a certain period of time
Fees earned from the provision of services over a period of time are accrued over that period. These
fees include investment fund administration fees, custodian fees, fiduciary fees, credit related fees, asset
management fees, portfolio and other management fees, advisory fees, etc. However, loan commitment
fees for loans that are likely to be drawn down are deferred (together with any incremental costs) and
recognized as an adjustment to the effective interest rate on the loan.
Fee income from providing transaction services
Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such
as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses,
are recognized on the completion of the underlying transaction and the control of services is transferred
to customers. Fees or components of fees that are linked to a certain performance are recognized after
fulfilling the corresponding criteria. These fees may include underwriting fees, corporate finance fees and
brokerage fees. Loan syndication fees are recognized in the income statement when the syndication has
been completed and the Group retains no part of the loans for itself or retains part at the same effective
interest rate as for the other participants.
Dividend income
FINANCIAL STATEMENTS
Dividend income is recognized when the right to receive dividend payment is established.
Expressway toll fee income
Expressway toll fee income is recognized upon the completion of the performance obligation of services.
Sale of goods
Revenue from the sale of goods is recognized when control of the goods has been transferred. Control
of goods or services refers to the ability to direct the use of, and obtain substantially all of the remaining
benefits from, the goods or services.
The amount of revenue from the sale of goods shall be measured by the transaction price, which is
allocated to each performance obligation. The transaction price is the amount of consideration to be
entitled in exchange for transferring promised goods to a customer. The Group considers the terms of the
contract and its customary business practices to determine the transaction price. When determining the
transaction price, the Group considers the effects of variable consideration, the existence of a significant
financing component in the contract, non-cash consideration and consideration payable to a customer.
The part with unconditional rights is recognized as a receivable by the Group, while the rest is recognized
as contracts assets. And the impairment provisions of receivables and contracts assets are recognized
based on ECL. If the consideration received or receivable from the contract exceeds the performance
completed, the excess part would be recognized as contracts liabilities. The Group presents the net amount
by the offsetting between contracts assets and contracts liabilities under one contact.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 207
F-216
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(37) REINSURANCE
The Group undertakes inward and outward reinsurance in the normal course of operations. All of the
reinsurance business of the Group has significant insurance risk transfer.
Outward reinsurance business
Outward reinsurance arrangements do not relieve the Group from its obligations to policyholders.
When recognizing premium income from insurance contracts, the Group determines the amount of
premium ceded and reinsurers’ share of expenses and recognize them through profit or loss according to
reinsurance contracts. As for profit commission, the Group recognizes it as a reinsurance expense through
profit or loss according to the reinsurance contracts when it is feasible to determine the amount of profit
commission to be received from the reinsurers. When calculating unearned premium reserves, claim
reserves and long-term life insurance policyholders’ reserves of insurance contracts, the Group estimates
the reinsurance related cash flows according to the reinsurance contracts, considers the risk margin when
determining the amount of insurance contract reserves to be recovered from reinsurers, and recognizes
reinsurers’ share of insurance contract liabilities. When insurance contract liabilities are reduced for actual
payment of claims and claim expenses, reinsurers’ share of insurance contract liabilities are reduced
accordingly. In the meantime, the Group determines the amount of claim expenses to be recovered from
the reinsurers according to the reinsurance contracts and recognizes the amount through profit or loss.
When there is an early termination of an insurance contract, the Group determines the adjustment amount
of premium ceded and reinsurers’ share of expenses according to the reinsurance contracts and recognizes
the amount through profit or loss, and the balance of reinsurers’ share of insurance contract liabilities is
reversed accordingly.
As a cedent, the Group presents in the statement of financial position the assets arising from reinsurance
contracts and the liabilities arising from insurance contracts separately instead of offsetting the assets
and liabilities. The Group also presents in the income statement the income derived from reinsurance
contracts and the expenses incurred for insurance contracts separately instead of offsetting the income
and expenses.
Inward reinsurance business
During the period of recognizing reinsurance premium income, the Group determines reinsurance expenses
according to the reinsurance contracts and recognizes the expenses through profit or loss. As for profit
commission, the Group recognizes it as a reinsurance expense through profit or loss according to the
reinsurance contracts when it is feasible to determine the amount of profit commission to be paid to the
reinsurers.
Upon receipt of the statement of the reinsurance business, the Group adjusts the reinsurance premium
income and reinsurance expenses, and then recognizes the adjusted amounts through profit or loss
according to the ceding company statements.
(38) POLICYHOLDER DIVIDENDS
Policyholder dividends represent dividends payable by the Group to policyholders in accordance with the
terms of direct insurance contracts. The dividends are calculated and provided based on the dividend
allocation method and the results of actuarial valuation.
208 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-217
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(39) LEASES
Leases refer to a contract in which the lessor transfers the right to use the assets to the lessee for a
certain period of time to obtain the consideration. Leases where substantially all the rewards and risks of
ownership of assets remain with the lessor are accounted for as operating leases.
As lessor of operating leases
Where the Group is the lessor, assets leased by the Group under operating leases are included in
investment properties and rentals receivable under such operating leases are credited to the income
statement on the straight-line basis over the lease terms. Contingent rents are recognized as profit or loss
in the period in which they are earned.
Group as a lessee
The Group mainly leases buildings as right-of-use assets. The Group applies the lease recognition
exemption to short-term leases and leases of low-value assets, and does not recognize the right-of-
use assets and lease liabilities. Lease payments on short-term leases and leases of low-value assets are
recognized as costs of asset or expenses on a straight-line basis over the lease term. Except for lease
applying lease recognition exemption, leases are recognized as a right-of-use asset at the date at which the
lease begins, lease liabilities are initial measured at the present value of the lease payments that have not
been paid. Lease payments include fixed payments, variable lease payment based on an index or a rate, the
exercise price of a purchase option if the lessee is reasonably certain to exercise that option and payments
of penalties for terminating the lease, etc. The variable lease payments determined on a certain percentage
of sales are not included in the lease payments and are recognized in profit or loss when incurred.
Right-of-use assets are initial measured at cost comprising the amount of the initial measurement of lease
liability, any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs and deduct any lease incentives receivable. The right-of-use asset is depreciated
over the asset’s useful life on a straight-line basis if the Group can reasonably determine the ownership of
the assets at the end of the lease term; The right-of-use asset is depreciated over the shorter of the asset’s
useful life and the lease term if the ownership of the assets is uncertain at the end of the lease term. When
FINANCIAL STATEMENTS
the recoverable amount is lower than the carrying amount of the right-of-use asset, the Group reduces its
carrying amount to the recoverable amount.
(40) EMPLOYEE BENEFITS
Pension obligations
The employees of the Group are mainly covered by various defined contribution pension plans. The Group
makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
the related government authorities that are responsible for the pension liability to retired employees. Under
such plans, the Group has no other significant legal or constructive obligations for retirement benefits
beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
group life insurance but the amounts involved are insignificant.
Housing benefits
The employees of the Group are entitled to participate in various government-sponsored housing funds.
The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of
the employees. The Group’s liability in respect of these funds is limited to the contributions payable in each
period.
Medical benefits
The Group makes monthly contributions for medical benefits to the local authorities in accordance with the
relevant local regulations for the employees. The Group’s liability in respect of employee medical benefits is
limited to the contributions payable in each period.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 209
F-218
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(41) SHARE-BASED PAYMENT
Equity-settled share-based payment transactions
The Group operates an equity-settled, share-based compensation plan, under which the Group receives
services from employees as consideration for equity instruments.
The total amount to be expensed is determined by reference to the fair value of the shares granted, which
includes the impact of market performance conditions (for example, an entity’s share price) but excludes
the impact of any service and non-market performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the entity over a specified time period) and includes
the impact of any non-vesting conditions (for example, the requirement for employees to save or holding
shares for a specified period of time). The Group estimates the number of total shares expected to vest
taking into consideration of service and non-market performance conditions. Based on number of shares
expected to vest, related cost or expense is recognized over the vesting period according to fair value of
the shares granted on granted date.
At the end of each reporting period, the Group revises its estimates of the number of options and awarded
shares that are expected to vest based on the non-marketing performance and service conditions.
It recognizes the impact of the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The Company settles with the awardees under the share purchase scheme upon vesting.
(42) SHARES HELD BY CONSOLIDATED STRUCTURED ENTITIES
The Group’s subsidiaries consolidated certain asset management schemes that were managed by third
parties. These asset management schemes invested in the insurance index shares which included the
Company’s shares. As such the Group indirectly hold the Company’s shares. The employee share purchase
scheme consolidated by the Group also hold the Company’s shares. The consideration paid by the
consolidated structured entities in purchasing the Company’s shares from the market, including any directly
attributable incremental cost, is debited to “Share premium” under “Reserves”. No gain or loss shall be
recognized in profit or loss on the sale of those shares, the consideration received is credited to “Share
premium” under “Reserves”.
(43) TAX
Income tax comprises current and deferred tax. Income tax is recognized in the income statement, or in
other comprehensive income or in equity if it relates to items that are recognized in the same or a different
period directly in other comprehensive income or in equity.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting
period between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
210 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-219
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(43) TAX (CONTINUED)
Deferred tax liabilities are recognized for all taxable temporary differences, except:
when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused
tax credits and any unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry-forward of unused tax credits and
unused tax losses can be utilized, except:
when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be utilized. Conversely, previously unrecognized deferred tax assets are
reassessed by the end of each reporting period and are recognized to the extent that it is probable that
FINANCIAL STATEMENTS
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
(44) DIVIDENDS
When the final dividends proposed by the directors have been approved by the shareholders and declared,
they are recognized as a liability.
Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and
articles of association grant the directors the authority to declare interim dividends. Consequently, interim
dividends are recognized immediately as a liability when they are proposed and declared.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 211
F-220
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(45) RELATED PARTIES
A party is considered to be related to the Group if:
(a) the party is a person or a close member of that person’s family and that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
Or
(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same Group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third
entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a); and
(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(46) SEGMENT REPORTING
For management purposes, the Group is organized into operating segments based on the internal
organization structure, management requirements and internal reporting. The reportable segments are
determined and disclosed based on operating segments and the presentation is consistent with the
information reported to the Board of Directors.
Operating segments refer to the Group’s component that satisfies the following conditions:
(a) The component produces income and expenses in its daily operation;
(b) The management of the Company regularly assesses the operating results of its business units for the
purpose of making decisions about resource allocation and performance assessment;
(c) The Group is able to obtain the accounting information such as the financial position, operating results
and cash flows of the component.
Two or more operating segments can be merged as one if they have similar characteristics and satisfy
certain conditions.
212 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-221
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES
The Group makes estimates and judgements that affect the reported amounts of revenues, expenses,
assets and liabilities and the disclosure of contingent liabilities in these financial statements. Estimates
and judgements are continually assessed based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
In the process of applying the Group’s accounting policies, management has made the following
judgements and accounting estimation, which have the significant effect on the amounts recognized in the
financial statements.
(1) FAIR VALUE OF FINANCIAL INSTRUMENTS DETERMINED USING VALUATION
TECHNIQUES
Fair value, in the absence of an active market, is estimated by using valuation techniques, applying
currently applicable and sufficiently available data, and the valuation techniques supported by other
information, mainly include market approach and income approach, reference to the recent arm’s length
transactions, current market value of another instrument which is substantially the same, and by using the
discounted cash flow analysis and option pricing models.
When using valuation techniques to determine the fair value of financial instruments, the Group would
choose the input value in consistent with market participants, considering the transactions of related assets
and liabilities. All related observable market parameters are considered in priority, including interest rate,
foreign exchange rate, commodity prices and share prices or index. When related observable parameters
are unavailable or inaccessible, the Group uses unobservable parameters and makes estimates for credit
risk, market volatility and liquidity adjustments.
Using different valuation techniques and parameter assumptions may lead to significant difference of fair
value estimation.
(2) CLASSIFICATION OF FINANCIAL ASSETS
FINANCIAL STATEMENTS
The judgements in determining the classification of financial assets include the analysis of business models
and the contractual cash flows characteristics.
An entity’s business model refers to how an entity manages its financial assets in order to generate cash
flows. That is, the entity’s business model determines whether cash flows are arising from collecting
contractual cash flows, selling financial assets or both. The business model of managing financial assets
is not determined by a single factor or activity. Instead, the entity should consider all relevant evidence
available when making the assessment. Relevant evidence mainly includes, but not limited to, how the cash
flow of the group of assets is collected, how the performance of the group of assets is reported to key
management personnel, and how the risk of group of assets is being assessed and managed.
The contractual cash flows characteristics of financial assets refer to the cash flow attributes of the
financial assets reflecting the economic characteristics of the relevant financial assets (i.e., whether the
contractual cash flows generated by the relevant financial assets on a specified date solely represents the
payments of principal and interest). The principal amount refers to the fair value of the financial asset at
initial recognition. The principal amount may change throughout the lifetime of the financial assets due
to prepayment or other reasons. The interest includes the time value of money, the credit risk associated
with the outstanding principal amount for a specific period, other basic lending credit risks, and the
consideration of costs and profits.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 213
F-222
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(3) MEASUREMENT OF THE EXPECTED CREDIT LOSSES
The measurement of the expected credit losses for financial assets measured at amortized cost and FVOCI
is an area that requires the use of complex models and significant assumptions about future economic
conditions and credit behaviour. Explanation of the inputs, assumptions and estimation techniques used in
measuring ECL is further detailed in Note 53.
A number of significant judgements are also required in applying the accounting requirements for
measuring ECL, such as:
Determining criteria for significant increase in credit risk;
Choosing appropriate models and assumptions for the measurement of ECL;
Establishing the number and relative weightings of forward-looking scenarios for each type of product
and the associated ECL; and
Establishing groups of similar financial assets for the purposes of measuring ECL.
(4) MEASUREMENT UNIT AND VALUATION OF INSURANCE CONTRACT LIABILITIES
The Group makes significant judgements on whether a group of insurance contracts’ insurance risks are
of the same nature. Different measurement units would affect the measurement of insurance contract
liabilities.
At the end of the reporting period, when measuring the insurance contract liabilities, the Group needs to
make a reasonable estimate of amounts of the payments which the Group is required to make in fulfilling
the obligations under the insurance contracts, based on information currently available at the end of the
reporting period.
At the end of the reporting period, the Group shall make an estimate of the assumptions used in the
measurement of insurance contract liabilities. Such assumptions shall be determined based on information
currently available at the end of the reporting period. To determine these assumptions, the Group selects
proper risk margins according to both uncertainties and degree of impact of expected future cash
outflows. Refer to Note 2.(2) for the changes in accounting policies and estimates.
214 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-223
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(4) MEASUREMENT UNIT AND VALUATION OF INSURANCE CONTRACT LIABILITIES
(CONTINUED)
The main assumptions used in the measurement of insurance contract liabilities are as follows:
For long-term life insurance contracts where the future insurance benefits are not affected by
investment return of the underlying asset portfolio, with consideration of the Cai Kuai [2017] No.637
issued by the former CIRC and other relevant regulations, the discount rate assumption is based on
the benchmark yield curve for the measurement of insurance contract liabilities published by the China
Central Depository & Clearing Co., Ltd. (“CCDC”), with consideration of the impact of the tax and
liquidity premium. The current discount rate assumption for the measurement as at 31 December 2022
ranged from 2.66% to 4.60% (31 December 2021: 2.83%-4.60%).
For long-term non-life insurance contracts where the future insurance benefits are not affected by
investment return of the underlying asset portfolio, as the risk margin has no material impact on
the reserve measurement, the discount rate assumption used is the benchmark yield curve for the
measurement of insurance contract liabilities published by the CCDC.
For long-term life insurance contracts where the future insurance benefits are affected by investment
return of the underlying asset portfolio, the discount rates are determined based on expected future
investment returns of the asset portfolio backing those liabilities. The future investment returns
assumption for the measurement as at 31 December 2022 ranged from 4.75% to 5.00% (31 December
2021: 4.75%–5.00%).
For short-term insurance contracts liabilities whose duration is within one year, the future cash flows
are not discounted.
The discount rate and investment return assumptions are affected by the future macro-economy,
capital market, investment channels of insurance funds, investment strategy, etc., and therefore
FINANCIAL STATEMENTS
subject to uncertainty.
The Group uses reasonable estimates, based on market and actual experience and expected future
development trends, in deriving assumptions of mortality rates, morbidity rates, disability rates, etc.
The assumption of mortality rates is based on the Group’s prior experience data on mortality rates,
estimates of current and future expectations, the industrial benchmark, the understanding of the
China insurance market as well as the risk margin. The assumption of mortality rates is presented as a
percentage of “China Life Insurance Mortality Table (2010-2013)”, which is the industry standard for life
insurance in China.
The assumption of morbidity rates is determined based on the industrial benchmark, the Group’s
assumptions used in product pricing, experience data of morbidity rates, and estimates of current and
future expectation as well as the risk margin.
The assumptions of mortality and morbidity rates are affected by factors such as changes in lifestyles
of national citizens, social development, and improvement of medical treatment, and hence subject to
uncertainty.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 215
F-224
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(4) MEASUREMENT UNIT AND VALUATION OF INSURANCE CONTRACT LIABILITIES
(CONTINUED)
The Group uses reasonable estimates, based on actual experience and future development trends, in
deriving lapse rate assumptions.
The assumptions of lapse rates are determined by reference to different pricing interest rates, product
categories and sales channels.
The Group uses reasonable estimates, based on an expense study and future development trends, in
deriving expense assumptions. If the future expense level becomes sensitive to inflation, the Group will
consider the inflation factor as well in determining expense assumptions.
The expense assumptions include assumptions of acquisition costs and maintenance costs. The
assumption of maintenance costs also has a risk margin.
The Group uses reasonable estimates, based on expected investment returns of participating insurance
accounts, participating dividend policy, policyholders’ reasonable expectations, etc. in deriving policy
dividend assumptions.
The assumption of participating insurance accounts is affected by the above factors, and hence
bears uncertainty. As at 31 December 2022, policyholder dividend assumption with a risk margin was
determined based on 80% (31 December 2021:85%) of the interest and mortality surplus for individual
participating business.
In the measurement of unearned premium reserves for the property and casualty insurance and
short-term life insurance business, the Group applies the cost of capital approach and considers the
insurance industry guideline ranged from 3% to 6% to determine risk margins.
The major assumptions needed in measuring claim reserves include the claim development factor and
expected claim ratio, which can be used to forecast trends of future claims so as to estimate the ultimate
claim expenses. The claim development factors and expected claim ratio of each measurement unit are
based on the Group’s historical claim development experience and claims paid, with consideration of
adjustments to company policies like underwriting policies, level of premium rates, claim management and
the changing trends of external environment such as macroeconomic, regulations, and legislation. In the
measurement of claim reserves, the Group applies the cost of capital approach and considers insurance
industry guideline ranged from 2.5% to 5.5% to determine risk margins.
(5) CLASSIFICATION AND UNBUNDLING/SEPARATION OF INSURANCE CONTRACTS AND
SIGNIFICANT INSURANCE RISK TESTS
The Group makes significant judgements on whether a written policy undertake both insurance risks and
other risks, whether contains both an insurance component and a deposit component and whether the
insurance component and deposit component are distinct and separately measurable. Such judgement
affects the unbundling/separation of insurance contracts.
The Group makes significant judgements on whether the contract transfers insurance risk, whether transfer
of insurance risk has commercial substance, and whether the transferred insurance risk is significant when
performing significant insurance risk tests. Such judgement affects the classification of insurance contracts.
216 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-225
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES (CONTINUED)
(5) CLASSIFICATION AND UNBUNDLING/SEPARATION OF INSURANCE CONTRACTS AND
SIGNIFICANT INSURANCE RISK TESTS (CONTINUED)
When determining whether the policies transfer a significant insurance risk, the Group makes the following
judgements for different policies:
If the insurance risk ratio of a non-annuity policy is equal or greater than 5% at one or more points in
time during the policy coverage period, the Group classifies it as an insurance contract. The insurance
risk ratio of a direct insurance policy is the percentage of the benefits to be paid when the insured
event occurs divided by the amounts to be paid when the insured event does not occur minus 100%;
Annuity policies where the longevity risk is transferred are classified as insurance contracts;
If a property and casualty insurance or a short-term life insurance policy obviously meets the criteria
for significant insurance risk transfer, the Group directly classifies it as an insurance contract.
When determining whether a reinsurance policy transfers significant insurance risks, judgement is made
on a comprehensive understanding of the commercial substance of the reinsurance policy and other
relevant contracts and agreements. If the reinsurance risk ratio of the reinsurance policy is greater than
1%, the Group classifies it as a reinsurance contract. The reinsurance risk ratio of a reinsurance policy is
derived from the present value of probability-weighted average net losses where the reinsurer incurs a net
loss divided by expected premium income of the reinsurer. If a reinsurance policy obviously transfers a
significant insurance risk, the Group directly classifies it as a reinsurance contract without calculating the
reinsurance risk ratio.
When performing significant insurance risk testing, the Group would group all policies of the same product
with similar risk characteristics into the same portfolio. The Group would then select sufficient and
representative policy samples from each policy portfolio to perform individual testing.
FINANCIAL STATEMENTS
The unbundling/separation and classification of insurance contracts would affect the Group’s revenue
recognition, liability measurement and financial statement presentation.
(6) DETERMINATION OF CONTROL OVER THE STRUCTURED ENTITIES
To determine whether the Group controls the structured entities of which the Group acts as an asset
manager, management applies judgement based on all relevant fact and circumstance to determine
whether the Group is acting as the principal or agent for the structured entities. If the Group is acting as
the principal, it has control over the structured entities. In assessing whether the Group is acting as the
principal, the Group considers factors such as scope of the asset manager’s decision-making authority,
rights held by other parties, remuneration to which it is entitled, and exposure to variable returns results
from its additional involvement with structured entities. The Group will perform reassessment once the fact
and circumstance changes leading to changes in above factors.
For further disclosure in respect of the maximum risk exposure of unconsolidated structured entities of the
Group, see Note 53.(8).
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 217
F-226
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Life Shenzhen, Corporation Life insurance, Shenzhen 99.51% – 99.51% 33,800,000,000
Ping An Property & Casualty Shenzhen, Corporation Property and casualty 99.55% – 99.55% 21,000,000,000
insurance, Shenzhen
Ping An Bank Co., Ltd. (ii) Shenzhen, Corporation Banking, Shenzhen 49.56% 8.40% 58.00% 19,405,918,198
(“Ping An Bank”)
Ping An Trust Co., Ltd. Shenzhen, Corporation Investment and trust, 99.88% – 99.88% 13,000,000,000
Shenzhen
Ping An Securities Co., Ltd. Shenzhen, Corporation Securities investment and 40.96% 55.59% 96.62% 13,800,000,000
(“Ping An Securities”) brokerage, Shenzhen
Ping An Annuity (iii) Shanghai, Corporation Annuity insurance, 94.18% 5.79% 100.00% 11,603,419,173
Shanghai
Ping An Asset Management Co., Ltd. Shanghai, Corporation Asset management, 98.67% 1.33% 100.00% 1,500,000,000
Shanghai
Ping An Health Insurance (iii) Shanghai, Corporation Health insurance, Shanghai 74.33% 0.68% 75.01% 4,616,577,790
China Ping An Insurance Overseas Hong Kong, Corporation Investment holding, 100.00% – 100.00% HKD7,085,000,000
(Holdings) Limited Hong Kong
China Ping An Insurance (Hong Kong) Hong Kong, Corporation Property and casualty – 100.00% 100.00% HKD490,000,000
Company Limited insurance, Hong Kong
Ping An International Financial Leasing Shanghai, Corporation Financial leasing, Shanghai 69.44% 30.56% 100.00% 14,500,000,000
Co., Ltd. (“Ping An Financial Leasing”)
Ping An of China Asset Management Hong Kong, Corporation Asset management, – 100.00% 100.00% HKD395,000,000
(Hong Kong) Company Limited (iii) Hong Kong
Shenzhen Ping An Innovation Shenzhen, Corporation Investment holding, – 99.88% 100.00% 4,000,000,000
Capital Investment Co., Ltd. Shenzhen
Ping An Trendwin Capital Shanghai, Corporation Investment consulting, – 99.75% 100.00% 100,000,000
Management Co., Ltd. Shanghai
218 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-227
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Real Estate Co., Ltd. (iii) Shenzhen, Corporation Property management and – 99.62% 100.00% 21,160,523,628
(“Ping An Real Estate”) investment management,
Shenzhen
Ping An Technology (Shenzhen) Co., Ltd. Shenzhen, Corporation IT services, Shenzhen 37.66% 62.34% 100.00% 5,310,315,757
Shenzhen Ping An Finserve Co., Ltd. Shenzhen, Corporation IT and business process – 100.00% 100.00% 598,583,070
outsourcing services,
Shenzhen
Ping An E-wallet Electronic Commerce Shenzhen, Corporation Internet service, Shenzhen – 77.14% 78.63% 1,000,000,000
Company Limited (“Ping An E-wallet”)
eLink Commerce Company Limited Hong Kong, Corporation E-commerce trade, – 99.89% 100.00% HKD25,124,600
Hong Kong
Shenzhen Wanlitong Network Shenzhen, Corporation Custom loyalty service, – 77.14% 100.00% 200,000,000
Information Technology Co., Ltd. Shenzhen
Shenzhen Ping An Commercial Property Shenzhen, Corporation Property leasing and – 99.50% 99.99% 1,567,000,000
Investment Co., Ltd. (“Ping An property management,
Commercial Property Investment”) Shenzhen
FINANCIAL STATEMENTS
Ping An Futures Co., Ltd. Shenzhen, Corporation Futures brokerage, – 96.66% 100.00% 721,716,042
Shenzhen
Shenzhen Ping An Real Estate Shenzhen, Corporation Real estate investment and – 100.00% 100.00% 1,310,000,000
Investment Co., Ltd. management, Shenzhen
Shanghai Pingpu Investment Co., Ltd. Shanghai, Corporation Investment management, – 99.51% 100.00% 9,130,500,000
Shanghai
Ansheng Investment Company Limited British Virgin Islands, Project investment, British – 99.51% 100.00% USD50,000
Corporation Virgin Islands
Shenzhen Ping An Financial Shenzhen, Corporation Corporation management 100.00% – 100.00% 30,406,000,000
Technology Consulting Co., Ltd. advisory services,
(“Ping An Financial Technology”) Shenzhen
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 219
F-228
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Ping An Tradition International Money Shenzhen, Corporation Currency brokerage, – 66.92% 67.00% 50,000,000
Broking Company Ltd. Shenzhen
Pingan Haofang (Shanghai) Shanghai, Corporation Property agency, Shanghai – 100.00% 100.00% 1,930,000,000
E-commerce Co., Ltd.
Ping An Wealthtone Investment Shenzhen, Corporation Asset management, – 68.11% 100.00% 800,000,000
Management Co., Ltd. Shenzhen
Ping An Fund Management Shenzhen, Corporation Fund raising and – 68.11% 68.19% 1,300,000,000
Company Limited distribution, Shenzhen
Shenzhen Ping An Financial Center Shenzhen, Corporation Property leasing and – 99.51% 100.00% 6,688,870,000
Development Company Ltd. property management,
Shenzhen
Ping An Insurance Sales Services Shenzhen, Corporation Sales agency of insurance, – 75.10% 75.10% 515,000,000
Co., Ltd. Shenzhen
Ping An Chuang Zhan Insurance Guangzhou, Corporation Insurance agent, Shenzhen – 99.55% 100.00% 50,000,000
Sales & Service Co., Ltd.
Reach Success International British Virgin Islands, Project investment, – 99.51% 100.00% USD50,000
Company Limited Corporation British Virgin Islands
Jade Reach Investment British Virgin Islands, Project investment, – 99.51% 100.00% USD50,000
Company Limited Corporation British Virgin Islands
Shenyang Shengping Investment Shenyang, Corporation Property management and – 99.51% 100.00% 419,000,000
Management Co., Ltd. investment management,
Shenyang
Tongxiang Ping An Investment Co., Ltd. Jiaxing, Corporation Investment management, – 99.62% 100.00% 500,000,000
Jiaxing
Ping An Commercial Factoring Shanghai, Corporation Commercial factoring, – 100.00% 100.00% 2,700,000,000
Co., Ltd. (iii) Shanghai
Shanxi Changjin Expressway Co., Ltd. Taiyuan, Corporation Expressway operation, – 59.71% 60.00% 750,000,000
Jincheng
220 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-229
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Shanxi Jinjiao Expressway Co., Ltd. Taiyuan, Corporation Expressway operation, – 59.71% 60.00% 504,000,000
Jincheng
Ping An Caizhi Investment Management Shenzhen, Corporation Equity investment, – 96.55% 100.00% 600,000,000
Company Limited Shenzhen
Ping An of China Securities (Hong Kong) Hong Kong, Corporation Investment holding, – 96.55% 100.00% HKD663,514,734
Company Limited Hong Kong
Ping An of China Futures (Hong Kong) Hong Kong, Corporation Futures brokerage, – 96.55% 100.00% HKD20,000,000
Company Limited Hong Kong
Ping An of China Capital (Hong Kong) Hong Kong, Corporation Investment management, – 96.55% 100.00% HKD20,000,000
Company Limited Hong Kong
China PA Securities (Hong Kong) Hong Kong, Corporation Securities investment and – 96.55% 100.00% HKD440,000,000
Company Limited brokerage, Hong Kong
Shanghai Lufax Fund Sales Co., Ltd. Shanghai, Corporation Fund sales, Shanghai – 100.00% 100.00% 20,000,000
Fuer Insurance Broker Co., Ltd. Shanghai, Corporation Insurance brokerage – 100.00% 100.00% 50,000,000
service, Shanghai
FINANCIAL STATEMENTS
Beijing Shuangronghui Investment Beijing, Corporation Property leasing, Beijing – 99.51% 100.00% 256,323,143
Co., Ltd.
Chengdu Ping An Property Investment Chengdu, Corporation Real estate investment and – 99.51% 100.00% 840,000,000
Co., Ltd. management, Chengdu
Hangzhou Pingjiang Investment Hangzhou, Corporation Real estate development – 99.51% 100.00% 1,430,000,000
Co., Ltd. and management,
Hangzhou
Beijing Jingxinlize Investment Co., Ltd. Beijing, Corporation Investment management, – 99.51% 100.00% 1,160,000,000
Beijing
Anbon Allied Investment Hong Kong, Corporation Real estate investment – 99.51% 100.00% GBP90,000,160
Company Limited and management,
United Kingdom
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 221
F-230
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Talent Bronze Limited Hong Kong, Corporation Real estate investment – 99.51% 100.00% GBP133,000,000
and management,
United Kingdom
Ping An Pioneer Capital Co., Ltd. Shenzhen, Corporation Financial products and – 96.55% 100.00% 1,000,000,000
equity investment,
Shenzhen
Shenzhen Pingke Information Consulting Shenzhen, Corporation Management consulting, – 100.00% 100.00% 5,092,341,943
Co., Ltd. Shenzhen
Beijing Jingping Shangdi Investment Beijing, Corporation Property leasing, Beijing – 99.51% 100.00% 45,000,000
Co., Ltd.
Guangzhou Xinping Property Investment Guangzhou, Corporation Property leasing, – 99.51% 100.00% 50,000,000
Co., Ltd. Guangzhou
Shanghai Jahwa (Group) Company Ltd. Shanghai, Corporation Production and sale of – 99.51% 100.00% 5,268,261,234
(“Shanghai Jahwa”) consumer chemicals,
Shanghai
Shanghai Jahwa United Co., Ltd. Shanghai, Corporation Industry, Shanghai – 51.36% 51.68% 679,634,461
Falcon Vision Global Limited British Virgin Islands, Investment management, – 99.51% 100.00% USD50,000
Corporation Shanghai
Shanghai Zean Investment Management Shanghai, Corporation Property leasing, Shanghai – 99.51% 100.00% 4,810,000,000
Company Limited
PA Dragon LLC USA, Corporation Logistics and real estate, – 99.52% 100.00% USD143,954,940
USA
Shanghai Pingan Automobile Shanghai, Corporation E-commerce, Shanghai – 94.74% 94.74% 63,330,000
E-commerce Co., Ltd.
Shanghai Gezhouba Yangming Property Shanghai, Corporation Real estate development – 99.51% 100.00% 20,000,000
Co., Ltd. and management,
Shanghai
222 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-231
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Shanghai Jinyao Investment Management Shanghai, Corporation Investment management, – 99.05% 100.00% 1,290,000,000
Co., Ltd. Shanghai
Shanghai Pingxin Asset Management Shanghai, Corporation Asset management, – 100.00% 100.00% 1,010,000,000
Co., Ltd. Shanghai
Shenzhen Qianhai Credit Service Centre Shenzhen, Corporation Credit information services, – 100.00% 100.00% 345,075,000
Co., Ltd. Shenzhen
Pingan Real Estate Capital Limited Hong Kong, Corporation Investment platform, – 99.62% 100.00% 2,536,129,600
Hong Kong
Shenzhen Qianhai Inclusive Crowdfunding Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 100,000,000
& Trading Co., Ltd. Shenzhen
Guangzhou Ping An Good Loan Guangzhou, Corporation Micro loan, Guangzhou – 100.00% 100.00% 600,000,000
Microfinance Co., Ltd.
Ping An International Financial Leasing Shenzhen, Corporation Financial leasing, Shenzhen – 100.00% 100.00% 1,800,000,000
(Shenzhen) Co., Ltd.
An Ke Technology Company Limited Hong Kong, Corporation Investment management – 100.00% 100.00% USD582,996,000
FINANCIAL STATEMENTS
and investment
consulting, Hong Kong
Ping An Pay Technology Service Co., Ltd. Shenzhen, Corporation Internet service, Shenzhen – 77.14% 100.00% 680,000,000
Ping An Pay Electronic Payment Co., Ltd. Shanghai, Corporation Internet service, Shanghai – 77.14% 100.00% 489,580,000
Tongxiang Anhao Investment Jiaxing, Corporation Investment management, – 99.81% 100.00% 300,000,000
Management Co., Ltd. Jiaxing
Ping An Infrastructure Investment Fund Shenzhen, Corporation Investment management, – 98.01% 99.00% 1,000,000,000
Management Co., Ltd. Shenzhen
Ping An Fortune Management Co., Ltd. Shanghai, Corporation Consulting services, – 100.00% 100.00% 100,000,000
Shanghai
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 223
F-232
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Shenzhen Dingshuntong Investment Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 100,000,000
Co., Ltd. (“Dingshuntong Investment”) Shenzhen
Shenzhen Ping An Evergreen Investment Shenzhen, Corporation Investment consulting, – 100.00% 100.00% 1,500,100,000
Development Holding Co., Ltd. Shenzhen
(“Evergreen Investment Development”)
Ping An International Financial Leasing Tianjin, Corporation Financial leasing, Tianjin – 100.00% 100.00% 10,400,000,000
(Tianjin) Co., Ltd.
Shenzhen Anpu Development Co., Ltd. Shenzhen, Corporation Logistics and warehousing, – 79.61% 80.00% 5,625,000,000
Shenzhen
China PA Asset Management Hong Kong, Corporation Asset management, – 96.55% 100.00% HKD10,000,000
(Hong Kong) Company Limited Hong Kong
Shanghai Tianhe Insurance Brokerage Shanghai, Corporation Insurance brokerage, – 41.71% 100.00% 50,000,000
Co., Ltd. Shanghai
Helios P.A. Company Limited Hong Kong, Corporation Project investment, – 99.51% 100.00% USD677,161,910
Hong Kong
Value Success International Limited British Virgin Islands, Project investment, – 100.00% 100.00% USD50,000
Corporation British Virgin Islands
Ping An Urban-Tech (Shenzhen) Co., Ltd. Shenzhen, Corporation IT services, Shenzhen – 79.21% 100.00% 50,000,000
Shenzhen Ping An Chuangke Investment Shenzhen, Corporation Investment management, – 99.81% 100.00% 100,000,000
Management Co., Ltd. Shenzhen
Shenzhen Anchuang Investment Shenzhen, Corporation Investment management, – 99.72% 100.00% 100,000,000
Management Co., Ltd. Shenzhen
Lianxin (Shenzhen) Investment Shenzhen, Corporation Investment management, – 99.72% 100.00% 5,100,000,000
Management Co., Ltd. Shenzhen
(“Lianxin Investment”)
Autohome Inc. Cayman Islands, Automotive internet – 41.71% 41.91% USD1,273,469
Corporation platform, Beijing
Mayborn Group Limited United Kingdom, Infant products, United – 51.36% 100.00% GBP1,154,873
Corporation Kingdom
Jiaxing Ping An Cornerstone I Equity Jiaxing, Corporation Investment management, – 99.51% 100.00% 1,000,000
Investment Management Co., Ltd. Shanghai
224 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-233
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Shenzhen Qianhai Jinxuan Investment Shenzhen, Corporation Investment management – 99.91% 100.00% 2,270,000,000
Co., Ltd. and investment
consulting, Shenzhen
Ping An Wealth Management Co., Ltd. Shenzhen, Corporation Asset management, – 57.96% 100.00% 5,000,000,000
Shenzhen
TTP Car Inc. Cayman Islands, Second-hand car platform, – 21.27% 51.00% USD15,753
Corporation Shanghai
Shenzhen Shengjun Investment Shenzhen, Corporation Investment management, – 99.72% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Overseas W.H. Investment Company Cayman Islands, Investment holding, – 100.00% 100.00% USD5,038,967,126
Limited (iii) Corporation Cayman Islands
Shenzhen Pingjia Investment Shenzhen, Corporation Investment platform, – 99.81% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Chongqing Youshengda Real Estate Chongqing, Corporation Real estate consulting, – 99.51% 100.00% 12,537,286,000
Consulting Co., Ltd. Chongqing
FINANCIAL STATEMENTS
Hangzhou Xiaoshan Ping An Cornerstone Hangzhou, Corporation Investment management, – 99.51% 100.00% 10,000,000
II Equity Investment Co., Ltd. Shanghai
Shenzhen Hengchuang Investment Shenzhen, Corporation Investment platform, – 99.62% 100.00% 5,000,000
Management Co., Ltd. Shenzhen
Global Voyager Fund (HK) Hong Kong, Corporation Asset management, – 100.00% 100.00% USD14,794,701
Company Limited Hong Kong
China PA Wealth Management Hong Kong, Corporation Insurance brokerage, – 96.55% 100.00% HKD1,000,000
(Hong Kong) Company Limited Hong Kong
Ping An Commodities Trading Co., Ltd. Shenzhen, Corporation Commodity trade, – 96.66% 100.00% 1,000,000,000
Shenzhen
Shanghai Orient Overseas Kaixuan Shanghai, Corporation Property leasing and – 69.66% 70.00% 2,208,601,418
Real Estate Co., Ltd. property management,
Shanghai
Shanghai Huaqing Real Estate Shanghai, Corporation Property leasing and – 59.71% 60.00% USD30,000,000
Management Co., Ltd. property management,
Shanghai
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 225
F-234
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Proportion of Proportion of Registered/
ordinary shares ordinary shares authorized capital
Place of incorporation and Principal activities and directly held by indirectly held by Proportion of (RMB unless
Name kind of legal entity place of operation the Company (%) the Company (%) votes (%) (i) otherwise stated)
Beijing Xinjie Real Estate Development Beijing, Corporation Property leasing and – 69.66% 70.00% USD24,500,000
Co., Ltd. property management,
Beijing
Chengdu Raffles City Industry Co., Ltd. Chengdu, Corporation Property leasing and – 69.66% 70.00% USD217,700,000
property management,
Chengdu
Raffles City (Hangzhou) Real Estate Hangzhou, Corporation Property leasing and – 69.66% 70.00% USD299,740,000
Development Co., Ltd. property management,
Hangzhou
Ningbo Xinyin Business Management Ningbo, Corporation Property leasing and – 69.66% 70.00% 800,000,000
Service Co., Ltd. property management,
Ningbo
Beijing Jinkunlize Property Co., Ltd. (iv) Beijing, Corporation Property leasing and – 99.51% 100.00% 3,380,000,000
property management,
Beijing
New Founder (Beijing) Enterprise Beijing, Corporation Corporation management, – 99.51% 100.00% 50,000,000
Management Development Co., Ltd. (iv) Beijing
New Founder Holding Development Zhuhai, Corporation Investment and technical – 66.18% 66.51% 7,250,000,000
Company Limited (iv) services, Beijing
Founder Securities Co., Ltd. (iv) Changsha, Corporation Securities brokerage, – 19.00% 28.71% 8,232,101,395
(“Founder Securities”) Changsha
Founder Cifco Futures Co., Ltd. (iv) Beijing, Corporation Futures brokerage, Beijing – 17.56% 92.44% 1,005,000,000
Founder Financing Securities Co.,Ltd. (iv) Beijing, Corporation Securities underwriting and – 19.00% 100.00% 1,400,000,000
sponsorship, Beijing
Shanghai Jifeng Investment Management Shanghai, Corporation Investment management, – 17.56% 100.00% 350,000,000
Co., Ltd. (iv) Shanghai
Beijing Founder Fubon Crown Asset Beijing, Corporation Customer-specific asset – 12.67% 100.00% 130,000,000
Management Co., Ltd. (iv) management, Beijing
Founder Securities Hong Kong, Corporation Securities trading and – 19.00% 100.00% HKD410,000,000
(Hong Kong) Limited (iv) consulting, Hong Kong
Founder Asset Management (Hong Kong) Hong Kong, Corporation Asset management, – 19.00% 100.00% HKD22,000,000
Limited (iv) Hong Kong
Founder Fubon Fund Management Beijing, Corporation Fund raising and – 12.67% 66.70% 660,000,000
Co.,Ltd. (iv) distribution, Beijing
226 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-235
4. SCOPE OF CONSOLIDATION (CONTINUED)
(1) Particulars of the Company’s principal subsidiaries as at 31 December 2022 are set out below:
(continued)
Notes:
(i) The proportion of ordinary shares, as shown in the above table, is the sum product of direct holding by the Company and indirect
holding by a multiplication of the proportion of shares held in each holding layer. The proportion of votes is the sum product of the
proportion of votes held directly by the Company and indirectly via subsidiaries controlled by the Company.
(ii) For the year ended 31 December 2022, Ping An Bank’s profit attributable to its non-controlling interest was RMB19,136 million (2021:
RMB15,276 million), the dividend paid to its non-controlling interest was RMB4,200 million (2021: RMB3,809 million). As at 31 December
2022, Ping An Bank’s equity attributable to its non-controlling interest was RMB211,724 million (31 December 2021: RMB195,231 million).
Ping An Bank’s summarized financial information is disclosed in “segment reporting” under the “Banking” segment.
(iii) The registered capitals of these subsidiaries were changed in 2022.
(iv) The subsidiaries were incorporated into the scope of consolidation in 2022.
The Company and its subsidiaries are subject to the Company Law as well as various listing requirements,
where applicable. Capital or asset transactions between the Company and its subsidiaries might be
subject to regulatory requirements. Certain of the Company’s subsidiaries are subject to regulatory capital
requirements. As such, there are restrictions on the Group’s ability to access or use the assets of these
subsidiaries or use them to settle the liabilities of these subsidiaries. Please refer to Note 53.(7) for detailed
disclosure on the relevant regulatory capital requirements.
(2) As at 31 December 2022, the Group consolidated the following principal structured entities:
Attributable equity Paid-in capital
Name interest (RMB) Principal activities
Ping An Asset Xinxiang No.28 Assets 99.51% 21,549,224,952 Investment in wealth
Management management products
Huabao East Aggregated Fund 98.87% 12,000,000,000 Investment in debt schemes
Trust Scheme
FINANCIAL STATEMENTS
Shanghai Trust Huarong Aggregated 99.52% 9,500,000,000 Investment in debt schemes
Fund Trust Scheme
Ping An Asset Xinxiang No.19 Assets 99.51% 7,391,669,880 Investment in wealth
Management management products
Ping An Asset Xinxiang No.5 Assets 99.55% 824,556,614 Investment in wealth
Management management products
Ping An Asset Xinxiang No.20 Assets 99.51% 6,442,075,486 Investment in wealth
Management management products
Ping An Asset Xinxiang No.18 Assets 99.51% 6,594,574,439 Investment in wealth
Management management products
Ping An Asset Xinxiang No.10 Assets 99.51% 7,138,468,987 Investment in wealth
Management management products
Ping An Asset Xinxiang No.14 Assets 99.51% 4,550,171,317 Investment in wealth
Management management products
Ping An Asset Xinxiang No.11 Assets 99.51% 1,666,857 Investment in wealth
Management management products
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 227
F-236
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
4. SCOPE OF CONSOLIDATION (CONTINUED)
(3) The acquisition of subsidiaries not under common control
In 2021, the consortium formed by the Company, Zhuhai Huafa Group Co., Ltd. (representing the state-
owned enterprises of Zhuhai Municipality) and Shenzhen SDG Co., Ltd. participated in the restructuring
of Peking University Founder Group Company Limited, Peking University Founder Information Industry
Group Co., Ltd., PKU Healthcare Industry Group Co., Ltd., Peking University Resources Group Limited, and
Founder Industry Holdings Co., Ltd. (“Restructuring Entities”). Authorized by the Company, Ping An Life,
participated in the substantive consolidated restructuring and entered into the restructuring investment
agreement of the Founder Group Restructuring (“Restructuring Investment Agreement”). The Restructuring
Plan of Five Companies including Peking University Founder Group Company Limited (“Restructuring
Plan”), which was formulated on the basis of the Restructuring Investment Agreement, was resolved and
approved at the creditors’ meeting held by the Restructuring Entities on 28 May 2021, and was approved by
the civil order of the Court and has come into effect on 28 June 2021. In accordance with the terms of the
Restructuring Investment Agreement and the selection of the debt repayment plan of the creditors of the
Restructuring Entities, Ping An Life shall pay a consideration of approximately RMB48,217 million to acquire
approximately 66.51% equity interest in New Founder Holding Development Company Limited (“New
Founder Group”), which has been approved by the China Banking and Insurance Regulatory Commission
(Yin Bao Jian Fu [2022] No.81). As of 28 December 2022, Ping An Life has paid off all the consideration,
and as of that date, a 66.51% equity interest of New Founder Group has been transferred to Ping An Life’s
wholly-owned subsidiary New Founder (Beijing) Enterprise Management Development Co., Ltd.. New
Founder Group has completed the business registration. The Group is deemed to have gained control of
New Founder Group on 28 December 2022, which was regarded as the acquisition date.
The fair value and carrying amount of consolidated identifiable assets and liabilities of New Founder Group
as at the date of acquisition are as follows:
(in RMB million) Fair value Carrying amount
Cash and amounts due from banks and other financial institutions 65,500 65,500
Including: Cash held on behalf of customers 45,543 45,543
Financial assets purchased under reverse repurchase agreements 606 606
Account receivable 5,938 5,938
Derivative financial assets 171 171
Financial assets at fair value through profit or loss 38,384 38,384
Financial assets at amortized cost 27,410 27,410
Debt financial assets at fair value
through other comprehensive income 43,213 43,213
Equity financial assets at fair value
through other comprehensive income 859 859
Investments in associates and joint ventures 7,773 7,773
Investment properties 12,851 12,851
Property and equipment 10,717 10,717
Intangible assets 4,672 4,672
Right-of-use assets 708 708
Deferred tax assets 626 626
Other assets 24,085 24,085
Total identifiable assets 243,513 243,513
228 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-237
4. SCOPE OF CONSOLIDATION (CONTINUED)
(3) The acquisition of subsidiaries not under common control (continued)
The fair value and carrying amount of consolidated identifiable assets and liabilities of Founder Group as at
the date of acquisition are as follows (continued):
(in RMB million) Fair value Carrying amount
Due to banks and other financial institutions 11,976 11,976
Financial liabilities at fair value through profit or loss 2,083 2,083
Derivative financial liabilities 63 63
Assets sold under agreements to repurchase 48,674 48,674
Customer deposits and payables to brokerage customers 52,465 52,465
Accounts payable 4,012 4,012
Tax payable 295 295
Bonds payable 21,150 21,150
Lease liabilities 724 724
Deferred tax liabilities 2,295 2,295
Other liabilities 30,099 30,099
Total identifiable liabilities 173,836 173,836
69,677 69,677
Less: Non-controlling interests (i) (42,437)
Fair value of net assets acquired attributable to the Group 27,240
Goodwill arising on acquisition 20,977
Acquisition cost 48,217
(i) Non-controlling interests presented above include equity in New Founder Group’s subsidiaries not attributable to New Founder
Group, and equity in New Founder Group not attributable to the Group.
FINANCIAL STATEMENTS
(ii) The Group engaged an independent valuer to evaluate the fair values of the consolidated identifiable assets and liabilities of New
Founder Group as at the date of acquisition. As of the date of approval and authorization for issue the financial statements, the
valuation has not been completed. According to IFRS 3, the Group recognized the net assets required based upon the provisional
amounts.
Cash flows from the acquisition of New Founder Group’s shares are as follows:
(in RMB million)
Total cash consideration 48,217
Less: Cash consideration paid in 2021 (1,400)
Cash consideration paid in 2022 46,817
Cash and cash equivalents held by New Founder Group as at the acquisition date (9,197)
Net cash outflow from the acquisition of New Founder Group in 2022 37,620
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 229
F-238
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
5. SEGMENT REPORTING
The segment businesses are separately presented as the insurance segment, the banking segment, the trust
segment, the securities segment, the other asset management segment, the technology business segment
and the other businesses, based on the products and service offerings. The insurance segment is divided
into the life and health insurance and the property and casualty insurance segment which are in line with
the nature of products, risk and asset portfolios. The types of products and services from which reportable
segments derive revenue are listed below:
– The life and health insurance segment offers a comprehensive range of life insurance products to
individual and corporate customers, including term, whole-life, endowment, annuity, investment-linked,
universal life and health care and medical insurance, reflecting performance summary of life insurance,
annuity insurance and health insurance subsidiaries;
– The property and casualty insurance segment offers a wide variety of insurance products to individual
and corporate customers, including auto insurance, non-auto insurance, accident and health insurance,
reflecting performance of property and casualty insurance subsidiary;
– The banking segment undertakes loan and intermediary business with corporate customers and retail
business customers as well as wealth management and credit card services with individual customers,
reflecting performance of banking subsidiary;
– The trust segment provides trust products services and undertakes investing activities;
– The securities segment undertakes brokerage, trading, investment banking and asset management
services;
– The other asset management segment provides investment management services, finance lease
business and other asset management services, reflecting performance summary of asset management
and finance lease and the other asset management subsidiaries;
– The technology business segment provides various financial and daily-life services through internet
platforms such as financial transaction information service platform, health care service platform,
reflecting performance summary of the technology business subsidiaries, associates and joint ventures.
Except for the above business segments, the other segments did not have a material impact on the Group’s
operating outcome, and as such are not separately presented.
Management monitors the operating results of the Group’s business units separately for the purpose of
making decisions with regard to resource allocation and performance assessment. Segment performance is
assessed based on key performance indicators.
Transfer prices between operating segments are based on the amount stated in the contracts agreed by
the both sides.
During 2022 and 2021, revenue from the Group’s top five customers accounted for less than 1% of the total
revenue for the year.
230 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-239
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows:
Property Other
Life and and businesses
health casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Gross written premiums 473,565 298,074 – – – – – (2,006) 769,633
Less: Premiums ceded to reinsurers (6,495) (17,725) – – – – – 2,253 (21,967)
Change in unearned premium
reserves (2,515) (2,729) – – – – – (4) (5,248)
Net earned premiums 464,555 277,620 – – – – – 243 742,418
Reinsurance commission revenue 2,689 4,484 – – – – – (1,023) 6,150
Interest revenue from banking operations – – 228,878 – – – – (94) 228,784
Fees and commission revenue from
non-insurance operations – – 37,754 2,014 7,952 1,330 – (3,068) 45,982
Including: Inter-segment fees and
commission revenue from
non-insurance operations – – 2,768 134 67 86 – (3,055) –
Interest revenue from non-banking
operations 101,711 7,961 – 339 5,915 9,506 595 (1,751) 124,276
Including: Inter-segment interest revenue
from non-banking operations 203 71 – 23 390 1,726 87 (2,500) –
Investment income (9,855) 1,849 14,529 243 2,602 (1,447) (2,112) (3,028) 2,781
Including: Inter-segment investment
income 2,255 197 (8) – 30 122 59 (2,655) –
Including: Operating lease income from
investment properties 7,321 393 46 – 3 47 – (1,632) 6,178
Share of profits and losses of associates
and joint ventures 4,344 620 – – (21) 5,440 4,196 (4,414) 10,165
FINANCIAL STATEMENTS
Other revenues and other gains/(losses) 24,540 984 544 384 3,169 30,369 19,864 (19,059) 60,795
Including: Inter-segment other revenues 10,045 27 18 27 – 3,190 5,666 (18,973) –
Including: Non-operating gains 159 103 64 – 1 9 8 15 359
Total revenue 587,984 293,518 281,705 2,980 19,617 45,198 22,543 (32,194) 1,221,351
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 231
F-240
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Claims and policyholders’ benefits (437,413) (193,898) – – – – – 173 (631,138)
Commission expenses on insurance
operations (39,873) (34,277) – – – – – 3,770 (70,380)
Interest expenses on banking operations – – (98,748) – – – – 1,060 (97,688)
Fees and commission expenses on
non-insurance operations – – (7,546) (97) (2,314) (21) – 50 (9,928)
Net impairment losses on financial assets
and other assets (629) (1,760) (71,306) (333) (231) (8,788) (600) (2) (83,649)
Including: Loan impairment losses, net – – (64,168) – – – – – (64,168)
Including: Impairment losses on
investment assets (571) 19 (6,766) (397) 419 (6,043) 38 – (13,301)
Including: Impairment losses on
receivables and others (58) (1,779) (372) 64 (650) (2,745) (638) (2) (6,180)
Foreign exchange gains/(losses) (394) (107) 4,548 4 6 (624) 34 (125) 3,342
Investment expenses (3,092) (359) – – – – – 3,336 (115)
Including: Taxes and surcharges on
investment operations (75) (40) – – – – – – (115)
Administrative expenses (43,646) (53,038) (51,114) (830) (4,833) (8,092) (13,543) 5,371 (169,725)
Including: Taxes and surcharges on
insurance operations (1,377) (1,259) – – – – – – (2,636)
Interest expenses on non-banking
operations (4,638) (1,305) – (93) (3,899) (15,025) (321) 2,393 (22,888)
Including: Financial costs (2,207) (870) – (59) (3,104) (15,013) (321) 2,489 (19,085)
Including: Interest expenses on assets
sold under agreements to
repurchase and placements
from banks and other
financial institutions (2,431) (435) – (34) (795) (12) – (96) (3,803)
Other expenses (25,427) (540) (286) (4) (3,011) (11,363) (3,896) 11,160 (33,367)
Total expenses (555,112) (285,284) (224,452) (1,353) (14,282) (43,913) (18,326) 27,186 (1,115,536)
Profit before tax 32,872 8,234 57,253 1,627 5,335 1,285 4,217 (5,008) 105,815
Income tax 16,474 645 (11,737) (445) (880) (3,119) 636 43 1,617
Profit for the year 49,346 8,879 45,516 1,182 4,455 (1,834) 4,853 (4,965) 107,432
– Attributable to owners of the parent 48,488 8,838 26,380 1,181 4,294 (3,183) 3,614 (5,838) 83,774
232 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-241
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2022 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Cash and amounts due from banks and
other financial institutions 332,122 59,688 236,412 5,055 87,360 38,500 24,076 (12,462) 770,751
Balances with the Central Bank and statutory
deposits for insurance operations 10,171 4,263 281,115 – – – 5 5 295,559
Accounts receivable 8,239 117 – – – 25,975 2,344 (557) 36,118
Finance lease receivable – – – – – 186,858 – – 186,858
Loans and advances to customers – – 3,242,258 – – – – (4,204) 3,238,054
Financial assets at fair value through
profit or loss 861,272 119,936 446,133 21,897 63,142 95,011 10,752 13,273 1,631,416
Financial assets at amortized cost 2,008,091 150,655 731,850 2,718 38 166,489 811 (56,150) 3,004,502
Financial assets at fair value through
other comprehensive income 433,866 31,359 178,613 14 88,048 6,613 49 (16,428) 722,134
Investments in associates and joint ventures 138,842 26,000 – 285 137 81,681 78,487 (44,639) 280,793
Others 534,824 121,329 205,133 2,701 23,278 71,147 25,268 (12,697) 970,983
Segment assets 4,327,427 513,347 5,321,514 32,670 262,003 672,274 141,792 (133,859) 11,137,168
Due to banks and other financial
institutions 39,386 4,366 652,475 – 3,057 290,496 3,428 (74,231) 918,977
Assets sold under agreements to
repurchase 178,291 24,593 13,303 – 50,243 4,896 – 411 271,737
Accounts payable 6,985 185 – – – 2,653 1,025 (499) 10,349
Insurance payables 123,854 32,372 – – – – – (2,718) 153,508
Customer deposits and payables to
brokerage customers 52,465 – 3,352,266 – 73,363 – – (46,095) 3,431,999
FINANCIAL STATEMENTS
Bonds payable 41,916 10,487 692,075 – 61,360 117,863 – 7,397 931,098
Insurance contract liabilities 3,278,813 289,674 – – – – – (738) 3,567,749
Investment contract liabilities for
policyholders 73,843 19 – – – – – – 73,862
Policyholder dividend payable 71,445 – – – – – – – 71,445
Others 89,185 31,639 176,715 8,518 28,407 187,221 23,591 (14,130) 531,146
Segment liabilities 3,956,183 393,335 4,886,834 8,518 216,430 603,129 28,044 (130,603) 9,961,870
Segment equity 371,244 120,012 434,680 24,152 45,573 69,145 113,748 (3,256) 1,175,298
– Attributable to owners of the parent 305,537 119,265 222,956 24,123 39,030 53,990 94,937 (1,163) 858,675
Other segment information:
Capital expenditures 7,077 1,204 6,170 70 616 2,306 1,681 (1,694) 17,430
Depreciation and amortization 9,650 1,624 6,535 74 418 781 1,950 (730) 20,302
Total other non-cash expenses charged to
consolidated results 629 1,760 71,306 333 231 8,788 600 2 83,649
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 233
F-242
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2021 and for the year then ended is as follows:
Other
Life and Property businesses
health and casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Gross written premiums 494,011 270,113 – – – – – (3,281) 760,843
Less: Premiums ceded to reinsurers (16,406) (17,324) – – – – – 3,522 (30,208)
Change in unearned premium
reserves 1,590 7,701 – – – – – 7 9,298
Net earned premiums 479,195 260,490 – – – – – 248 739,933
Reinsurance commission revenue 2,749 4,527 – – – – – (1,368) 5,908
Interest revenue from banking operations – – 213,536 – – – – (97) 213,439
Fees and commission revenue from
non-insurance operations – – 40,190 3,611 9,309 1,726 – (3,312) 51,524
Including: Inter-segment fees and
commission revenue from
non-insurance operations – – 2,776 312 57 122 – (3,267) –
Interest revenue from non-banking
operations 98,317 7,372 – 614 5,857 15,621 439 (2,746) 125,474
Including: Inter-segment interest revenue
from non-banking operations 176 76 – 18 369 2,761 67 (3,467) –
Investment income 57,835 5,896 14,380 (998) 1,978 12,320 (9,866) (3,506) 78,039
Including: Inter-segment investment
income 2,339 135 17 – 4 237 34 (2,766) –
Including: Operating lease income from
investment properties 5,744 205 57 – 3 140 – (1,529) 4,620
Share of profits and losses of associates
and joint ventures 2,034 1,696 – 72 (22) (117) 7,351 (3,668) 7,346
Other revenues and other gains/(losses) 24,804 1,225 443 480 5,704 33,103 22,564 (22,311) 66,012
Including: Inter-segment other revenues 10,334 31 22 – – 5,076 6,801 (22,264) –
Including: Non-operating gains 218 165 158 – – 10 25 3 579
Total revenue 664,934 281,206 268,549 3,779 22,826 62,653 20,488 (36,760) 1,287,675
234 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-243
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2021 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Claims and policyholders’ benefits (444,096) (174,769) – – – – – 203 (618,662)
Commission expenses on insurance
operations (52,277) (32,039) – – – – – 3,605 (80,711)
Interest expenses on banking operations – – (93,200) – – – – 1,129 (92,071)
Fees and commission expenses on
non-insurance operations – – (7,128) (366) (2,570) (100) – 224 (9,940)
Net impairment losses on financial assets
and other assets (24,492) (1,496) (73,817) (1,146) (574) (2,428) (1,033) (56) (105,042)
Including: Loan impairment losses, net – – (59,407) – – – – – (59,407)
Including: Impairment losses on
investment assets (24,447) (441) (13,248) (1,120) (570) (882) (859) – (41,567)
Including: Impairment losses on
receivables and others (45) (1,055) (1,162) (26) (4) (1,546) (174) (56) (4,068)
Foreign exchange gains/(losses) 7 (52) 1,320 (1) (3) (61) 7 50 1,267
Investment expenses (4,281) (345) – – – – – 4,490 (136)
Including: Taxes and surcharges on
investment operations (120) (16) – – – – – – (136)
Administrative expenses (48,177) (52,018) (49,581) (1,443) (5,819) (12,439) (14,449) 7,001 (176,925)
Including: Taxes and surcharges on
insurance operations (1,051) (1,091) – – – – – – (2,142)
Interest expenses on non-banking
operations (4,519) (1,326) – (148) (3,803) (21,364) (530) 3,608 (28,082)
Including: Financial costs (2,066) (926) – (74) (2,871) (21,358) (530) 3,643 (24,182)
FINANCIAL STATEMENTS
Including: Interest expenses on assets
sold under agreements to
repurchase and placements
from banks and other
financial institutions (2,453) (400) – (74) (932) (6) – (35) (3,900)
Other expenses (26,814) (465) (264) 288 (5,454) (11,665) (5,428) 12,009 (37,793)
Total expenses (604,649) (262,510) (222,670) (2,816) (18,223) (48,057) (21,433) 32,263 (1,148,095)
Profit before tax 60,285 18,696 45,879 963 4,603 14,596 (945) (4,497) 139,580
Income tax 18 (2,504) (9,543) (734) (774) (4,702) 488 (27) (17,778)
Profit for the year 60,303 16,192 36,336 229 3,829 9,894 (457) (4,524) 121,802
– Attributable to owners of the parent 59,468 16,117 21,060 229 3,614 8,378 (1,957) (5,291) 101,618
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 235
F-244
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
5. SEGMENT REPORTING (CONTINUED)
The segment analysis as at 31 December 2021 and for the year then ended is as follows (continued):
Other
Life and Property businesses
health and casualty Other asset Technology and
(in RMB million) insurance insurance Banking Trust Securities management business elimination Total
Cash and amounts due from banks and
other financial institutions 207,013 59,110 176,373 6,439 89,483 59,855 23,067 (36,345) 584,995
Balances with the Central Bank and statutory
deposits for insurance operations 8,293 4,300 308,348 – – – 5 8 320,954
Accounts receivable 2,019 7 – – – 22,971 2,571 (940) 26,628
Finance lease receivable – – – – – 200,701 – – 200,701
Loans and advances to customers – – 2,984,753 – – – – (3,778) 2,980,975
Financial assets at fair value through
profit or loss 709,874 119,501 389,703 14,639 50,824 108,277 18,245 15,614 1,426,677
Financial assets at amortized cost 1,771,695 113,333 738,166 6,625 60 179,522 777 (41,183) 2,768,995
Financial assets at fair value through
other comprehensive income 447,189 25,502 155,020 14 87,752 11,791 210 (30,733) 696,745
Investments in associates and joint ventures 134,856 25,789 – 1,046 158 86,150 77,387 (41,325) 284,061
Others 435,565 122,865 169,017 2,962 25,091 76,706 27,523 (8,434) 851,295
Segment assets 3,716,504 470,407 4,921,380 31,725 253,368 745,973 149,785 (147,116) 10,142,026
Due to banks and other financial
institutions 32,020 3,978 525,687 – 4,895 277,712 5,149 (51,795) 797,646
Assets sold under agreements to
repurchase 27,300 9,484 47,703 – 37,556 4,921 – 513 127,477
Accounts payable 2,632 288 – – – 3,578 1,055 (890) 6,663
Insurance payables 122,163 32,247 – – – – – (3,643) 150,767
Customer deposits and payables to
brokerage customers – – 2,990,518 – 73,134 – – (61,603) 3,002,049
Bonds payable 20,665 13,996 823,934 – 68,818 161,124 – 8,986 1,097,523
Insurance contract liabilities 2,995,147 267,128 – – – – – (921) 3,261,354
Investment contract liabilities for
policyholders 72,820 19 – – – – – – 72,839
Policyholder dividend payable 67,276 – – – – – – – 67,276
Others 57,161 28,638 138,090 6,778 26,388 219,693 24,694 (20,733) 480,709
Segment liabilities 3,397,184 355,778 4,525,932 6,778 210,791 667,028 30,898 (130,086) 9,064,303
Segment equity 319,320 114,629 395,448 24,947 42,577 78,945 118,887 (17,030) 1,077,723
– Attributable to owners of the parent 296,877 113,898 200,217 24,918 36,003 54,922 100,697 (15,127) 812,405
Other segment information:
Capital expenditures 6,198 1,382 8,583 18 782 2,081 1,334 (491) 19,887
Depreciation and amortization 7,053 1,612 6,416 74 415 835 2,158 (684) 17,879
Total other non-cash expenses charged to
consolidated results 24,492 1,496 73,817 1,146 574 2,428 1,033 56 105,042
236 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-245
6. GROSS AND NET WRITTEN PREMIUMS
(in RMB million) 2022 2021
Gross written premiums and premium deposits 841,545 837,834
Less: Premium deposits of policies without significant insurance risk
transfer (2,670) (3,060)
Premium deposits separated out from universal life and
investment-linked products (69,242) (73,931)
Gross written premiums 769,633 760,843
Long-term life business gross written premiums 438,081 454,051
Short-term life business gross written premiums 33,021 36,239
Property and casualty business gross written premiums 298,531 270,553
Gross written premiums 769,633 760,843
Gross written premiums
Life insurance
Individual business 453,549 470,214
Group business 17,553 20,076
471,102 490,290
Property and casualty insurance
Automobile insurance 201,436 188,990
Non-automobile insurance 73,406 58,943
Accident and health insurance 23,689 22,620
298,531 270,553
Gross written premiums 769,633 760,843
Net of reinsurance premiums ceded
Life insurance
Individual business 449,570 464,345
FINANCIAL STATEMENTS
Group business 17,499 13,260
467,069 477,605
Property and casualty insurance
Automobile insurance 195,575 182,567
Non-automobile insurance 61,460 48,297
Accident and health insurance 23,562 22,166
280,597 253,030
Net written premiums 747,666 730,635
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 237
F-246
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
7. NET INTEREST INCOME FROM BANKING OPERATIONS
(in RMB million) 2022 2021
Interest revenue from banking operations
Due from the Central Bank 3,715 3,595
Due from and placements with banks and other
financial institutions and financial assets purchased
under reverse repurchase agreements 4,795 4,814
Loans and advances to customers (including discounted bills) 188,282 173,670
Financial investments 31,992 31,360
Subtotal 228,784 213,439
Interest expenses on banking operations
Due to the Central Bank 3,860 3,664
Due to and placements from banks and other
financial institutions and assets sold under
agreements to repurchase 8,054 9,535
Customer deposits 66,304 56,967
Bonds payable 19,470 21,905
Subtotal 97,688 92,071
Net interest income from banking operations 131,096 121,368
8. INTEREST REVENUE FROM NON-BANKING OPERATIONS
(in RMB million) 2022 2021
Financial assets at amortized cost 114,132 113,708
Debt financial assets at fair value through
other comprehensive income 10,144 11,766
124,276 125,474
9. NET FEES AND COMMISSION INCOME FROM NON-INSURANCE
OPERATIONS
(in RMB million) 2022 2021
Fees and commission revenue from non-insurance operations
Brokerage commission 6,541 7,440
Underwriting commission 618 914
Trust service fees 1,544 2,930
Fees and commission from the banking business 34,986 37,414
Others 2,293 2,826
Subtotal 45,982 51,524
Fees and commission expenses on non-insurance operations
Brokerage commission 2,238 2,466
Fees and commission on the banking business 7,546 7,128
Others 144 346
Subtotal 9,928 9,940
Net fees and commission income from non-insurance operations 36,054 41,584
238 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-247
10. INVESTMENT INCOME
(in RMB million) 2022 2021
Net investment income 90,257 74,985
Realized gains/(losses) (54,534) 25,667
Unrealized gains/(losses) (32,942) (22,613)
Total investment income 2,781 78,039
(1) NET INVESTMENT INCOME
(in RMB million) 2022 2021
Financial assets at fair value through profit or loss 68,710 55,742
Equity financial assets at fair value through
other comprehensive income 15,369 14,623
Operating lease income from investment properties 6,178 4,620
90,257 74,985
(2) REALIZED GAINS/(LOSSES)
(in RMB million) 2022 2021
Financial assets at fair value through profit or loss (56,782) 18,495
Debt financial assets at fair value through
other comprehensive income (243) (159)
Financial assets at amortized cost (273) (363)
Derivative financial instruments 1,471 (356)
Gains on disposals of loans and advances at fair value through other
comprehensive income 3,255 1,884
Precious metal transactions investment gains 15 121
Investment in subsidiaries, associates and joint ventures (1,977) 6,045
(54,534) 25,667
FINANCIAL STATEMENTS
(3) UNREALIZED GAINS/(LOSSES)
(in RMB million) 2022 2021
Financial assets at fair value through profit or loss
Bonds (4,067) 3,220
Funds (16,873) (2,354)
Stocks 8,795 (15,052)
Wealth management investments, debt schemes and other
investments (22,586) (6,964)
Financial liabilities at fair value through profit or loss 418 (1,571)
Derivative financial instruments 1,371 108
(32,942) (22,613)
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 239
F-248
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
11. OTHER REVENUES AND OTHER GAINS/(LOSSES)
(in RMB million) 2022 2021
Sales revenue 20,316 24,776
Expressway toll fee 844 889
Annuity management fee 1,535 1,844
Management fee and consulting fee income 9,729 11,098
Finance lease income 16,650 17,192
Others 11,721 10,213
60,795 66,012
12. CLAIMS AND POLICYHOLDERS’ BENEFITS
2022
(in RMB million) Gross Reinsurers’ share Net
Claims and claim adjustment expenses 259,464 (13,780) 245,684
Surrenders 54,102 – 54,102
Annuities 9,122 – 9,122
Maturities and survival benefits 33,003 – 33,003
Policyholder dividends 19,599 – 19,599
Increase in long-term life insurance policyholders’
reserves 242,834 (345) 242,489
Interest credited to policyholder contract deposits 27,139 – 27,139
645,263 (14,125) 631,138
2021
(in RMB million) Gross Reinsurers’ share Net
Claims and claim adjustment expenses 243,970 (19,862) 224,108
Surrenders 52,931 – 52,931
Annuities 7,887 – 7,887
Maturities and survival benefits 25,980 – 25,980
Policyholder dividends 19,405 – 19,405
Increase in long-term life insurance
policyholders’ reserves 257,832 (342) 257,490
Interest credited to policyholder contract deposits 30,861 – 30,861
638,866 (20,204) 618,662
240 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-249
12. CLAIMS AND POLICYHOLDERS’ BENEFITS (CONTINUED)
2022
(in RMB million) Gross Reinsurers’ share Net
Long-term life insurance contract benefits 421,929 (3,067) 418,862
Short-term life insurance claims 19,485 (1,357) 18,128
Property and casualty insurance claims 203,849 (9,701) 194,148
645,263 (14,125) 631,138
2021
(in RMB million) Gross Reinsurers’ share Net
Long-term life insurance contract benefits 431,385 (3,327) 428,058
Short-term life insurance claims 21,886 (6,227) 15,659
Property and casualty insurance claims 185,595 (10,650) 174,945
638,866 (20,204) 618,662
13. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS
(in RMB million) 2022 2021
Accounts receivable (23) 242
Loans and advances to customers 64,168 59,407
Debt financial assets at fair value through
other comprehensive income 105 2,399
Financial assets at amortized cost 3,535 23,144
Finance lease receivable 1,763 1,013
Placements with banks and other financial institutions 2,175 (54)
Credit commitments 5,758 3,027
Due from banks and other financial institutions 1,502 (63)
FINANCIAL STATEMENTS
Others 1,570 1,379
80,553 90,494
14. NET IMPAIRMENT LOSSES ON OTHER ASSETS
(in RMB million) 2022 2021
Investments in associates and joint ventures 928 12,260
Others 2,168 2,288
3,096 14,548
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 241
F-250
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
15. PROFIT BEFORE TAX
(1) PROFIT BEFORE TAX IS ARRIVED AT AFTER CHARGING THE FOLLOWING ITEMS:
(in RMB million) 2022 2021
Employee costs (Note 15.(2)) 75,798 78,859
Interest expenses on policyholder contract deposits and
investment contract reserves 27,139 30,861
Depreciation of investment properties 3,645 1,620
Depreciation of property and equipment 6,932 6,895
Amortization of intangible assets 2,610 2,564
Depreciation of right-of-use assets 5,839 6,364
Net impairment losses on financial assets 80,553 90,494
Net impairment losses on other assets 3,096 14,548
Cost of sales 9,284 12,763
Auditors’ remuneration 95 88
(2) EMPLOYEE COSTS
(in RMB million) 2022 2021
Wages, salaries and bonuses 57,802 61,209
Retirement benefits, social security contributions and
welfare benefits 16,169 15,561
Others 1,827 2,089
75,798 78,859
16. INCOME TAX
(in RMB million) 2022 2021
Current income tax
Charge for the year 26,481 26,588
Adjustments in respect of current income tax of previous years 1,162 228
Deferred income tax (29,260) (9,038)
(1,617) 17,778
Certain subsidiaries enjoy tax preferential treatments. These subsidiaries are not material to the Group.
Except for those subsidiaries enjoying tax preferential treatments, the applicable corporate income tax rate
of the Group for 2022 was 25%.
242 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-251
16. INCOME TAX (CONTINUED)
Reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax
rate of 25% (2021: 25%) is as follows:
(in RMB million) 2022 2021
Profit before tax 105,815 139,580
Tax at the applicable tax rate of 25% (2021: 25%) 26,454 34,895
Expenses not deductible for tax 3,989 4,073
Income not subject to tax (31,232) (25,500)
Adjustments in respect of current income tax of previous years 1,162 228
Others (1,990) 4,082
Income tax per consolidated income statement (1,617) 17,778
Taxes for taxable income attained from outside of the PRC are measured at the tax rates under local and
PRC law, regulations and conventions. The income tax credited by the Group is verified by official tax
bureau.
17. DIVIDENDS
(in RMB million) 2022 2021
2021 final dividend declared in 2022 – RMB1.50 (2020 final dividend
declared in 2021 – RMB1.40) per ordinary share (i) 27,161 25,494
2022 interim dividend – RMB0.92 (2021 interim dividend - RMB0.88)
per ordinary share (ii) 16,659 15,975
(i) On 17 March 2022, the Board of Directors of the Company approved the Profit Distribution Plan of the Company for 2021, agreeing
to declare a cash dividend in the amount of RMB1.50 (tax inclusive) per share. The total amount of the cash dividend for 2021 was
RMB27,161 million (tax inclusive).
On 29 April 2022, the above profit distribution plan was approved by the shareholders of the Company at the annual general
FINANCIAL STATEMENTS
meeting.
(ii) On 23 August 2022, the Board of Directors of the Company approved the Proposal on Distributing Interim Dividend for 2022, and
declared an interim cash dividend of RMB0.92 (tax inclusive) per share. The total amount of the cash dividend was RMB16,659 million
(tax inclusive).
(iii) On 15 March 2023, the Board of Directors of the Company approved the Profit Distribution Plan of the Company for 2022, and
declared a final cash dividend of 2022 in the amount of RMB1.50 (tax inclusive) per share. Pursuant to the Shanghai Stock Exchange’s
Guidelines for Self-regulation of Listed Companies No.7 – Repurchase of Shares and other applicable regulations, the Company’s
A shares in the Company’s repurchased securities account after trading hours on the record date of A shareholders for the final
dividend will not be entitled to the final dividend distribution. The actual total amount of final dividend payment is subject to the
total number of shares that will be entitled to the dividend distribution on the record date of A shareholders. The total amount of
the final dividend payment for 2022 is RMB27,161,462,992.50 (tax inclusive) based on the total share capital of 18,280,241,410 shares less
the 172,599,415 A shares of the Company in the repurchased securities account as at 31 December 2022, which was not recognized as
a liability as at 31 December 2022.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 243
F-252
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
18. EARNINGS PER SHARE
(1) BASIC
Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the
weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased
by the Group.
2022 2021
Profit attributable to owners of the parent (in RMB million) 83,774 101,618
Weighted average number of ordinary shares in issue (million shares) 17,454 17,607
Basic earnings per share (in RMB) 4.80 5.77
Weighted average number of ordinary shares in issue (million shares) 2022 2021
Issued ordinary shares as at 1 January 18,280 18,280
Weighted average number of shares held by the Key Employee
Share Purchase Plan (22) (21)
Weighted average number of shares held by the Long-term
Service Plan (234) (143)
Weighted average number of shares held by the consolidated
assets management schemes (i) (406) (417)
Weighted average number of shares held by the treasury share (164) (92)
Weighted average number of ordinary shares in issue 17,454 17,607
(i) As at 31 December 2022, 261 million (31 December 2021: 417 million) shares were held by the consolidated assets management
schemes.
(2) DILUTED
Diluted earnings per share was computed by dividing the adjusted profit attributable to owners of the
parent based on assuming conversion of all dilutive potential shares for the year by the adjusted weighted
average number of ordinary shares in issue. The shares granted by the Company under the Key Employee
Share Purchase Plan (Note 41) and Long-term Service Plan (Note 42) have a potential dilutive effect on the
earnings per share.
2022 2021
Earnings (in RMB million)
Profit attributable to owners of the parent 83,774 101,618
Weighted average number of ordinary shares (million shares)
Weighted average number of ordinary shares in issue 17,454 17,607
Adjustments for:
– Assumed vesting of Key Employee Share Purchase Plan 22 21
– Assumed vesting of Long-term Service Plan 234 143
Weighted average number of ordinary shares for diluted earnings
per share in issue (million shares) 17,710 17,771
Diluted earnings per share (in RMB) 4.73 5.72
244 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-253
19. CASH AND AMOUNTS DUE FROM BANKS AND OTHER FINANCIAL
INSTITUTIONS
(in RMB million) 31 December 2022 31 December 2021
Cash on hand 4,165 3,686
Term deposits 281,697 258,176
Due from banks and other financial institutions 350,968 227,690
Placements with banks and other financial institutions 133,921 95,443
770,751 584,995
Details of placements with banks and other financial institutions are as follows:
(in RMB million) 31 December 2022 31 December 2021
Measured at amortized cost
Placements with banks 64,520 59,142
Placements with other financial institutions 68,952 25,145
Gross 133,472 84,287
Less: Provision for impairment losses (2,328) (72)
Net 131,144 84,215
Measured at fair value through other comprehensive income
Placements with other financial institutions 2,777 11,228
Total 133,921 95,443
As at 31 December 2022, the provision for impairment losses of placements with banks and other financial
institutions measured at fair value through other comprehensive income is RMB91 million (31 December
2021: RMB170 million).
As at 31 December 2022, cash and amounts due from banks and other financial institutions of RMB10,919
FINANCIAL STATEMENTS
million (31 December 2021: RMB11,579 million) were restricted from use.
As at 31 December 2022, cash and amounts due from overseas amounted to RMB60,616 million (31 December
2021: RMB29,474 million).
20. BALANCES WITH THE CENTRAL BANK
(in RMB million) 31 December 2022 31 December 2021
Statutory reserve deposits with the Central Bank for banking
operations 240,380 221,619
Statutory reserve deposits with the Central Bank for banking
operations – RMB 234,851 211,488
Statutory reserve deposits with the Central Bank for banking
operations – foreign currencies 5,529 10,131
Surplus reserve deposits with the Central Bank 40,467 84,057
Fiscal deposits with the Central Bank 268 2,672
281,115 308,348
In accordance with relevant regulations, subsidiaries of the Group engaged in bank operations are required
to place mandatory reserve deposits with the People’s Bank of China (the “PBC”) for customer deposits in
both local currency and foreign currencies. As at 31 December 2022, the mandatory deposits are calculated
at 7.5% (31 December 2021: 8.0%) of customer deposits denominated in RMB and 6.0% (31 December 2021:
9.0%) of customer deposits denominated in foreign currencies. Mandatory reserve deposits are not available
for use by the Group in its day-to-day operations.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 245
F-254
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
21. FINANCIAL ASSETS PURCHASED UNDER REVERSE REPURCHASE
AGREEMENTS
Classified by collateral:
(in RMB million) 31 December 2022 31 December 2021
Bonds 84,721 55,662
Bills 2,676 –
Stocks and others 4,059 6,091
Gross 91,456 61,753
Less: Provision for impairment losses (141) (324)
Net 91,315 61,429
22. PREMIUM RECEIVABLES
(in RMB million) 31 December 2022 31 December 2021
Premium receivables 76,610 84,742
Less: Provision for doubtful receivables (4,330) (4,908)
Premium receivables, net 72,280 79,834
Life insurance 17,188 17,482
Property and casualty insurance 55,092 62,352
Premium receivables, net 72,280 79,834
The credit terms of premium receivables granted are generally from one to six months, and non-interest
bearing.
An aging analysis of premium receivables is as follows:
(in RMB million) 31 December 2022 31 December 2021
Within 3 months 69,045 76,279
Over 3 months but within 1 year 3,766 3,509
Over 1 year 3,799 4,954
76,610 84,742
246 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-255
23. DERIVATIVE FINANCIAL INSTRUMENTS
31 December 2022
Assets Liabilities
(in RMB million) Nominal amount Fair value Nominal amount Fair value
Interest rate swaps 3,819,447 11,893 2,102,061 10,062
Currency forwards and swaps 992,397 15,602 1,146,546 23,498
Gold derivative instruments 36,240 1,049 43,741 3,172
Stock index options 17,143 146 2,233 88
Stock index swaps 3,718 160 7,669 776
Others 48,074 428 20,277 2,142
4,917,019 29,278 3,322,527 39,738
31 December 2021
Assets Liabilities
(in RMB million) Nominal amount Fair value Nominal amount Fair value
Interest rate swaps 3,538,229 14,164 2,773,780 13,237
Currency forwards and swaps 1,047,646 15,687 1,023,471 15,855
Gold derivative instruments 33,424 567 26,865 2,779
Stock index options 79 3 5,782 19
Stock index swaps 2,249 75 – –
Others 1,923 461 23,254 3,159
4,623,550 30,957 3,853,152 35,049
24. REINSURERS’ SHARE OF INSURANCE LIABILITIES
(in RMB million) 31 December 2022 31 December 2021
Reinsurers’ share of unearned premium reserves 9,158 11,084
FINANCIAL STATEMENTS
Reinsurers’ share of claim reserves 13,175 13,477
Reinsurers’ share of long-term life insurance policyholders’ reserves 2,636 2,291
24,969 26,852
25. FINANCE LEASE RECEIVABLE
(in RMB million) 31 December 2022 31 December 2021
Finance lease receivables, net of unrealized financial gains 192,444 205,907
Less: Provision for impairment losses (5,586) (5,206)
186,858 200,701
The Group’s finance lease receivables are the net amount offsetting the unrealized financial gains.
As at 31 December 2022, finance lease receivables with an amount of RMB24,052 million (31 December 2021:
RMB45,170 million) were pledged as collateral for long-term and short-term borrowings.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 247
F-256
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
26. LOANS AND ADVANCES TO CUSTOMERS
(1) ANALYSED BY CORPORATE AND INDIVIDUAL
(in RMB million) 31 December 2022 31 December 2021
Measured at amortized cost
Corporate customers
Loans 945,687 901,295
Individual customers
Xinyidai 160,056 158,981
Credit card receivables 578,691 621,448
Mortgage loans and licensed mortgage loans 783,393 654,870
Auto loans 321,034 301,229
Others 204,216 173,793
Gross 2,993,077 2,811,616
Add: Interest receivable 11,016 10,561
Less: Provision for impairment losses (97,919) (89,256)
Net 2,906,174 2,732,921
Measured at fair value through other comprehensive income
Corporate customers
Loans 134,333 93,401
Discounted bills 197,547 154,653
Subtotal 331,880 248,054
Carrying amount 3,238,054 2,980,975
As at 31 December 2022, discounted bills with a carrying amount of RMB211 million (31 December 2021:
RMB2,841 million) were pledged for amounts due to the Central Bank.
As at 31 December 2022, the provision for impairment losses of loans and advances to customers measured
at fair value through other comprehensive income was RMB3,277 million (31 December 2021: RMB946 million),
refer to Note 26.(6).
248 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-257
26. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
(2) ANALYSED BY INDUSTRY
(in RMB million) 31 December 2022 31 December 2021
Loans and advances to customers
Agriculture, husbandry and fishery 3,124 4,416
Mining 18,899 22,099
Manufacturing 183,192 157,027
Energy 33,091 26,037
Transportation and communication 51,441 49,031
Wholesaling and retailing 124,729 103,784
Real estate 283,484 288,923
Social service, technology, culture and sanitary industries 219,219 212,943
Construction 45,868 48,073
Individual customers 2,047,390 1,910,321
Others 314,520 237,016
Gross 3,324,957 3,059,670
Add: Interest receivable 11,016 10,561
Less: Provision for impairment losses (97,919) (89,256)
Carrying amount 3,238,054 2,980,975
(3) ANALYSED BY TYPE OF COLLATERAL HELD
(in RMB million) 31 December 2022 31 December 2021
Unsecured 1,283,638 1,258,615
Guaranteed 221,241 203,818
Secured by collateral
Secured by mortgages 1,316,244 1,154,938
Secured by monetary assets 306,287
FINANCIAL STATEMENTS
287,646
Subtotal 3,127,410 2,905,017
Discounted bills 197,547 154,653
Gross 3,324,957 3,059,670
Add: Interest receivable 11,016 10,561
Less: Provision for impairment losses (97,919) (89,256)
Carrying amount 3,238,054 2,980,975
(4) AGING ANALYSIS OF PAST DUE LOANS BY PASS DUE DAYS
31 December 2022
3 months More than
(in RMB million) Within 3 months to 1 year 1 to 3 years 3 years Total
Unsecured 25,934 14,983 343 78 41,338
Guaranteed 91 87 595 262 1,035
Secured by collateral
Secured by mortgages 12,318 5,639 827 – 18,784
Secured by monetary assets 623 708 607 3 1,941
38,966 21,417 2,372 343 63,098
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 249
F-258
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
26. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
(4) AGING ANALYSIS OF PAST DUE LOANS BY PASS DUE DAYS (CONTINUED)
31 December 2021
3 months More than
(in RMB million) Within 3 months to 1 year 1 to 3 years 3 years Total
Unsecured 22,410 11,123 1,224 438 35,195
Guaranteed 1,920 853 196 266 3,235
Secured by collateral
Secured by mortgages 9,657 8,282 251 10 18,200
Secured by monetary assets 828 35 10 – 873
34,815 20,293 1,681 714 57,503
Past due loans refer to the loans with either principal or interest being past due by one day or more.
(5) ANALYSED BY REGION
31 December 2022 31 December 2021
(in RMB million) Amount % Amount %
Eastern 708,410 21.31% 597,650 19.53%
Southern 649,810 19.54% 599,433 19.59%
Western 310,665 9.34% 280,397 9.16%
Northern 489,810 14.73% 451,643 14.76%
Head office 1,136,487 34.18% 1,115,419 36.46%
Overseas 29,775 0.90% 15,128 0.50%
Gross 3,324,957 100.00% 3,059,670 100.00%
Add: Interest receivable 11,016 10,561
Less: Loan allowance (97,919) (89,256)
Carrying amount 3,238,054 2,980,975
(6) LOAN IMPAIRMENT PROVISION
(in RMB million) 2022 2021
Measured at amortized cost
As at 1 January 89,256 62,821
Charge for the year 61,837 58,859
Write-off and transfer during the year (65,136) (48,084)
Recovery of loans written off previously 11,942 15,888
Unwinding of discount of impairment provisions recognized
as interest income (45) (109)
Others 65 (119)
As at 31 December 97,919 89,256
Measured at fair value through other comprehensive income
As at 1 January 946 398
Charge for the year 2,331 548
As at 31 December 3,277 946
As at 31 December 101,196 90,202
250 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-259
27. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
(in RMB million) 31 December 2022 31 December 2021
Bonds
Government bonds 134,744 167,688
Finance bonds 290,675 171,644
Corporate bonds 80,129 80,011
Funds 504,195 351,183
Stocks 80,738 100,485
Preferred shares 32,832 32,958
Unlisted equity investments 133,295 125,363
Debt schemes 60,698 62,164
Wealth management investments 237,866 245,208
Other investments 76,244 89,973
Total 1,631,416 1,426,677
Listed 203,705 185,601
Unlisted 1,427,711 1,241,076
1,631,416 1,426,677
28. FINANCIAL ASSETS AT AMORTIZED COST
(in RMB million) 31 December 2022 31 December 2021
Bonds
Government bonds 2,184,921 1,804,351
Finance bonds 267,163 306,714
Corporate bonds 79,545 77,606
Debt schemes 129,431 136,654
Wealth management investments 239,896 327,717
FINANCIAL STATEMENTS
Other investments 148,373 149,595
Gross 3,049,329 2,802,637
Less: Provisions for impairment losses (44,827) (33,642)
Net 3,004,502 2,768,995
Listed 326,107 326,326
Unlisted 2,678,395 2,442,669
3,004,502 2,768,995
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 251
F-260
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
29. DEBT FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
(in RMB million) 31 December 2022 31 December 2021
Bonds
Government bonds 200,977 188,185
Finance bonds 113,944 96,784
Corporate bonds 50,940 43,347
Margin accounts receivable 49,126 54,253
Wealth management investments 52,044 45,961
Total 467,031 428,530
Listed 89,849 37,830
Unlisted 377,182 390,700
467,031 428,530
As at 31 December 2022, the total provision for impairment losses recognized in debt financial assets
at fair value through other comprehensive income is RMB4,533 million (31 December 2021: RMB4,821 million).
30. EQUITY FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
Equity financial assets at fair value through other comprehensive income comprise the following individual
investments:
(in RMB million) 31 December 2022 31 December 2021
Stocks 174,047 189,541
Preferred shares 76,116 76,115
Other equity investments 4,940 2,559
Total 255,103 268,215
Listed 250,163 265,656
Unlisted 4,940 2,559
255,103 268,215
For the equity investments which are not held for trading but for long-term investments, the Group has
irrevocably elected to recognize them in this category at initial recognition.
In 2022, for the consideration of optimizing asset allocation and asset-liability management, the Group
disposed of equity financial assets at fair value through other comprehensive income amounted to
RMB27,224 million, and the net cumulative losses of RMB131 million on disposal was transferred from other
comprehensive income to retained profits.
The dividends income of equity financial assets at fair value through other comprehensive income
recognized during the year are disclosed in Note 10.
252 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-261
31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The Group’s investments in the principal associates and joint ventures as at 31 December 2022 are as
follows:
2022
Provision Proportion of
Increase balance Change of Cash ordinary
Additional /(Decrease) in As at as at provision in dividends in shares held by
(in RMB million) As at 1 January investment current year 31 December 31 December current year current year the Group (%)(i)
Associates
Veolia Water (Kunming) Investment Co., Ltd.
(“Veolia Kunming”) 272 – 37 309 (37) – – 23.88%
Veolia Water (Yellow River) Investment Co., Ltd.
(“Veolia Yellow River”) 158 – (18) 140 (402) – – 48.76%
Veolia Water (Liuzhou) Investment Co., Ltd.
(“Veolia Liuzhou”) 93 – 54 147 (23) – – 44.78%
Shanxi Taichang Expressway Co., Ltd. (“Shanxi Taichang”) 873 – 159 1,032 – – – 29.85%
Beijing-Shanghai High-Speed Railway Equity
Investment Scheme (“Beijing-Shanghai Railway”) 9,318 – 171 9,489 – – 89 39.18%
Massive Idea Investments Limited 1,074 – 57 1,131 – – – 36.66%
Guangzhou Jinglun Property Development Co., Ltd. 701 – (64) 637 – – 64 39.92%
Xuhui Holdings Co., Ltd. 4,336 – (4,336) – – (777) 31 –
Lufax Holding Ltd. (“Lufax Holding”) 51,564 – 1,281 52,845 – – 3,250 41.44%
Ping An Healthcare and Technology Co., Ltd.
(“Ping An Health”) 18,922 – (183) 18,739 – – – 39.41%
HealthKonnect Medical and Health Technology Management
Company Limited (“Ping An HealthKonnect”) 2,903 – 85 2,988 – – – 29.55%
OneConnect Financial Technology Co., Ltd. (“OneConnect”) 2,259 52 (232) 2,079 – – – 32.12%
Shenzhen China Merchants-Ping An Asset
Management Co., Ltd. 1,570 – (472) 1,098 – – 102 38.81%
ZhongAn Online P&C Insurance Co., Ltd.
FINANCIAL STATEMENTS
(“ZhongAn Online”) 1,735 – (236) 1,499 – – – 10.21%
Beijing Beiqi Penglong Automobile Service Co., Ltd. 1,830 – (23) 1,807 – – – 39.18%
China Yangtze Power Co., Ltd. 15,684 – 198 15,882 – – 807 4.34%
China Traditional Chinese Medicine Holdings Co., Ltd. 2,797 – (7) 2,790 – – 38 11.94%
China Fortune Land Development Co., Ltd.
(“China Fortune”) 3,621 – (1,099) 2,522 (9,822) – – 25.02%
China Jinmao Holding Group Co., Ltd. 7,137 – 2 7,139 (1,558) – 146 13.36%
Ping An Consumer Finance Co., Ltd.
(“Ping An Consumer Finance”) 1,330 – 56 1,386 – – – 30.00%
Vivid Synergy Limited 9,217 – 853 10,070 – – – 29.85%
Shanghai Yibin Property Co., Ltd. 13,345 – (7) 13,338 – – – 41.80%
Guangzhou Futures Exchange Co., Ltd. 450 – 15 465 – – – 15.00%
Others 35,633 5,988 (3,574) 38,047 (1,156) (151) 1,729
Subtotal 186,822 6,040 (7,283) 185,579 (12,998) (928) 6,256
Joint ventures
Yunnan Kunyu Highway Development Co., Ltd.
(“Kunyu Highway”) 762 – (762) – – – – –
Beijing Zhaotai Property Development Co., Ltd. 1,632 – (13) 1,619 – – – 24.95%
Wuhan DAJT Property Development Co., Ltd. 482 – (14) 468 – – – 49.81%
Founder Meiji Yasuda Life Insurance Co., Ltd. – 2,795 – 2,795 – – – 33.75%
Others 94,363 5,674 (9,705) 90,332 – – 3,924
Subtotal 97,239 8,469 (10,494) 95,214 – – 3,924
Total 284,061 14,509 (17,777) 280,793 (12,998) (928) 10,180
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 253
F-262
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)
The Group’s investments in the principal associates and joint ventures as at 31 December 2021 are as
follows:
2021
Provision Proportion of
Increase/ balance Change of Cash ordinary
As at Additional (Decrease) in As at as at provision in dividends in shares held by
(in RMB million) 1 January investment current year 31 December 31 December current year current year the Group (%)(i)
Associates
Veolia Kunming 280 – (8) 272 (34) – – 23.88%
Veolia Yellow River 179 – (21) 158 (368) – – 48.76%
Veolia Liuzhou 143 – (50) 93 (21) – 5 44.78%
Shanxi Taichang 861 – 12 873 – – 85 29.85%
Beijing-Shanghai Railway 10,842 – (1,524) 9,318 – – 57 39.19%
Massive Idea Investments Limited 1,082 – (8) 1,074 – – – 36.65%
Guangzhou Jinglun Property Development Co., Ltd. 661 – 40 701 – – – 39.92%
Xuhui Holdings Co., Ltd. 4,237 – 99 4,336 – – 253 7.91%
Lufax Holding 43,310 – 8,254 51,564 – – – 41.50%
Ping An Health 19,481 – (559) 18,922 – – – 38.43%
Ping An HealthKonnect 3,033 – (130) 2,903 – – – 29.55%
OneConnect 3,236 – (977) 2,259 – – – 30.43%
Shenzhen China Merchants-Ping An Asset
Management Co., Ltd. 1,452 – 118 1,570 – – 104 38.81%
ZhongAn Online 1,609 – 126 1,735 – – – 10.21%
Beijing Beiqi Penglong Automobile Service Co., Ltd. 1,725 – 105 1,830 – – 128 39.18%
China Yangtze Power Co., Ltd. 15,269 – 415 15,684 – – 693 4.32%
China Traditional Chinese Medicine Holdings Co., Ltd. 2,583 – 214 2,797 – – 33 11.94%
China Fortune 19,331 – (15,710) 3,621 (9,822) (9,822) – 25.02%
China Jinmao Holding Group Co., Ltd. 7,880 – (743) 7,137 (1,558) (1,558) 384 14.02%
Ping An Consumer Finance 1,431 – (101) 1,330 – – – 30.00%
Vivid Synergy Limited 9,488 – (271) 9,217 – – – 29.85%
Shanghai Yibin Property Co., Ltd. 13,278 74 (7) 13,345 – – – 41.80%
Guangzhou Futures Exchange Co., Ltd. – 450 – 450 – – – 15.00%
Others 44,118 6,923 (15,408) 35,633 (1,520) (880) 1,788
Subtotal 205,509 7,447 (26,134) 186,822 (13,323) (12,260) 3,530
Joint ventures
Kunyu Highway 841 – (79) 762 – – 151 49.94%
Nanjing Mingwan Property Development Co., Ltd. 2,186 – (2,186) – – – 381 –
Beijing Zhaotai Property Development Co., Ltd. 1,694 – (62) 1,632 – – 26 24.95%
Wuhan DAJT Property Development Co., Ltd. 487 – (5) 482 – – – 49.80%
Others 57,102 36,068 1,193 94,363 – – 3,144
Subtotal 62,310 36,068 (1,139) 97,239 – – 3,702
Total 267,819 43,515 (27,273) 284,061 (13,323) (12,260) 7,232
254 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-263
31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)
The financial information summary of the Group’s principal associates and joint ventures as at year end of
2022 are as follows:
Total
Significant to Total assets liabilities Total Net profit/
Place of Place of the Group’s as at as at revenue in (loss) in
(in RMB million) business incorporation Principal activities operation 31 December 31 December current year current year(ii)
Associates
Ping An Health China Cayman Online health care Yes 17,142 3,684 6,160 (608)
OneConnect China Cayman Technology-as-a-service Yes 8,882 5,604 4,464 (872)
cloud platform for
financial institutions
Lufax Holding China Cayman Financial technology Yes 349,263 254,476 58,116 8,699
The financial information summary of the Group’s principal associates and joint ventures as at year end of
2021 are as follows:
Total
Significant to Total assets liabilities Total Net profit/
Place of Place of the Group’s as at as at revenue in (loss) in
(in RMB million) business incorporation Principal activities operation 31 December 31 December current year current year(ii)
Associates
Ping An Health China Cayman Online health care Yes 17,881 3,795 7,334 (1,538)
OneConnect China Cayman Technology-as-a-service Yes 9,341 5,506 4,132 (1,282)
cloud platform for
financial institutions
Lufax Holding China Cayman Financial technology Yes 360,433 265,874 61,835 16,804
The Group has no significant contingent liabilities relating to the associates and joint ventures listed above.
Note i: The proportion of ordinary shares, as shown in the above table, is the multiplication of the proportion of shares held in each
holding layer.
FINANCIAL STATEMENTS
Note ii: Net profit/(loss) refers to the net profit/(loss) attributable to shareholders of the parent company of Ping An Health, OneConnect
and Lufax Holding respectively.
32. STATUTORY DEPOSITS FOR INSURANCE OPERATIONS
(in RMB million) 31 December 2022 31 December 2021
Ping An Life 6,760 6,760
Ping An Property & Casualty 4,200 4,200
Ping An Annuity 2,322 972
Ping An Health Insurance 940 420
Others 18 20
Subtotal 14,240 12,372
Less: Provision for impairment losses (4) (4)
Add: Interest receivable 208 238
Total 14,444 12,606
Statutory deposits for insurance operations are placed with PRC national commercial banks in accordance
with the relevant regulations issued by the China Banking and Insurance Regulatory Commission (the
“CBIRC”) based on 20% of the registered capital for the insurance company subsidiaries and 5% of the
registered capital for insurance sales agency subsidiaries within the Group, respectively. Statutory deposits
for insurance operations can only be utilized to settle liabilities during liquidation of insurance companies,
insurance sales agency companies and insurance brokerage companies.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 255
F-264
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
33. INVESTMENT PROPERTIES
(in RMB million) 2022 2021
Cost
As at 1 January 102,166 53,739
Acquisition of subsidiaries 25,799 47,614
Additions 3,536 2,755
Transfer from/(to) property and equipment, net 4,740 (1,511)
Disposals of subsidiaries – (9)
Disposals (150) (422)
As at 31 December 136,091 102,166
Accumulated depreciation
As at 1 January 16,121 10,350
Acquisition of subsidiaries 507 4,266
Charge for the year 3,645 1,620
Transfer from/(to) property and equipment, net 1,058 (110)
Disposals (4) (5)
As at 31 December 21,327 16,121
Impairment losses
As at 1 January 4 4
Disposals (3) –
As at 31 December 1 4
Net carrying amount
As at 31 December 114,763 86,041
As at 1 January 86,041 43,385
Fair value
As at 31 December 154,690 121,526
As at 1 January 121,526 79,678
The fair value of the investment properties as at 31 December 2022 were estimated by the Group, based on
valuation performed by independent valuers. It falls under level 3 in the fair value hierarchy.
The rental income arising from investment properties for the year 2022 amounted to RMB6,178 million (2021:
RMB4,620 million), which is included in net investment income.
As at 31 December 2022, investment properties with a carrying amount of RMB19,411 million (31 December
2021: RMB23,229 million) were pledged as collateral for long-term borrowings with a carrying amount of
RMB7,270 million (31 December 2021: RMB10,729 million).
The Group was still in the process of applying for title certificates for certain investment properties with a
carrying amount of RMB3,465 million as at 31 December 2022 (31 December 2021: RMB991 million).
256 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-265
34. PROPERTY AND EQUIPMENT
2022
Equipment,
Leasehold furniture and Motor Construction
(in RMB million) improvements Buildings fixtures vehicles in progress Total
Cost
As at 1 January 12,485 43,510 24,202 2,657 3,169 86,023
Acquisitions of subsidiaries 167 8,823 1,780 33 83 10,886
Additions 198 469 1,945 3 1,343 3,958
Transfer from/(to) construction in progress 655 450 120 1 (1,226) –
Transfer to investment properties, net – (4,100) – – (640) (4,740)
Disposals of subsidiaries – – (1) – – (1)
Disposals (535) (199) (1,502) (458) (11) (2,705)
As at 31 December 12,970 48,953 26,544 2,236 2,718 93,421
Accumulated depreciation
As at 1 January 8,550 12,150 13,832 1,549 – 36,081
Acquisitions of subsidiaries – – 1 – – 1
Charge for the year 1,954 1,573 3,859 122 – 7,508
Transfer to investment properties, net – (1,058) – – – (1,058)
Disposals (1,250) (66) (1,324) (326) – (2,966)
As at 31 December 9,254 12,599 16,368 1,345 – 39,566
Impairment losses
As at 1 January – 81 66 37 – 184
Additions – 2 6 6 – 14
As at 31 December – 83 72 43 – 198
Net carrying amount
As at 31 December 3,716 36,271 10,104 848 2,718 53,657
FINANCIAL STATEMENTS
As at 1 January 3,935 31,279 10,304 1,071 3,169 49,758
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 257
F-266
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
34. PROPERTY AND EQUIPMENT (CONTINUED)
2021
Equipment,
Leasehold furniture and Motor Construction
(in RMB million) improvements Buildings fixtures vehicles in progress Total
Cost
As at 1 January 11,653 37,726 23,256 1,811 3,118 77,564
Acquisitions of subsidiaries – 3,299 2 557 34 3,892
Additions 443 558 3,326 510 2,184 7,021
Transfer from/(to) construction in progress 674 1,343 131 – (2,148) –
Transfer from investment properties, net – 1,511 – – – 1,511
Disposals of subsidiaries – – (4) – – (4)
Disposals (285) (927) (2,509) (221) (19) (3,961)
As at 31 December 12,485 43,510 24,202 2,657 3,169 86,023
Accumulated depreciation
As at 1 January 7,216 10,812 11,953 1,179 – 31,160
Acquisitions of subsidiaries – 561 2 337 – 900
Charge for the year 1,369 1,462 3,709 178 – 6,718
Transfer from investment properties, net – 110 – – – 110
Disposals of subsidiaries – – (3) – – (3)
Disposals (35) (795) (1,829) (145) – (2,804)
As at 31 December 8,550 12,150 13,832 1,549 – 36,081
Impairment losses
As at 1 January – 83 – 35 – 118
Additions – – 66 4 – 70
Disposals – (2) – (2) – (4)
As at 31 December – 81 66 37 – 184
Net carrying amount
As at 31 December 3,935 31,279 10,304 1,071 3,169 49,758
As at 1 January 4,437 26,831 11,303 597 3,118 46,286
The Group was still in the process of applying for title certificates for its buildings with a carrying amount
of RMB22 million as at 31 December 2022 (31 December 2021: RMB21 million).
258 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-267
35. INTANGIBLE ASSETS
2022
Expressway Prepaid Software
(in RMB million) Goodwill (i) operating rights land premiums Core deposits Trademarks and others Total
Cost
As at 1 January 23,233 5,129 26,268 15,082 9,987 13,571 93,270
Acquisitions of subsidiaries – – 8,857 – – 1,045 9,902
Additions 21,105 – 2,358 – 69 1,786 25,318
Disposals – – (353) – – (437) (790)
As at 31 December 44,338 5,129 37,130 15,082 10,056 15,965 127,700
Accumulated amortization
As at 1 January – 3,146 2,885 7,886 783 10,039 24,739
Acquisitions of subsidiaries – – 134 – – – 134
Charge for the year – 189 761 754 110 1,357 3,171
Disposals – – (36) – – (9) (45)
As at 31 December – 3,335 3,744 8,640 893 11,387 27,999
Impairment losses
As at 1 January 58 – – – – 11 69
Additions 220 – – – – 1 221
As at 31 December 278 – – – – 12 290
Net carrying amount
As at 31 December 44,060 1,794 33,386 6,442 9,163 4,566 99,411
As at 1 January 23,175 1,983 23,383 7,196 9,204 3,521 68,462
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 259
F-268
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
35. INTANGIBLE ASSETS (CONTINUED)
2021
Expressway Prepaid Software
(in RMB million) Goodwill (i) operating rights land premiums Core deposits Trademarks and others Total
Cost
As at 1 January 23,058 5,129 19,336 15,082 10,008 12,700 85,313
Acquisitions of subsidiaries – – 4,501 – – – 4,501
Additions 267 – 3,200 – – 1,187 4,654
Disposals (92) – (769) – (21) (316) (1,198)
As at 31 December 23,233 5,129 26,268 15,082 9,987 13,571 93,270
Accumulated amortization
As at 1 January – 2,962 1,628 7,132 680 8,594 20,996
Acquisitions of subsidiaries – – 913 – – – 913
Charge for the year – 184 514 754 103 1,469 3,024
Disposals – – (170) – – (24) (194)
As at 31 December – 3,146 2,885 7,886 783 10,039 24,739
Impairment losses
As at 1 January 27 – – – – – 27
Additions 31 – – – – 11 42
As at 31 December 58 – – – – 11 69
Net carrying amount
As at 31 December 23,175 1,983 23,383 7,196 9,204 3,521 68,462
As at 1 January 23,031 2,167 17,708 7,950 9,328 4,106 64,290
As at 31 December 2022, expressway operating rights with a carrying amount of RMB1,604 million (31
December 2021: RMB1,715 million) were pledged as collateral for long-term borrowings amounting to
RMB260 million (31 December 2021: RMB368 million).
As at 31 December 2022, prepaid land premiums with a carrying amount of RMB1,485 million (31 December
2021: RMB1,547 million) were pledged as collateral for long-term borrowings amounting to RMB579 million
(31 December 2021: RMB896 million).
The Group was still in the process of applying for its prepaid land premiums with a carrying amount of
RMB1,936 million as at 31 December 2022 (31 December 2021: RMB1,992 million).
260 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-269
35. INTANGIBLE ASSETS (CONTINUED)
(I) GOODWILL
2022
As at As at
(in RMB million) 1 January Increase Decrease 31 December
Ping An Bank 8,761 – – 8,761
Shanghai Jahwa 2,502 – – 2,502
Mayborn Group Limited 1,749 17 – 1,766
Ping An Securities 328 – – 328
Ping An Commercial Property Investment 66 – – 66
Beijing Shuangronghui Investment Co., Ltd. 134 – – 134
Shanghai Gezhouba Yangming Property Co., Ltd. 241 – – 241
Ping An E-wallet 1,073 – – 1,073
Autohome Inc. 5,265 – – 5,265
TTP Car Inc. 2,438 – – 2,438
New Founder Group – 20,977 – 20,977
Other 676 111 – 787
Total 23,233 21,105 – 44,338
Less: Impairment losses (58) (220) – (278)
Net carrying amount 23,175 20,885 – 44,060
2021
As at As at
(in RMB million) 1 January Increase Decrease 31 December
Ping An Bank 8,761 – – 8,761
Shanghai Jahwa 2,502 – – 2,502
Mayborn Group Limited 1,838 – (89) 1,749
Ping An Securities 328 – – 328
Ping An Commercial Property Investment 66 – – 66
FINANCIAL STATEMENTS
Beijing Shuangronghui Investment Co., Ltd. 134 – – 134
Shanghai Gezhouba Yangming Property Co., Ltd. 241 – – 241
Ping An E-wallet 1,073 – – 1,073
Autohome Inc. 5,265 – – 5,265
TTP Car Inc. 2,171 267 – 2,438
Other 679 – (3) 676
Total 23,058 267 (92) 23,233
Less: Impairment losses (27) (31) – (58)
Net carrying amount 23,031 236 (92) 23,175
When assessing the impairment of goodwill, the main valuation technique used to determine the
recoverable amount of the groups of assets (or groups of cash-generating units) are Fair Value Less Cost
to Sell and Present Value of Future Cash Flows.
Fair value is based on the fair value of stocks issued in the public market or applicable valuation
techniques. The present value of future cash flows is based on business plans approved by management
covering a three- to six-year period and a risk adjusted discount rate. Cash flows beyond that period have
been extrapolated using a steady growth rate and terminal value. Discount rates used by the Group range
from 10% to 17% (2021: from 10% to 17%) and growth rates, where applicable, range from 2% to 35% (2021:
from 2% to 31%) for 2022.
The Group’s right-of-use assets include the above prepaid land premiums and right-of-use assets disclosed
in Note 36.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 261
F-270
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
36. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
RIGHT-OF-USE ASSETS
2022
(in RMB million) Buildings Others Total
Cost
As at 1 January 24,752 4 24,756
Additions 6,428 6 6,434
Disposals (11,459) (1) (11,460)
As at 31 December 19,721 9 19,730
Accumulated depreciation
As at 1 January 10,568 3 10,571
Charge for the year 5,980 2 5,982
Disposals (9,402) (1) (9,403)
As at 31 December 7,146 4 7,150
Impairment provision
As at 1 January – – –
As at 31 December – – –
Net carrying amount
As at 31 December 12,575 5 12,580
As at 1 January 14,184 1 14,185
2021
(in RMB million) Buildings Others Total
Cost
As at 1 January 25,814 26 25,840
Additions 5,725 2 5,727
Disposals (6,787) (24) (6,811)
As at 31 December 24,752 4 24,756
Accumulated depreciation
As at 1 January 9,643 25 9,668
Charge for the year 6,518 2 6,520
Disposals (5,593) (24) (5,617)
As at 31 December 10,568 3 10,571
Impairment provision
As at 1 January – – –
As at 31 December – – –
Net carrying amount
As at 31 December 14,184 1 14,185
As at 1 January 16,171 1 16,172
262 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-271
36. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (CONTINUED)
RIGHT-OF-USE ASSETS (CONTINUED)
The Group’s right-of-use assets include the above assets and prepaid land premiums disclosed in Note 35.
The amount recognized in the Consolidated Income Statement and the Consolidated Statement of Cash
Flows for the year relating to the lease contracts are as follows:
(in RMB million) 2022 2021
Interest expense on lease liabilities 555 602
Expense relating to leases of low-value assets and short-term leases
applied the simplified approach 584 760
Total cash outflows for lease 7,044 8,265
37. OTHER ASSETS
(in RMB million) 31 December 2022 31 December 2021
Other receivables 91,835 74,645
Due from reinsurers 12,311 16,300
Foreclosed assets 2,070 2,345
Prepayments 3,964 4,114
Precious metals held for trading 16,834 18,071
Dividends receivable 1,060 469
Amounts in the processing clearance and settlement 29,680 30,107
Others 20,501 16,310
Gross 178,255 162,361
Less: Impairment provisions (10,229) (8,244)
Including:
Other receivables (6,829) (4,531)
FINANCIAL STATEMENTS
Due from reinsurers (33) (24)
Foreclosed assets (1,699) (1,895)
Precious metals held for trading (279) (251)
Others (1,389) (1,543)
Net 168,026 154,117
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 263
F-272
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
38. POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INSURANCE/
INVESTMENT CONTRACTS
(1) POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INSURANCE CONTRACTS
(in RMB million) 31 December 2022 31 December 2021
Cash and amounts due from banks and other financial institutions 2,987 6,284
Financial assets at fair value through profit or loss
Bonds 257 759
Funds 12,777 20,322
Stocks 3,257 4,211
Other investments 108 183
Financial assets purchased under reverse repurchase agreements 59 49
Other assets 22 39
19,467 31,847
(2) POLICYHOLDER ACCOUNT ASSETS IN RESPECT OF INVESTMENT CONTRACTS
(in RMB million) 31 December 2022 31 December 2021
Cash and amounts due from banks and other financial institutions 1,104 870
Financial assets at fair value through profit or loss
Bonds 1,275 1,167
Funds 978 1,343
Other investments 118 647
Financial assets purchased under reverse repurchase agreements 140 105
Other assets 11 23
3,626 4,155
39. SHARE CAPITAL
Domestic listed Overseas listed
A shares, par value H shares, par value
(million shares) RMB1.00 per share RMB1.00 per share Total
31 December 2021 10,832 7,448 18,280
31 December 2022 10,832 7,448 18,280
40. RESERVES, RETAINED PROFITS AND NON-CONTROLLING INTERESTS
In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic
or other losses as incurred by companies operating in the insurance, banking, trust, securities, futures
and fund businesses. The Group’s respective entities engaged in such businesses would need to make
appropriations for such reserves based on their respective year-end profit or risk assets, the companies
operating in insurance should make appropriations for general reserves based on 10% of net profit, the
company operating in banking should make appropriations based on 1.5% of risk assets, the company
operating in securities should make appropriations based on 10% of net profit, the companies operating in
trust should make appropriations based on 5% of trust claim reserves, the companies operating in futures
should make appropriations based on 10% of net profit, and the companies operating in fund should make
appropriations based on 10% of fund management fees as determined in accordance with PRC Accounting
Standards, and based on the applicable PRC financial regulations, in their annual financial statements. Such
reserves are not available for dividend distribution or transfer to share capital.
In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
Standards and (ii) the retained profits determined in accordance with IFRSs.
264 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-273
41. KEY EMPLOYEE SHARE PURCHASE PLAN
The Company has adopted a Key Employee Share Purchase Plan for the key employees (including
executive directors and senior management) of the Company and its subsidiaries. Shares shall be vested
and awarded to the key employees approved for participation in the plan, subject to the achievement of
certain performance targets.
Movement of reserves relating to the Key Employee Share Purchase Plan is as follows:
Cost of shares held for
Key Employee Share Value of
(in RMB million) Purchase Plan employee services Total
As at 1 January 2022 (1,439) 984 (455)
Purchased (i) (596) – (596)
Share-based compensation expenses (ii) – 573 573
Exercised 790 (790) –
Expired 108 – 108
As at 31 December 2022 (1,137) 767 (370)
Cost of shares held for
Key Employee Share Value of
(in RMB million) Purchase Plan employee services Total
As at 1 January 2021 (1,595) 1,310 (285)
Purchased (i) (670) – (670)
Share-based compensation expenses (ii) – 378 378
Exercised 704 (704) –
Expired 122 – 122
As at 31 December 2021 (1,439) 984 (455)
(i) During the period from 18 March 2022 to 25 March 2022, 12,518,547 ordinary A shares were purchased from the market. The average
price of shares purchased was RMB47.56 per share. The total purchasing cost was RMB596 million (transaction expenses included).
FINANCIAL STATEMENTS
During the period from 26 April 2021 to 29 April 2021, 9,162,837 ordinary A shares were purchased from the market. The average price
of shares purchased was RMB73.13 per share. The total purchasing cost was RMB670 million (transaction expenses included).
(ii) The share-based compensation expenses of the Key Employee Share Purchase Plan and the total value of employee services were
RMB573 million during 2022 (2021: RMB378 million).
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 265
F-274
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
41. KEY EMPLOYEE SHARE PURCHASE PLAN (CONTINUED)
(iii) Movement of shares relating to the Key Employee Share Purchase Plan is as follows (refer to Note 58. (3) for details about
directors):
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Type 2022 the year[1] the year[2] 2022
From 25 March 2019 RMB72.79 per share Directors 404,413 – 404,413 –
to 27 March 2019 The five highest paid – – – –
individuals
Other employees 1,717,131 – 1,585,467 –
From 24 February 2020 RMB80.17 per share Directors 788,544 – 394,269 394,275
to 27 February 2020 The five highest paid – – – –
individuals
Other employees 3,551,755 – 1,545,831 1,546,892
From 26 April 2021 RMB73.13 per share Directors 1,617,652 – 539,215 1,078,437
to 29 April 2021 The five highest paid – – – –
individuals
Other employees 6,922,016 – 2,024,874 4,051,091
From 18 March 2022 RMB47.56 per share Directors – 2,685,633 – 2,685,633
to 25 March 2022 The five highest paid – – – –
individuals
Other employees – 9,832,121 – 9,832,121
[1] The closing price of the domestic listed A shares on the trading day before the period of purchase was RMB45.50 per share.
The lock-up period of the relevant shares is from 28 March 2022 to 27 March 2023. One third of the shares under the Key
Employee Share Purchase Plan will be unlocked each year and vested in batches to employees after the lock-up period
according to rules of the Key Employee Share Purchase Plan, if employees achieve the requirements of the Company’s
performance indicators (including compliant operation indicators, risk management indicators, economic efficiency
indicators, and social responsibility indicators).
[2] The weighted average price of the domestic listed A shares on the trading day before the grant date was RMB44.06 per
share.
[3] From 1 January 2022 to 31 December 2022, the number of shares lapsed under the Key Employee Share Purchase Plan
(excluding directors and the five highest paid individuals) reached 1,436,747; there was no share cancellation under the Key
Employee Share Purchase Plan.
[4] The relevant shares are locked for one year from the purchasing date; one third of the shares will be unlocked each year
and vested in batches to employees after the lock-up period according to rules of the Key Employee Share Purchase Plan.
266 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-275
42. LONG-TERM SERVICE PLAN
The Company has adopted a Long-term Service Plan for the employees of the Company and its
subsidiaries. Shares shall be vested and awarded to the employees participated in the Long-term Service
Plan, subject to the confirmation of their applications made when they retire from the Company.
Movement of reserves relating to the Long-term Service Plan is as follows:
Cost of shares Value of
held for Long-term employee
(in RMB million) Service Plan services Total
As at 1 January 2022 (12,465) 662 (11,803)
Purchased (i) (4,439) – (4,439)
Share-based compensation expenses (ii) – 326 326
Exercised 18 (18) –
As at 31 December 2022 (16,886) 970 (15,916)
Cost of shares Value of
held for Long-term employee
(in RMB million) Service Plan services Total
As at 1 January 2021 (8,284) 371 (7,913)
Purchased (i) (4,184) – (4,184)
Share-based compensation expenses (ii) – 294 294
Exercised 3 (3) –
As at 31 December 2021 (12,465) 662 (11,803)
(i) From 18 March 2022 to 25 March 2022, 93,314,482 ordinary A shares were purchased from the market. The average price of shares
purchased was RMB47.56 per share. The total purchasing cost was RMB4,439 million (transaction expenses included).
From 26 April 2021 to 29 April 2021, 57,368,981 ordinary A shares were purchased from the market. The average price of shares
purchased was RMB72.92 per share. The total purchasing cost was RMB4,184 million (transaction expenses included).
(ii) The share-based compensation expenses and the total value of employee services of the Long-term Service Plan were RMB326
FINANCIAL STATEMENTS
million during 2022 (2021: RMB294 million).
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 267
F-276
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
42. LONG-TERM SERVICE PLAN (CONTINUED)
(iii) Movement of shares relating to the Long-term Service Plan is as follows (refer to Note 58. (3) for details about directors):
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Type 2022 the year[1] the year[2] 2022
From 7 May 2019 RMB79.10 per share Directors 884,666 – – 884,666
to 14 May 2019 The five highest 63,190 – – 63,190
paid individuals
Other employees 53,309,345 – 133,634 53,169,611
From 24 February 2020 RMB80.15 per share Directors 873,264 – – 873,264
to 28 February 2020 The five highest 62,374 – – 62,374
paid individuals
Other employees 48,815,358 – 84,817 48,730,541
From 26 April 2021 RMB72.92 per share Directors 959,784 – – 959,784
to 29 April 2021 The five highest 41,955 – – 41,955
paid individuals
Other employees 56,366,530 – 2,007 56,364,523
From 18 March 2022 RMB47.56 per share Directors – 1,471,562 – 1,471,562
to 25 March 2022 The five highest – 34,686 – 34,686
paid individuals
Other employees – 91,808,234 806 91,807,428
[1] The closing price of the domestic listed A shares on the trading day before the period of purchase was RMB45.50 per share.
Shares shall be vested and awarded to the employees when they retire from the Company, and the number of shares
eligible for vesting is determined according to their performance.
[2] The weighted average price of the domestic listed A shares on the trading day before the grant date was RMB43.31 per
share.
[3] From 1 January 2022 to 31 December 2022, the number of shares lapsed under the Long-term Service Plan (excluding
directors and the five highest paid individuals) reached 6,100; there was no share cancellation under the Long-term Service
Plan.
[4] Shares shall be vested and awarded to the employees participating in the Long-term Service Plan, subject to the
confirmation of their applications made and the payment of relevant taxes when they retire from the Company.
268 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-277
43. TREASURY SHARES
(in RMB million) 31 December 2021 Additions Disposals 31 December 2022
Treasury shares 9,895 1,101 – 10,996
As at 31 December 2022, 172,599,415 A shares had been purchased from the Shanghai Stock Exchange by
centralized bidding. The total repurchasing cost was RMB10,996 million (transaction expenses included).
44. DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS
(in RMB million) 31 December 2022 31 December 2021
Deposits from other banks and financial institutions 453,577 361,700
Due to the Central Bank 191,916 148,162
Short-term borrowings 121,945 116,102
Long-term borrowings 151,539 171,682
918,977 797,646
45. ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE
(in RMB million) 31 December 2022 31 December 2021
Bonds 262,798 127,477
Others 8,939 –
271,737 127,477
As at 31 December 2022, bonds with a carrying amount of RMB168,705 million (31 December 2021: RMB95,158
million) were pledged as collateral for financial assets sold under agreements to repurchase resulted from
repurchase transactions entered into by the Group in the inter-bank market. The collaterals are restricted
from trading during the period of the repurchase transactions.
FINANCIAL STATEMENTS
As at 31 December 2022, the carrying amount of bonds deposited in the collateral pool was RMB321,696
million (31 December 2021: RMB284,423 million). The collaterals are restricted from trading during the period
of the repurchase transactions. The Group can withdraw the exchange-traded bonds from the collateral
pool in short time provided that the value of the bonds is no less than the balance of related repurchase
transactions.
For bonds repurchase transactions through stock exchange, the Group is required to deposit certain
exchange traded bonds and/or bonds transferred under new pledged repurchase transactions with fair
value converted at a standard rate pursuant to stock exchange’s regulation no less than the balance of
related repurchase transactions into a collateral pool.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 269
F-278
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
46. CUSTOMER DEPOSITS AND PAYABLES TO BROKERAGE CUSTOMERS
(in RMB million) 31 December 2022 31 December 2021
Current and savings accounts
Corporate customers 842,380 828,389
Individual customers 297,141 242,554
Term deposits
Corporate customers 1,415,106 1,319,315
Individual customers 751,544 538,863
Subtotal 3,306,171 2,929,121
Payables to brokerage customers
Individual customers 96,810 54,285
Corporate customers 29,018 18,643
Subtotal 125,828 72,928
Total 3,431,999 3,002,049
As at 31 December 2022, bonds classified as financial assets carried at amortized costs with a carrying
amount of RMB22,945 million (31 December 2021: RMB20,245 million) were pledged as main collaterals for
term deposit with the Central Bank.
270 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-279
47. BONDS PAYABLE
The information of the Group’s main bonds payable is as follows:
Early
redemption/ Par value
Selling back (in RMB Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option million) year type (per annum) 2022 2021
Ping An Financial Leasing Corporate bonds None 5 years End of the 2,474 2019 Fixed 3.00%-3.45% 2,518 3,659
third year
Ping An Financial Leasing Corporate bonds None 4 years End of the 1,018 2020 Fixed 3.10%-3.85% 731 2,541
second year
Ping An Financial Leasing Corporate bonds None 5 years End of the 2,750 2020 Fixed 3.88%-4.02% 2,799 2,795
third year
Ping An Financial Leasing Private corporate None 5 years End of the 2,710 2018 Fixed 4.20%-4.30% 2,758 2,755
bonds third year
Ping An Financial Leasing Private corporate None 3 years End of the 600 2019 Fixed 3.95% – 610
bonds second year
Ping An Financial Leasing Private corporate None 4 years End of the 2,700 2019 Fixed 4.10%-4.18% 2,748 2,745
bonds second year
Ping An Financial Leasing Private corporate None 5 years End of the 629 2019 Fixed 3.70% 640 2,541
bonds third year
Ping An Financial Leasing Corporate bonds None 2-4 years End of the 3,100 2021 Fixed 3.60%-4.05% 3,155 3,151
second year
Ping An Financial Leasing Corporate bonds None 3-5 years End of the 1,700 2021 Fixed 3.89%-4.08% 1,730 1,728
third year
Ping An Financial Leasing Corporate bonds None 3-4 years End of the 8,800 2022 Fixed 3.09%-3.65% 8,957 –
second year
Ping An Financial Leasing Corporate bonds None 5 years End of the 1,500 2022 Fixed 3.33%-3.80% 1,527 –
third year
Ping An Financial Leasing Corporate bonds None 2 years End of the first 3,200 2022 Fixed 2.60%-3.60% 3,257 –
year
FINANCIAL STATEMENTS
Ping An Bank Tier-2 Capital None 10 years End of the 30,000 2019 Fixed 4.55% 30,908 30,910
bonds fifth year
Ping An Bank Financial bonds None 3 years None 30,000 2020 Fixed 2.30% 30,414 30,416
Ping An Bank Financial bonds None 3 years None 20,000 2021 Fixed 3.45% 20,629 20,631
Ping An Bank Tier-2 Capital None 10 years End of the 30,000 2021 Fixed 3.69% 30,151 30,149
bonds fifth year
Ping An Bank Financial bonds None 3 years None 20,000 2022 Fixed 2.45% 20,099 –
Ping An Bank Financial bonds None 3 years None 5,000 2022 Fixed 2.45% 5,020 –
Ping An Bank Financial bonds None 3 years None 5,000 2022 Fixed 2.45% 5,020 –
Ping An Bank Financial bonds None 3 years None 20,000 2022 Fixed 2.45% 20,070 –
Ping An Life Capital None 10 years End of the 20,000 2020 Fixed First 5 years: 3.58% 20,767 20,665
supplement fifth year Next 5 years: 4.58%
bonds (if not redeemed)
Ping An Property & Casualty Capital None 10 years End of the 3,500 2017 Fixed First 5 years: 5.10% – 3,562
supplement fifth year Next 5 years: 6.10%
bonds (if not redeemed)
Ping An Property & Casualty Capital None 10 years End of the 10,000 2019 Fixed First 5 years: 4.64% 10,487 10,434
supplement fifth year Next 5 years: 5.64%
bonds (if not redeemed)
Ping An Securities Corporate bonds None 5 years End of the 100 2018 Fixed 3.00% 100 100
third year
Ping An Securities Corporate bonds None 5 years End of the 2,000 2019 Fixed 3.70% – 2,062
third year
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 271
F-280
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
47. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows: (continued)
Early
redemption/ Par value
Selling back (in RMB Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option million) year type (per annum) 2022 2021
Ping An Securities Corporate bonds None 5 years End of the 2,700 2019 Fixed 3.75% – 2,774
third year
Ping An Securities Corporate bonds None 5 years End of the 2,300 2019 Fixed 3.73% – 2,350
third year
Ping An Securities Private corporate None 3 years None 3,500 2019 Fixed 4.05% – 3,612
bonds
Ping An Securities Private corporate None 3 years None 2,000 2019 Fixed 4.20% – 2,058
bonds
Ping An Securities Corporate bonds None 5 years End of the 1,500 2020 Fixed 3.40% 1,548 1,547
third year
Ping An Securities Private corporate None 3 years None 3,000 2020 Fixed 3.19% 3,077 3,077
bonds
Ping An Securities Corporate bonds None 3 years None 4,000 2020 Fixed 3.58% 4,062 4,061
Ping An Securities Corporate bonds None 3 years None 2,550 2020 Fixed 3.70% 2,566 2,565
Ping An Securities Corporate bonds None 547 days None 2,450 2020 Fixed 3.44% – 2,536
Ping An Securities Private corporate None 18 months None 1,500 2021 Fixed 3.70% – 1,547
bonds
Ping An Securities Private corporate None 18 months None 1,500 2021 Fixed 3.50% – 1,541
bonds
Ping An Securities Corporate bonds None 3 years None 3,000 2021 Fixed 3.40% 3,059 3,059
Ping An Securities Corporate bonds None 549 days None 2,000 2021 Fixed 3.05% – 2,035
Ping An Securities Corporate bonds None 3 years None 2,400 2021 Fixed 3.48% 2,445 2,444
Ping An Securities Corporate bonds None 3 years None 1,200 2021 Fixed 3.50% 1,221 1,221
Ping An Securities Corporate bonds None 2 years None 2,000 2021 Fixed 3.35% 2,034 2,034
Ping An Securities Corporate bonds None 3 years None 1,800 2021 Fixed 3.25% 1,825 1,825
Ping An Securities Corporate bonds None 1 year None 2,000 2021 Fixed 2.77% – 2,024
Ping An Securities Corporate bonds None 1 year None 2,000 2021 Fixed 2.67% – 2,018
Ping An Securities Corporate bonds None 3 years None 3,000 2021 Fixed 3.05% 3,034 3,033
Ping An Securities Corporate bonds None 5 years None 2,000 2021 Fixed 3.47% 2,024 2,024
Ping An Securities Corporate bonds None 3 years None 2,600 2021 Fixed 3.37% 2,616 2,615
Ping An Securities Corporate bonds None 1 year None 2,000 2021 Fixed 2.75% – 2,015
Ping An Securities Private corporate None 2 years None 2,000 2021 Fixed 3.25% 2,009 2,009
bonds
Ping An Securities Private corporate None 2 years None 1,500 2021 Fixed 3.20% 1,501 1,500
bonds
Ping An Securities Private corporate None 2 years None 1,500 2022 Fixed 3.07% 1,544 –
bonds
Ping An Securities Corporate bonds None 3 years None 2,300 2022 Fixed 3.00% 2,348 –
Ping An Securities Corporate bonds None 5 years None 500 2022 Fixed 3.42% 512 –
Ping An Securities Subordinated None 3 years None 1,900 2022 Fixed 3.10% 1,936 –
corporate
bonds
Ping An Securities Subordinated None 5 years None 1,100 2022 Fixed 3.56% 1,124 –
corporate
bonds
272 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-281
47. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows: (continued)
Early
redemption/ Par value
Selling back (in RMB Issued Interest Coupon rate 31 December 31 December
Issuer Type Guarantee Maturity option million) year type (per annum) 2022 2021
Ping An Securities Corporate bonds None 3 years None 3,000 2022 Fixed 2.80% 3,034 –
Ping An Securities Corporate bonds None 9 months None 2,000 2022 Fixed 1.95% 2,015 –
Ping An Securities Corporate bonds None 3 years None 500 2022 Fixed 2.75% 505 –
Ping An Securities Corporate bonds None 5 years None 1,000 2022 Fixed 3.22% 1,011 –
Ping An Securities Corporate bonds None 3 years None 2,500 2022 Fixed 2.65% 2,518 –
Ping An Securities Corporate bonds None 6 months None 500 2022 Fixed 2.80% 501 –
Ping An Real Estate Corporate bonds None 5 years End of the 21 2019 Fixed 3.70% – 720
third year
Ping An Real Estate Corporate bonds None 7 years End of the 750 2019 Fixed 4.40% 765 764
fifth year
Ping An Real Estate Corporate bonds None 7 years End of the 940 2019 Fixed 4.30% 957 955
fifth year
Ping An Real Estate Corporate bonds None 7 years End of the 244 2016 Fixed 3.28% 245 265
fifth year
Ping An Financial Private corporate None 5 years End of the 120 2019 Fixed 3.85% 121 3,017
Technology bonds third year
Ping An Financial Private corporate None 5 years End of the 2,000 2020 Fixed 3.40% 2,046 2,045
Technology bonds third year
Ping An Financial Private corporate None 5 years End of the 3,000 2020 Fixed 3.80% 3,063 3,062
Technology bonds third year
Ping An Financial Private corporate None 3 years End of the 950 2020 Fixed 3.60% 956 2,014
Technology bonds second year
Dingshuntong Investment Private corporate None 2 years Yes 272 2020 Fixed 6.74% – 278
FINANCIAL STATEMENTS
bonds
Dingshuntong Investment Private corporate None 2 years Yes 240 2020 Fixed 6.74% – 245
bonds
Evergreen Investment Private corporate Yes 2 years Yes 3,000 2020 Fixed 4.30% – 3,029
Development bonds
Shenzhen Ping An Real Convertible None 3 years Yes 273 2019 Fixed 6.74% – 280
Estate Investment Co., Ltd. bonds
Shenzhen Ping An Real Convertible None 2 years Yes 289 2020 Fixed 6.69% – 302
Estate Investment Co., Ltd. bonds
Lianxin Investment Private corporate None 5 years End of the 2,000 2020 Fixed 5.40% 2,003 2,004
bonds third year
Lianxin Investment Private corporate None 3 years End of the 1,000 2021 Fixed 4.50% 1,031 1,031
bonds second year
Founder Securities Corporate bonds None 2 years None 1,000 2022 Fixed 3.49% 1,025 –
Founder Securities Corporate bonds None 366 days None 800 2022 Fixed 3.18% 817 –
Founder Securities Corporate bonds None 2 years None 700 2022 Fixed 3.40% 716 –
Founder Securities Corporate bonds None 2 years None 600 2022 Fixed 3.18% 611 –
Founder Securities Corporate bonds None 3 years None 1,000 2022 Fixed 2.95% 1,007 –
Founder Securities Corporate bonds None 2 years None 700 2022 Fixed 2.75% 702 –
Founder Securities Corporate bonds None 3 years None 1,300 2022 Fixed 2.94% 1,304 –
Founder Securities Corporate bonds None 2 years None 400 2022 Fixed 4.30% 400 –
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 273
F-282
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
47. BONDS PAYABLE (CONTINUED)
The information of the Group’s main bonds payable is as follows: (continued)
As at 31 December 2022, the original terms of interbank certificates of deposit issued by Ping An Bank,
but unmatured were from 1 month to 1 year, and the annual interest rates were from 1.65% to 3.01% (31
December 2021: the original terms were from 3 months to 1 year, and the annual interest rates were from
0.27% to 3.18%). The carrying amount was RMB529,764 million (31 December 2021: RMB711,828 million).
As at 31 December 2022, the original terms of short-term financial bonds issued by Ping An Securities,
but unmatured were from 92 days to 365 days, and the annual interest rates were from 1.84% to 2.66% (31
December 2021: the original terms were from 92 days to 365 days, and the annual interest rates were from
2.70% to 2.79%). The carrying amount was RMB11,109 million (31 December 2021: RMB6,929 million).
As at 31 December 2022, the original terms of short-term financial bonds issued by Ping An Financial
Leasing, but unmatured were from 63 days to 365 days, and the annual interest rates were from 2.64% to
4.10% (31 December 2021: the original terms were from 150 days to 365 days, and the annual interest rates
were from 2.78% to 4.00%). The carrying amount was RMB3,970 million (31 December 2021: RMB12,097 million).
As at 31 December 2022, the original term of short-term financial bonds issued by Ping An Real Estate, but
unmatured was 210 days, and the annual interest rate was 3.38% (31 December 2021: the original terms were
from 268 days to 270 days, and the annual interest rates were from 3.08% to 3.20%). The carrying amount was
RMB1,520 million (31 December 2021: RMB2,532 million).
As at 31 December 2022, the original terms of short-term financial bonds issued by Founder Securities, but
unmatured were from 175 days to 365 days, and the annual interest rates were from 3.05% to 4.20%. The
carrying amount was RMB8,999 million.
As at 31 December 2022, the original term of income certificates issued by Ping An Securities, but
unmatured was 14 days, and the annual interest rates were from 4.48% to 5.11% (31 December 2021: the
original terms were from 14 days to 240 days, and the annual interest rates were from 3.65% to 5.20%). The
carrying amount was RMB81 million (31 December 2021: RMB2,201 million).
As at 31 December 2022, the original terms of income certificates issued by Founder Securities, but
unmatured were from 366 days to 733 days, and the annual interest rates were from 3.20% to 4.45%. The
carrying amount was RMB5,569 million.
48. INSURANCE CONTRACT LIABILITIES
(in RMB million) 31 December 2022 31 December 2021
Long-term life insurance policyholders’ reserves 2,430,854 2,183,788
Policyholder contract deposits 805,293 756,373
Policyholder account liabilities in respect of insurance contracts 19,467 31,847
Unearned premium reserves 173,742 170,420
Claim reserves 138,393 118,926
Total 3,567,749 3,261,354
274 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-283
48. INSURANCE CONTRACT LIABILITIES (CONTINUED)
31 December 2022
Insurance
(in RMB million) contract liabilities Reinsurers’ share Net
Long-term life insurance contracts 3,255,614 (2,636) 3,252,978
Short-term life insurance contracts 21,586 (246) 21,340
Property and casualty insurance contracts 290,549 (22,087) 268,462
3,567,749 (24,969) 3,542,780
31 December 2021
Insurance
(in RMB million) contract liabilities Reinsurers’ share Net
Long-term life insurance contracts 2,972,008 (2,291) 2,969,717
Short-term life insurance contracts 21,401 (4,725) 16,676
Property and casualty insurance contracts 267,945 (19,836) 248,109
3,261,354 (26,852) 3,234,502
(in RMB million) 31 December 2022 31 December 2021
Current portion*
Long-term life (35,543) (67,907)
Short-term life 20,335 19,851
Property and casualty 178,293 166,017
Non-current portion
Long-term life 3,291,157 3,039,915
Short-term life 1,251 1,550
Property and casualty 112,256 101,928
Total 3,567,749 3,261,354
FINANCIAL STATEMENTS
* Estimated net cash flows within 12 months from the end of the reporting period.
(1) LONG-TERM LIFE INSURANCE CONTRACTS
(in RMB million) 31 December 2022 31 December 2021
Long-term life insurance policyholders’ reserves 2,430,854 2,183,788
Policyholder contract deposits 805,293 756,373
Policyholder account liabilities in respect of insurance contracts 19,467 31,847
3,255,614 2,972,008
The long-term life insurance policyholders’ reserves are analysed as follows:
(in RMB million) 2022 2021
As at 1 January 2,183,788 1,931,023
Increase during the year 414,471 403,536
Decrease during the year
Claims and benefits paid (106,363) (96,804)
Surrender (62,106) (54,823)
Others 1,064 856
As at 31 December 2,430,854 2,183,788
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 275
F-284
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
48. INSURANCE CONTRACT LIABILITIES (CONTINUED)
(1) LONG-TERM LIFE INSURANCE CONTRACTS (CONTINUED)
The policyholder contract deposits are analysed as follows:
(in RMB million) 2022 2021
As at 1 January 756,373 705,657
Policyholder principal increased 81,967 86,519
Accretion of investment income 29,609 33,327
Liabilities released for benefits paid (49,854) (55,763)
Policy administration fees and risk premiums deducted (12,802) (13,367)
As at 31 December 805,293 756,373
(2) SHORT-TERM LIFE INSURANCE CONTRACTS
(in RMB million) 31 December 2022 31 December 2021
Unearned premium reserves 10,533 10,613
Claim reserves 11,053 10,788
21,586 21,401
The unearned premium reserves of short-term life insurance are analysed as follows:
2022 2021
Reinsurers’ Reinsurers’
(in RMB million) Gross share Net Gross share Net
As at 1 January 10,613 (2,473) 8,140 10,479 (747) 9,732
Increase 31,841 (4,394) 27,447 35,423 (13,619) 21,804
Decrease (31,921) 6,990 (24,931) (35,289) 11,893 (23,396)
As at 31 December 10,533 123 10,656 10,613 (2,473) 8,140
The claim reserves of short-term life insurance are analysed as follows:
2022 2021
Reinsurers’ Reinsurers’
(in RMB million) Gross share Net Gross share Net
As at 1 January 10,788 (2,252) 8,536 12,689 (1,239) 11,450
Increase 19,346 (3,875) 15,471 21,586 (9,029) 12,557
Decrease (19,081) 5,758 (13,323) (23,487) 8,016 (15,471)
As at 31 December 11,053 (369) 10,684 10,788 (2,252) 8,536
276 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-285
48. INSURANCE CONTRACT LIABILITIES (CONTINUED)
(3) PROPERTY AND CASUALTY INSURANCE CONTRACTS
(in RMB million) 31 December 2022 31 December 2021
Unearned premium reserves 163,209 159,807
Claim reserves 127,340 108,138
290,549 267,945
The unearned premium reserves of property and casualty insurance are analysed as follows:
2022 2021
Reinsurers’ Reinsurers’
(in RMB million) Gross share Net Gross share Net
As at 1 January 159,807 (8,611) 151,196 166,562 (7,661) 158,901
Increase 261,372 (17,944) 243,428 231,665 (12,854) 218,811
Decrease (257,970) 17,274 (240,696) (238,420) 11,904 (226,516)
As at 31 December 163,209 (9,281) 153,928 159,807 (8,611) 151,196
The claim reserves of property and casualty insurance are analysed as follows:
2022 2021
Reinsurers’ Reinsurers’
(in RMB million) Gross share Net Gross share Net
As at 1 January 108,138 (11,225) 96,913 97,254 (8,624) 88,630
Increase 203,776 (9,698) 194,078 185,664 (10,725) 174,939
Decrease (184,574) 8,117 (176,457) (174,780) 8,124 (166,656)
As at 31 December 127,340 (12,806) 114,534 108,138 (11,225) 96,913
FINANCIAL STATEMENTS
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 277
F-286
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
49. INVESTMENT CONTRACT LIABILITIES FOR POLICYHOLDERS
(in RMB million) 31 December 2022 31 December 2021
Policyholder account liabilities in respect of investment contracts 3,626 4,155
Investment contract reserves 70,236 68,684
73,862 72,839
The investment contract liabilities are analysed as follows:
(in RMB million) 2022 2021
As at 1 January 72,839 67,581
Policyholder principal increased 9,599 14,209
Accretion of investment income 1,548 2,412
Liabilities released for benefits paid (9,934) (11,270)
Policy administration fees and risk premiums deducted (65) (68)
Others (125) (25)
As at 31 December 73,862 72,839
As at 31 December 2022 and 2021, all reinsurance contracts of the Group transferred significant insurance
risks.
278 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-287
50. DEFERRED TAX ASSETS AND LIABILITIES
(in RMB million) 31 December 2022 31 December 2021
Deferred tax assets 92,846 65,360
Deferred tax liabilities (14,217) (13,605)
Net 78,629 51,755
The deferred tax assets are analysed as follows:
2022
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss 1,018 4,255 – – 5,273 (21,092)
Fair value adjustments on financial
assets at fair value through other
comprehensive income 13,590 – (1,880) 4 11,714 (46,856)
Insurance contract liabilities 6,408 (1,594) 1,859 – 6,673 (26,692)
Impairment provisions 49,410 5,956 (481) – 54,885 (219,540)
Others 8,011 11,483 120 500 20,114 (80,456)
78,437 20,100 (382) 504 98,659 (394,636)
2021
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
FINANCIAL STATEMENTS
value through profit or loss 163 849 – 6 1,018 (4,072)
Fair value adjustments on financial
assets at fair value through other
comprehensive income 12,251 – 1,339 – 13,590 (54,360)
Insurance contract liabilities 8,745 (1,395) (942) – 6,408 (25,632)
Impairment provisions 41,808 8,349 (702) (45) 49,410 (197,640)
Others 7,172 414 57 368 8,011 (32,044)
70,139 8,217 (248) 329 78,437 (313,748)
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 279
F-288
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
50. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
The deferred tax liabilities are analysed as follows:
2022
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss (10,143) 7,717 – (6) (2,432) 9,728
Fair value adjustments on financial
assets at fair value through other
comprehensive income (673) – 31 – (642) 2,568
Intangible assets-core deposits (1,799) 189 – – (1,610) 6,442
Intangible assets valuation premium
from acquisition of Autohome Inc. (1,923) 39 – – (1,884) 7,536
Assets valuation premium from
disposal of subsidiaries (3,615) – – – (3,615) 14,460
Others (8,529) 1,215 73 (2,606) (9,847) 39,388
(26,682) 9,160 104 (2,612) (20,030) 80,122
2021
Temporary
difference
As at Charged to Charged to Other As at as at
(in RMB million) 1 January profit or loss equity changes 31 December 31 December
Fair value adjustments on financial
assets and liabilities carried at fair
value through profit or loss (12,994) 2,833 – 18 (10,143) 40,572
Fair value adjustments on financial
assets at fair value through other
comprehensive income (763) – 94 (4) (673) 2,692
Intangible assets-core deposits (1,987) 188 – – (1,799) 7,196
Intangible assets valuation premium
from acquisition of Autohome Inc. (1,966) 43 – – (1,923) 7,692
Assets valuation premium from
disposal of subsidiaries (3,615) – – – (3,615) 14,460
Others (6,180) (2,243) 153 (259) (8,529) 34,116
(27,505) 821 247 (245) (26,682) 106,728
280 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-289
50. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
As at 31 December 2022, unrecognized tax losses of the Group were RMB38,697 million (31 December 2021:
RMB24,847 million).
The following table shows unrecognized tax losses based on its expected expiry date:
(in RMB million) 31 December 2022 31 December 2021
2022 – 1,054
2023 2,992 2,032
2024 5,864 5,585
2025 7,077 7,689
2026 6,041 8,487
2027 16,723 –
38,697 24,847
The net amounts of deferred tax assets and liabilities after offsetting are as follows:
31 December 2022 31 December 2021
(in RMB million) Offsetting Net Offsetting Net
Deferred tax assets (5,813) 92,846 (13,077) 65,360
Deferred tax liabilities 5,813 (14,217) 13,077 (13,605)
51. OTHER LIABILITIES
(in RMB million) 31 December 2022 31 December 2021
Other payables 195,322 191,577
Payables to non-controlling interests of consolidated structured
entities 22,260 31,815
FINANCIAL STATEMENTS
Salaries and welfare payable 47,723 45,759
Other tax payable 9,795 9,668
Contingency provision 10,033 4,026
Insurance guarantee fund 1,161 804
Provision payables 5,781 6,569
Accruals 11,538 9,599
Deferred income 1,909 1,661
Contract liabilities 6,382 5,179
Finance lease deposits 15,232 19,297
Others 32,196 18,270
359,332 344,224
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 281
F-290
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
52. FIDUCIARY ACTIVITIES
(in RMB million) 31 December 2022 31 December 2021
Assets under trust schemes 537,178 444,454
Assets under annuity investments and annuity schemes 669,251 712,159
Assets under asset management schemes 1,790,619 1,719,031
Entrusted loans of banking operations 178,386 190,853
Entrusted investments of banking operations 886,840 872,066
4,062,274 3,938,563
53. RISK AND CAPITAL MANAGEMENT
(1) INSURANCE RISK
Type of insurance risk
Insurance risk refers to the risk that actual indemnity might exceed expected indemnity due to the
frequency and severity of insurance accidents, as well as the possibility that insurance surrender rates are
being underestimated. The principal risk the Group faces under such contracts is that the actual claims and
benefit payments exceed the carrying amount of insurance liabilities. This could occur due to any of the
following factors:
Occurrence risk – the possibility that the number of insured events will differ from those expected.
Severity risk – the possibility that the cost of the events will differ from those expected.
Development risk – the possibility that changes may occur in the amount of an insurer’s obligation at
the end of the contract period.
The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance
contracts as a more diversified portfolio is less likely to be affected across the board by change in any
subset of the portfolio. The variability of risks is also improved by careful selection and implementation of
underwriting strategies and guidelines.
The insurance business of the Group mainly comprises long-term life insurance contracts, property
and casualty and short-term life insurance contracts. For contracts where death is the insured risk, the
significant factors that could increase the overall frequency of claims are epidemics, widespread changes
in lifestyles and natural disasters, resulting in earlier or more claims than expected. For contracts where
survival is the insured risk, the most significant factor is continuing improvement in medical science and
social conditions that would increase longevity. For property and casualty insurance contracts, claims are
often affected by natural disasters, calamities, terrorist attacks, etc.
These risks currently do not vary significantly in relation to the location of the risk insured by the Group
whilst undue concentration by amounts could have an impact on the severity of benefit payments on a
portfolio basis.
282 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-291
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Type of insurance risk (Continued)
There would be no significant mitigating terms and conditions that reduce the insured risk accepted for
contracts with fixed and guaranteed benefits and fixed future premiums. However, for contracts with
discretionary participation features, the participating nature of these contracts results in a significant
portion of the insurance risk being shared with the insured party.
Insurance risk is also affected by the policyholders’ rights to terminate the contract, pay reduced
premiums, refuse to pay premiums or exercise annuity conversion option, etc. Thus, the resultant insurance
risk is subject to policyholders’ behaviour and decisions.
Concentration of insurance risks
The Group runs its insurance business primarily within the PRC. Hence the geographical insurance risk is
concentrated primarily within the PRC.
The Group’s concentration of insurance risk is reflected by its major lines of business as analysed by
insurance contract liabilities in Note 48.
Assumptions and sensitivities
(a) Long-term life insurance contracts
Assumptions
Significant judgement is required in determining insurance contract reserves and in choosing discount
rates/investment return, mortality, morbidity, lapse rates, policy dividend, and expenses assumptions
relating to long-term life insurance contracts.
Sensitivities
FINANCIAL STATEMENTS
The Group has measured the impact on long-term life insurance contract liabilities using sensitivity analysis,
of varying independently certain assumptions under reasonable and possible circumstances. The following
changes in assumptions have been considered:
discount rate/investment return assumption increased by 10 basis points;
discount rate/investment return assumption decreased by 10 basis points;
a 10% increase in mortality, morbidity, accident rates and etc. (a 10% increase in mortality rates of
annuity policies before the payment period, a 10% decrease in the payment period);
a 10% increase in policy lapse rates; and
a 5% increase in maintenance expense rates.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 283
F-292
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(a) Long-term life insurance contracts (Continued)
31 December 2022
Impact on gross Impact on net
long-term long-term
life insurance life insurance
policyholders’ policyholders’ Impact on profit Impact on equity
reserves reserves before tax before tax
Change in
(in RMB million) assumptions Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease)
Discount rate/investment return +10bps (16,642) (16,643) 16,643 16,643
Discount rate/investment return –10bps 17,040 17,041 (17,041) (17,041)
Mortality, morbidity, accident rates
and etc. +10% 68,178 68,109 (68,109) (68,109)
Policy lapse rates +10% 12,096 12,097 (12,097) (12,097)
Maintenance expense rates +5% 4,352 4,352 (4,352) (4,352)
31 December 2021
Impact on gross Impact on net
long-term long-term
life insurance life insurance
policyholders’ policyholders’ Impact on profit Impact on equity
reserves reserves before tax before tax
Change in
(in RMB million) assumptions Increase/(decrease) Increase/(decrease) Increase/(decrease) Increase/(decrease)
Discount rate/investment return +10bps (13,141) (13,142) 13,142 13,142
Discount rate/investment return –10bps 13,460 13,461 (13,461) (13,461)
Mortality, morbidity, accident rates
and etc. +10% 66,256 66,207 (66,207) (66,207)
Policy lapse rates +10% 16,694 16,693 (16,693) (16,693)
Maintenance expense rates +5% 4,122 4,122 (4,122) (4,122)
Note: For long-term life and health insurance contracts where the future insurance benefits are not affected by investment return of the
underlying asset portfolio, the amounts above represent the results of sensitivity analysis calculated by the discount rates when the
benchmark yield curve for the measurement of insurance contract liabilities increases or decreases 10bps, with consideration of the
Cai Kuai [2017] No.637 issued by the former CIRC and other relevant regulations.
284 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-293
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts
Assumptions
The principal assumptions underlying the estimates includes assumptions in respect of average claim
costs, claims handling costs, claims inflation factors and claim numbers for each accident year which are
determined based on the Group’s past claim experiences. Judgement is used to assess the extent to which
external factors such as judicial decisions and government legislation affect the estimates.
Other key assumptions include delays in settlement, etc.
Sensitivities
The property and casualty and short-term life insurance claim reserves are sensitive to the above key
assumptions. The sensitivity of certain variables including legislative change, uncertainty in the estimation
process, etc., is not possible to quantify. Furthermore, because of delays that arise between the occurrence
of a claim and its subsequent notification and eventual settlement, the outstanding claim reserves are not
known with certainty at the end of the reporting period.
Reproduced below is an exhibit that shows the development of gross claim reserves of property and
casualty insurance by the accident year:
(in RMB million) 2018 2019 2020 2021 2022 Total
Estimated cumulative claims paid:
As at the end of current year 134,483 150,592 166,997 194,826 200,136
One year later 129,907 146,275 161,174 189,188
Two years later 124,672 142,235 159,929
FINANCIAL STATEMENTS
Three years later 120,933 140,683
Four years later 121,682
Estimated cumulative claims 121,682 140,683 159,929 189,188 200,136 811,618
Cumulative claims paid (119,780) (136,603) (148,774) (163,073) (128,055) (696,285)
Subtotal 115,333
Prior year adjustments,
unallocated loss adjustment
expenses, discount and risk
margin 12,007
Outstanding claim reserves 127,340
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 285
F-294
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities (continued)
Reproduced below is an exhibit that shows the development of net claim reserves of property and casualty
insurance by the accident year:
(in RMB million) 2018 2019 2020 2021 2022 Total
Estimated cumulative claims paid:
As at the end of current year 125,966 141,982 158,308 183,409 189,335
One year later 121,579 138,059 152,791 178,028
Two years later 116,721 134,343 151,705
Three years later 113,193 133,028
Four years later 113,991
Estimated cumulative claims 113,991 133,028 151,705 178,028 189,335 766,087
Cumulative claims paid (112,479) (129,621) (141,806) (155,886) (122,919) (662,711)
Subtotal 103,376
Prior year adjustments,
unallocated loss adjustment
expenses, discount and risk
margin 11,158
Outstanding claim reserves 114,534
286 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-295
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities (continued)
Reproduced below is an exhibit that shows the development of gross claim reserves of short-term life
insurance by the accident year:
(in RMB million) 2018 2019 2020 2021 2022 Total
Estimated cumulative
claims paid:
As at the end of current year 16,879 21,107 26,858 25,963 22,167
One year later 15,917 21,157 24,707 24,926
Two years later 15,986 20,478 23,435
Three years later 15,802 20,423
Four years later 15,836
Estimated cumulative claims 15,836 20,423 23,435 24,926 22,167 106,787
Cumulative claims paid (15,832) (20,419) (23,417) (23,325) (13,388) (96,381)
Subtotal 10,406
Prior year adjustments,
unallocated loss adjustment
expenses and risk margin 647
Outstanding claim reserves 11,053
Reproduced below is an exhibit that shows the development of net claim reserves of short-term life
FINANCIAL STATEMENTS
insurance by the accident year:
(in RMB million) 2018 2019 2020 2021 2022 Total
Estimated cumulative
claims paid:
As at the end of current year 15,809 19,146 24,258 18,842 18,486
One year later 14,760 18,997 21,819 19,044
Two years later 14,849 18,202 20,860
Three years later 14,663 18,147
Four years later 14,697
Estimated cumulative claims 14,697 18,147 20,860 19,044 18,486 91,234
Cumulative claims paid (14,693) (18,143) (20,847) (17,580) (9,806) (81,069)
Subtotal 10,165
Prior year adjustments,
unallocated loss adjustment
expenses and risk margin 519
Outstanding claim reserves 10,684
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 287
F-296
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(1) INSURANCE RISK (CONTINUED)
Assumptions and sensitivities (Continued)
(b) Property and casualty and short-term life insurance contracts (Continued)
Sensitivities (continued)
To illustrate the sensitivities of ultimate claims costs, for example, a respective percentage change in the
average claim costs alone results in a similar percentage change in claim reserves:
31 December 2022
Impact on gross Impact on net Impact on profit Impact on equity
Change in claim reserves claim reserves before tax before tax
(in RMB million) assumptions increase increase decrease decrease
Average claim costs
Property and casualty insurance +5% 6,367 5,727 (5,727) (5,727)
Short-term life insurance +5% 579 534 (534) (534)
31 December 2021
Impact on gross Impact on net Impact on profit Impact on equity
Change in claim reserves claim reserves before tax before tax
(in RMB million) assumptions increase increase decrease decrease
Average claim costs
Property and casualty insurance +5% 5,407 4,846 (4,846) (4,846)
Short-term life insurance +5% 561 427 (427) (427)
(c) Reinsurance
The Group limits its exposure to losses from insurance operations mainly through participation in
reinsurance arrangements. The majority of the business ceded is placed on the quota share basis and
the surplus basis with retention limits varying by product lines. Amounts recoverable from reinsurers are
estimated in a manner consistent with the assumptions used for ascertaining the underlying policy benefits
and are presented in the statement of financial position as reinsurers’ share of insurance liabilities and due
from reinsurers.
Even though the Group may have reinsurance arrangements, it is not relieved of its direct obligations to its
policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any
reinsurer is unable to meet its obligations assumed under such reinsurance agreements.
288 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-297
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK
Market risk is the risk of changes in fair value of financial instruments and future cash flows from
fluctuation of market prices, which includes three types of risks from volatility of foreign exchange rates
(foreign currency risk), market interest rates (interest rate risk) and market prices (price risk).
(a) Foreign currency risk
Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates.
Fluctuations in exchange rates between the RMB and other currencies in which the Group conducts
business may affect its financial position and results of operations. The foreign currency risk facing the
Group mainly comes from movements in the USD/RMB and HKD/RMB exchange rates. The Group sets
limitation to its position of foreign currency, monitors the size of foreign currency position, and limits the
foreign currency position within the threshold set by utilizing hedging strategy.
The analysis below is performed for reasonably possible movements in key variables with all other variables
held constant, showing the pre-tax impact on profit and equity (due to changes in fair value of foreign
currency denominated non-monetary assets and liabilities measured at fair value, as well as monetary
assets and liabilities). The correlation of variables will have a significant effect on determining the ultimate
impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis.
31 December 2022 31 December 2021
Increase/ Increase/ Increase/ Increase/
Change in (decrease) in (decrease) in (decrease) in (decrease) in
(in RMB million) variables profit before tax equity before tax profit before tax equity before tax
USD +5% 1,381 2,834 823 2,559
HKD +5% 482 1,183 898 1,448
Other currencies +5% 387 764 591 924
2,250 4,781 2,312 4,931
FINANCIAL STATEMENTS
USD -5% (1,381) (2,834) (823) (2,559)
HKD -5% (482) (1,183) (898) (1,448)
Other currencies -5% (387) (764) (591) (924)
(2,250) (4,781) (2,312) (4,931)
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 289
F-298
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(a) Foreign currency risk (Continued)
The main monetary assets and liabilities of the Group (excluding balances of investment-linked contracts)
and non-monetary assets and liabilities measured at fair value are analysed as follows by currency:
31 December 2022
USD HKD Others RMB
(RMB (RMB (RMB equivalent
(in RMB million) RMB equivalent) equivalent) equivalent) total
Assets
Cash and amounts due from banks and
other financial institutions 643,483 112,157 8,758 6,353 770,751
Balances with the Central Bank and
statutory deposits for insurance operations 289,046 6,116 397 – 295,559
Financial assets purchased under
reverse repurchase agreements 91,315 – – – 91,315
Premium receivables 69,955 2,230 95 – 72,280
Accounts receivable 36,016 1 – 101 36,118
Reinsurers’ share of insurance liabilities 21,136 3,330 503 – 24,969
Policy loans 188,765 – – – 188,765
Finance lease receivable 186,858 – – – 186,858
Loans and advances to customers 3,048,119 124,470 37,780 27,685 3,238,054
Financial assets at fair value through
profit or loss 1,507,624 96,929 9,131 17,732 1,631,416
Financial assets at amortized cost 2,952,906 46,441 2,356 2,799 3,004,502
Debt financial assets at fair value
through other comprehensive income 438,987 26,773 1,271 – 467,031
Equity financial assets at fair value
through other comprehensive income 248,571 688 5,844 – 255,103
Other assets 123,370 4,862 1,685 71 129,988
9,846,151 423,997 67,820 54,741 10,392,709
Liabilities
Due to banks and other financial institutions 799,285 92,228 12,567 14,897 918,977
Financial liabilities at fair value
through profit or loss 85,895 2,787 – 88 88,770
Assets sold under agreements to repurchase 266,869 4,868 – – 271,737
Accounts payable 10,349 – – – 10,349
Insurance payables 152,472 951 81 4 153,508
Policyholder dividend payable 71,414 29 – 2 71,445
Customer deposits and payables to
brokerage customers 3,169,278 242,914 13,817 5,990 3,431,999
Bonds payable 901,191 29,907 – – 931,098
Insurance contract liabilities 3,561,267 5,455 1,012 15 3,567,749
Investment contract liabilities for policyholders 73,856 6 – – 73,862
Other liabilities 234,443 3,052 525 619 238,639
9,326,319 382,197 28,002 21,615 9,758,133
Net position of foreign currency 41,800 39,818 33,126 114,744
Notional amount of foreign exchange
derivative financial instruments 14,888 (16,161) (17,841) (19,114)
56,688 23,657 15,285 95,630
Off-balance sheet credit commitments 1,790,679 25,879 1,003 9,399 1,826,960
290 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-299
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(a) Foreign currency risk (Continued)
31 December 2021
USD HKD Others RMB
(RMB (RMB (RMB equivalent
(in RMB million) RMB equivalent) equivalent) equivalent) total
Assets
Cash and amounts due from banks
and other financial institutions 481,286 82,019 15,764 5,926 584,995
Balances with the Central Bank and
statutory deposits for insurance operations 310,223 10,171 560 – 320,954
Financial assets purchased under reverse
repurchase agreements 61,429 – – – 61,429
Premium receivables 77,922 1,861 51 – 79,834
Accounts receivable 26,541 1 – 86 26,628
Reinsurers’ share of insurance liabilities 24,205 2,219 428 – 26,852
Policy loans 178,298 – – – 178,298
Finance lease receivable 200,701 – – – 200,701
Loans and advances to customers 2,799,799 142,393 16,221 22,562 2,980,975
Financial assets at fair value through
profit or loss 1,287,033 101,821 17,460 20,363 1,426,677
Financial assets at amortized cost 2,727,348 38,392 2,123 1,132 2,768,995
Debt financial assets at fair value
through other comprehensive income 398,471 28,977 1,082 – 428,530
Equity financial assets at fair value
through other comprehensive income 262,383 620 5,212 – 268,215
Other assets 111,060 6,008 962 135 118,165
8,946,699 414,482 59,863 50,204 9,471,248
Liabilities
FINANCIAL STATEMENTS
Due to banks and other financial institutions 700,202 89,335 1,625 6,484 797,646
Financial liabilities at fair value
through profit or loss 54,738 2,548 – 90 57,376
Assets sold under agreements to repurchase 122,577 4,900 – – 127,477
Accounts payable 6,663 – – – 6,663
Insurance payables 149,750 947 67 3 150,767
Policyholder dividend payable 67,249 25 – 2 67,276
Customer deposits and payables to
brokerage customers 2,724,575 253,388 17,133 6,953 3,002,049
Bonds payable 1,064,171 32,625 – 727 1,097,523
Insurance contract liabilities 3,256,611 3,837 890 16 3,261,354
Investment contract liabilities for policyholders 72,833 6 – – 72,839
Other liabilities 223,043 3,469 1,074 23 227,609
8,442,412 391,080 20,789 14,298 8,868,579
Net position of foreign currency 23,402 39,074 35,906 98,382
Notional amount of foreign exchange
derivative financial instruments 27,780 (10,112) (17,433) 235
51,182 28,962 18,473 98,617
Off-balance sheet credit commitments 1,522,035 30,485 1,126 7,561 1,561,207
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 291
F-300
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(b) Price risk
The Group’s price risk exposure relates to financial assets and liabilities whose values will fluctuate as a
result of changes in market prices (other than those arising from interest rate risk or foreign currency risk),
which mainly include listed equity securities and security investment funds classified as equity financial
assets at fair value through other comprehensive income and financial assets at fair value through profit or
loss.
The above investments are exposed to price risk because of changes in market prices, where changes are
caused by factors specific to the individual financial instruments or their issuers, or factors affecting all
similar financial instruments traded in the market.
The Group manages price risks by diversification of investments, setting limits for investments in different
securities, etc.
The Group uses a 10-day market price value-at-risk (“VaR”) technique to estimate its risk exposure for
listed equity securities and equity investments funds. The Group adopts 10-day as the holding period on
the assumption that not all the investments can be sold on the same day. Moreover, the VaR calculation is
made based on normal market conditions and a 99% confidence interval.
The use of VaR has limitations because it is based on historical correlations and volatilities in market prices
and assumes that future price movements will follow a statistical distribution. Due to the fact that VaR
relies heavily on historical data to provide information and may not clearly predict future changes and
modifications of the risk factors, the probability of large market moves may be underestimated if changes
in risk factors fail to align with the normal distribution assumption. The VaR may also be under or over
estimated due to the assumption placed on risk factors and the relationship between such factors for
specific instruments. Even though positions may change throughout the day, the VaR only represents the
risk of the portfolios at the close of each business day, and it does not account for any losses that may
occur beyond the 99% confidence interval.
In practice, the actual trading results will differ from the VaR calculation and, in particular, the calculation
does not provide a meaningful indication of profits and losses in stressed market conditions.
The analysis below is the estimated impact for listed stocks and security investment funds with 10-day
reasonable market fluctuation in using the VaR model in the normal market.
(in RMB million) 31 December 2022 31 December 2021
Listed stocks and security investment funds 33,881 21,492
The Group expects that current listed stocks and equity investments funds will not lose more than
RMB33,881 million due to market price movements in a 10-trading-day holding period on 99% of occasions.
292 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-301
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(c) Interest rate risk
Interest rate risk is the risk that the value/future cash flows of a financial instrument will fluctuate because
of changes in market interest rates.
Floating rate instruments expose the Group to cash flow interest rate risk, whereas fixed rate instruments
expose the Group to fair value interest risk.
The Group’s interest rate risk policy requires it to manage interest rate risk by maintaining an appropriate
mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of
interest-bearing financial assets and interest-bearing financial liabilities. Interest on floating rate
instruments is repriced at intervals of less than one year. Interest on fixed interest rate instruments is
priced at inception of the financial instruments and is fixed until maturity.
The analysis below is performed for reasonably possible movements in interest rate with all other variables
held constant, for the following financial instruments, showing the pre-tax impact on the Group’s profit (fair
value change on bonds carried at fair value through profit or loss) and equity (fair value change on bonds
carried at fair value through profit or loss and bonds carried at fair value through other comprehensive
income).
31 December 2022 31 December 2021
Increase/ Increase/ Increase/ Increase/
(decrease) (decrease) (decrease) (decrease)
Change in in profit in equity in profit in equity
(in RMB million) interest rate before tax before tax before tax before tax
Bonds carried at fair value through
profit or loss and through other
comprehensive income –50 bps 7,912 15,849 6,138 13,700
Bonds carried at fair value through
profit or loss and through other
FINANCIAL STATEMENTS
comprehensive income +50 bps (7,912) (15,849) (6,138) (13,700)
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 293
F-302
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(c) Interest rate risk (Continued)
The following sensitivity analysis is based on the assumption that the floating rate bonds, floating rate term
deposits and loans and advances have a static structure of interest rate risk. The analysis only measured
interest rate changes within one year, reflecting the impact on interest income and interest expenses from
the re-pricing of financial assets and liabilities within a year with the following assumptions: firstly, the
interest rate of the floating rate bonds, floating rate term deposits/loans and advances is re-priced after
the end of the reporting period; secondly, the yield curve moved in parallel with the changes in the interest
rate; and thirdly, there are no other changes in the portfolio of financial assets and liabilities. Regarding the
above assumptions, the pre-tax impact on the Group’s profit and equity as a result of actual increases or
decreases in interest rates may differ from that of the following sensitivity analysis.
31 December 2022 31 December 2021
Increase/ Increase/ Increase/ Increase/
(decrease) (decrease) (decrease) (decrease)
Change in in profit in equity in profit in equity
(in RMB million) interest rate before tax before tax before tax before tax
Floating interest rate bonds +50 bps 87 87 79 79
Loans and advances to customers +50 bps 8,395 8,395 7,873 7,873
Floating interest rate bonds –50 bps (87) (87) (79) (79)
Loans and advances to customers –50 bps (8,395) (8,395) (7,873) (7,873)
The following table sets out the Group’s term deposits (excluding balances of investment-linked contracts)
exposed to interest rate risk by maturity or repricing date (whichever is the earlier):
(in RMB million) 31 December 2022 31 December 2021
Fixed interest rate
Less than 3 months (including 3 months) 58,008 26,119
3 months to 1 year (including 1 year) 48,054 47,126
1-2 years (including 2 years) 76,101 83,554
2-3 years (including 3 years) 69,557 74,583
3-4 years (including 4 years) 14,896 2,848
4-5 years (including 5 years) 7,997 18,425
More than 5 years – 260
274,613 252,915
294 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-303
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(2) MARKET RISK (CONTINUED)
(c) Interest rate risk (Continued)
The following table sets out the Group’s bonds, debt schemes, wealth management investments and other
debt financial assets (excluding balances of investment-linked contracts) by maturity or repricing date
(whichever is the earlier):
31 December 2022
Debt financial
assets at
fair value Financial assets
Financial assets through other at fair value
at amortized comprehensive through
(in RMB million) cost income profit or loss Total
Fixed interest rate
Less than 3 months (including 3 months) 116,549 36,993 24,141 177,683
3 months to 1 year (including 1 year) 210,677 122,016 113,542 446,235
1-2 years (including 2 years) 173,105 59,746 115,944 348,795
2-3 years (including 3 years) 206,250 73,569 80,086 359,905
3-4 years (including 4 years) 85,404 24,856 67,599 177,859
4-5 years (including 5 years) 134,167 21,371 50,061 205,599
More than 5 years 1,994,944 119,821 214,953 2,329,718
Floating interest rate 49,681 3,173 18,167 71,021
2,970,777 461,545 684,493 4,116,815
31 December 2021
Debt financial
assets at
fair value Financial assets
Financial assets through other at fair value
at amortized comprehensive through
(in RMB million) cost income profit or loss Total
FINANCIAL STATEMENTS
Fixed interest rate
Less than 3 months (including 3 months) 96,649 30,269 19,153 146,071
3 months to 1 year (including 1 year) 290,016 93,510 140,411 523,937
1-2 years (including 2 years) 211,864 61,068 83,964 356,896
2-3 years (including 3 years) 161,906 54,212 75,273 291,391
3-4 years (including 4 years) 144,917 37,432 49,617 231,966
4-5 years (including 5 years) 84,264 31,582 64,033 179,879
More than 5 years 1,681,658 109,244 166,251 1,957,153
Floating interest rate 65,501 5,942 13,389 84,832
2,736,775 423,259 612,091 3,772,125
Interest rates on floating rate term deposits and floating rate bonds are repriced at intervals of less than
one year. Interest rates on fixed rate term deposits and fixed rate bonds are fixed before maturity.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 295
F-304
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK
Credit risks refer to the risk of losses incurred by the inabilities of debtors or counterparties to fulfill their
contractual obligations or by the adverse changes in their credit conditions. The Group is exposed to
credit risks primarily associated with its deposit arrangements with commercial banks, loans and advances
to customers, financial assets at amortized cost and debt financial assets at fair value through other
comprehensive income, reinsurance arrangement with reinsurers, policy loans, margin financing, financial
guarantee contracts and loan commitments, etc. The Group uses a variety of controls to identify, measure,
monitor and report credit risk.
(a) Credit risk management
Credit risk of banking business
The banking business of the Group has formulated a set of credit management processes and internal
control mechanisms, so as to carry out the whole process management of credit business. Credit
management procedures for its corporate and individual loans of comprise credit origination, credit review,
credit approval, disbursement, post credit management. In addition, the banking business of the Group has
formulated procedure manuals for credit management, which clarifies the duties of each part in the credit
management processes, effectively monitoring credit risk and enhancing credit compliance.
Credit risks arising from credit commitments are similar to those of loans and advances. Therefore, financial
guarantees and loan commitments are also subject to the same application, post credit management and
collateral requirements as loan and advances business.
Credit risk of investment business
As to debt investment, the Group rates these investments by internal credit rating policies, selects
counterparties with high credit quality and sets strict entry criteria.
The Group’s debt investment mainly includes domestic government bonds, the Central Bank bills, financial
institution bonds, corporate bonds and debt investment schemes, wealth management investments, etc.
The Group manages the credit risk for these investments mainly through controlling the investment scales,
selecting counterparties within the financial institutions with appropriate credit quality prudently, balancing
the credit risks and rate of return of investment and considering the internal and external credit rating
information comprehensively.
Credit risk of insurance business
The Group evaluated the credit rating of the reinsurance companies before signing the reinsurance
contracts, and chose the reinsurance companies with higher credit quality to reduce the credit risk.
The limits of policy loans are based on the cash values of valid insurance policies, with appropriate
discounts, and the validity periods of policy loans are within the validity periods of insurance policies. The
credit risk associated with policy loans did not have material impact on the Group’s consolidated financial
statements.
296 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-305
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss
The Group formulates the credit losses of financial assets at amortized cost, debt financial assets at FVOCI,
finance lease receivable and other financial assets, as well as loan commitment and financial guarantee
contracts using expected credit loss models according to IFRS 9 requirements.
Parameters of ECL model
The parameters and assumptions involved in ECL model are described below.
The Group considers the credit risk characteristics of different financial instruments when determining if
there is significant increase in credit risk. For financial instruments with or without significant increase in
credit risk, 12-month or lifetime expected credit losses are provided respectively. The expected credit loss
is the result of discounting the product of EAD, PD and LGD.
i) Exposure at Default (EAD): EAD is based on the amounts the Group expects to be owed at the time of
default, over the next 12 months or over the remaining lifetime.
ii) Probability of Default (PD): The PD represents the likelihood of a borrower defaulting on its financial
obligation, either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the
obligation.
iii) Loss Given Default (LGD): LGD represents the Group’s expectation of the extent of loss on a defaulted
exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral
or other credit support.
The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile
looks at how defaults develop on a portfolio from the point of initial recognition throughout the Lifetime.
The maturity profile is based on historical observed data and is assumed to be the same across all assets
FINANCIAL STATEMENTS
within a portfolio and credit grading band. This is supported by historical analysis.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 297
F-306
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Judgement of significant increase in credit risk (“SICR”)
Under IFRS 9, when considering the impairment stages for financial assets, the Group evaluates the credit
risk at initial recognition and also whether there is any significant increase in credit risk for each reporting
period. The Group considers various reasonable supporting information to judge if there is significant
increase in credit risk, including the forward-looking information, when determining the ECL staging for
financial assets, Major factor being considered include regulatory and operating environment, internal and
external credit ratings, solvency, and operational capabilities. The Group could base on individual financial
instruments or portfolios of financial instruments with similar credit risk characteristics to determine
ECL staging by comparing the credit risks of the financial instruments at the reporting date with initial
recognition.
The Group set quantitative and qualitative criteria to judge whether the credit risk has SICR after initial
recognition. The judgement criteria mainly include the PD changes of the debtors, changes of credit
risk categories and other indicators of SICR, etc. In the judgement of whether the financial instruments
have SICR after initial recognition, the Group considers the 30 days past due as one of criteria of SICR, in
accordance with the standard.
The definition of credit-impaired assets
Under IFRS 9, in order to determine whether credit impairment occurs, the defined standards adopted by
the Group are consistent with the internal credit risk management objectives for relevant financial assets,
while considering quantitative and qualitative indicators. When the Group assesses whether the debtor has
credit impairment, the following factors are mainly considered:
The debtor has overdue more than 90 days after the contract payment date;
Internal credit rating is default grade;
The lender gives the debtor concessions for economic or contractual reasons due to the debtor’s
financial difficulties, where such concessions are normally reluctant to be made by the lender;
The debtor has significant financial difficulties;
The debtor is likely to go bankrupt or other financial restructuring;
The active market for financial assets disappears
The credit impairment of financial assets may be caused by the joint effects of multiple events, and may
not be caused by separately identifiable events.
298 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-307
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Forward-looking information and management overlay
The determinations of 12 months and the lifetime EAD, PD and LGD also incorporates forward-looking
information. The Group has performed historical data analysis and identified the key macroeconomic
variables associated with credit risk and expected credit losses for each portfolio. The Group has
developed macroeconomic forward looking adjustment model by establishing a pool of macro-economic
indicators, preparing data, filtering model factors and adjusting forward-looking elements, and the
indicators include gross domestic product (GDP) quarter on quarter percentage change, customer price
index (CPI) year on year percentage change, purchasing manager’s index (PMI) and other macroeconomic
variables. Through regression analysis, the relationship among these economic indicators in history with
EAD, PD and LGD is determined, and the EAD, PD, LGD are then determined through forecasting economic
indicator.
During the reporting period, the Group adjusted the predicted values of forward-looking economic
indicators by statistical analysis and also considered the range of possible outcomes represented by each
scenario, to determine the final macroeconomic scenarios and weights for measuring the relevant expected
credit loss. The impact of these economic indicators on PD and LGD varies to different businesses. The
Group comprehensively considers internal and external data, expert forecasts and statistical analysis to
determine the relationship between these economic indicators with PD and LGD. The Group evaluates
and forecasts these economic indicators at least annually, provides the best estimates for the future, and
regularly evaluates the results. Similar to other economic forecasts, the estimates of economic indicators
have high inherent uncertainties, actual results may have significant difference with estimates. The Group
considered the estimates above represented the optimal estimation of possible outcomes.
In 2022, the key macroeconomic assumptions used by the Group to estimate expected credit losses in
different macroeconomic scenarios include GDP quarter on quarter percentage change, CPI year on year
percentage change, PMI and other macroeconomic variables. For the GDP quarter on quarter percentage
FINANCIAL STATEMENTS
change, the average predictive value in the base scenario in year 2023 is about 5%, and is 0.5 percentage
upper in the upside scenario while 0.5 percentage lower in the downside scenario. The average predictive
value in the base scenario in year 2024 is about 5.24%, and is 0.45 percentage upper in the upside scenario
while 0.44 percentage lower in the downside scenario.
Sensitivity analysis
Expected credit losses are sensitive to the parameters used in the model, the macroeconomic variables of
the forward-looking forecast, the weight probabilities in the three scenarios, and other factors considered
in the application of expert judgement. Changes in these input parameters, assumptions, models, and
judgements will have an impact on the significant increase in credit risk and the measurement of expected
credit losses.
The Group has the highest weight of the base scenario, and the weight of the base scenario is slightly
higher than the sum of the weight of other base scenarios. The banking business of the Group assumed
that if the weight of the upside scenario increased by 10% and the weight of the base scenario reduced
by 10%, the Group’s ECL impairment provision on 31 December 2022 would be reduced by RMB1,177 million
(31 December 2021: RMB1,161 million); if the weight of the downside scenario increased by 10% and the
weight of the base scenarios reduced by 10%, the Group’s ECL impairment provision would be increased by
RMB1,144 million (31 December 2021: RMB1,883 million).
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 299
F-308
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Credit exposure
Without considering the impact of collateral and other credit enhancements, for on-balance sheet assets,
the maximum exposures are based on net carrying amounts as reported in the consolidated financial
statements. The Group also assumes credit risk due to credit commitments and financial guarantee
contracts. The details are disclosed in Note 61.(2).
Please refer to Note 26.(2) and (5) for an analysis of concentration of loans and advances by industry and
geographical region.
Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of the credit risk of the
counterparty. Policies are established regarding to the selection of types of collateral and valuation
parameters.
The main types of collateral obtained are as follows:
for policy loans, collaterals are cash value of policies;
for reverse repurchase transactions, collaterals are quoted securities;
for commercial loans, collaterals are real estate properties, inventories, equity investments and trade
receivables, etc.;
for retail lending loans to individuals, collaterals are residential properties mortgages.
Management monitors the market value of the collateral, and requires additional collateral when needed
according to contracts, when assessing the adequacy of impairment.
It is the Group’s policy to dispose collateral orderly. The proceeds are used to repay all or part of the
outstanding balance. Generally, the Group would not use the collateralised assets for business purpose.
Restructured loans and advances to customers
Restructured loans and advances to customers are those loans and advances to customers for which the
Group has renegotiated the contract terms with borrowers as a result of the deterioration in their financial
position or of their inability to make payments when due. Concessions are given by the Group that would
not otherwise be granted to these borrowers for economic or legal reasons relating to their financial
difficulties. As at 31 December 2022, the Group’s restructured loans and advances to customers was
RMB17,107 million (31 December 2021: RMB11,417 million).
300 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-309
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following table presents the credit risk exposure of the financial assets under the scope of expected
credit loss. Without considering guarantee or any other credit enhancement measures, for on-balance sheet
assets, the maximum credit risk exposure is presented as the net carrying amount of the financial assets:
31 December 2022
Maximum credit
Carrying amount (in RMB million) Stage 1 Stage 2 Stage 3 risk exposure
Cash and amounts due from banks and other
financial institutions 770,751 – – 770,751
Balances with the Central Bank and statutory
deposits for insurance operations 295,559 – – 295,559
Financial assets purchased under reverse
repurchase agreements 90,910 – 405 91,315
Accounts receivable 35,909 169 40 36,118
Finance lease receivable 179,398 6,695 765 186,858
Loans and advances to customers 3,152,071 74,444 11,539 3,238,054
Financial assets at amortized cost 2,951,078 15,145 38,279 3,004,502
Debt financial assets at fair value through other
comprehensive income 464,861 1,000 1,170 467,031
Other assets 104,053 271 9,689 114,013
Subtotal 8,044,590 97,724 61,887 8,204,201
Off-balance sheet 1,826,854 6,193 147 1,833,194
Total 9,871,444 103,917 62,034 10,037,395
31 December 2021
Maximum credit
FINANCIAL STATEMENTS
Carrying amount (in RMB million) Stage 1 Stage 2 Stage 3 risk exposure
Cash and amounts due from banks and other
financial institutions 584,995 – – 584,995
Balances with the Central Bank and statutory
deposits for insurance operations 320,954 – – 320,954
Financial assets purchased under reverse
repurchase agreements 61,262 – 167 61,429
Accounts receivable 26,529 90 9 26,628
Finance lease receivable 195,123 5,023 555 200,701
Loans and advances to customers 2,939,619 34,512 6,844 2,980,975
Financial assets at amortized cost 2,730,744 8,838 29,413 2,768,995
Debt financial assets at fair value through other
comprehensive income 424,733 2,871 926 428,530
Other assets 99,806 100 819 100,725
Subtotal 7,383,765 51,434 38,733 7,473,932
Off-balance sheet 1,569,949 2,165 99 1,572,213
Total 8,953,714 53,599 38,832 9,046,145
The Group closely monitors collateral of credit-impaired financial assets.
As at 31 December 2022, the fair value of collateral of credit-impaired loans and advances to customers
is RMB16,747 million (31 December 2021: RMB14,030 million). The fair value of collateral of credit-impaired
financial assets at amortized cost is RMB10,311 million (31 December 2021: RMB9,641 million).
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 301
F-310
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following tables explain the changes in the gross carrying amount and impairment provision of the
main financial assets between the beginning and the end of the annual period due to these factors:
(in RMB million) 2022
Stages transfers
Transfer Transfer Transfer
Net increase/ between between between
(decrease) Stage 1 Stage 1 Stage 2
Gross carrying amount Stage 1 January (Note) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 2,992,010 340,539 (126,378) (707) – – 3,205,464
to customers Stage 2 44,549 (14,009) 126,378 – (65,193) – 91,725
Stage 3 33,672 (986) – 707 65,193 (59,802) 38,784
Total 3,070,231 325,544 – – – (59,802) 3,335,973
Financial assets Stage 1 2,738,183 252,624 (26,700) (3,164) – – 2,960,943
at amortized cost Stage 2 10,075 (2,141) 26,700 – (16,116) – 18,518
Stage 3 54,379 (3,627) – 3,164 16,116 (164) 69,868
Total 2,802,637 246,856 – – – (164) 3,049,329
Debt financial assets Stage 1 424,733 40,073 55 – – – 464,861
at fair value through Stage 2 2,871 (1,432) (55) – (384) – 1,000
other comprehensive income
Stage 3 926 (116) – – 384 (24) 1,170
Total 428,530 38,525 – – – (24) 467,031
Note: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
(in RMB million) 2022
Stages transfers
Charge/ Transfer Transfer Transfer
Net increase/ (recover) between between between
(decrease) for the year Stage 1 Stage 1 Stage 2
Impairment provision Stage 1 January (Note 1) (Note 2) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances Stage 1 53,285 20,225 (11,847) (5,185) 53 – – 56,531
to customers Stage 2 10,088 (1,117) 26,245 5,185 – (23,044) – 17,357
Stage 3 26,829 2,631 34,659 – (53) 23,044 (59,802) 27,308
Total 90,202 21,739 49,057 – – – (59,802) 101,196
Financial assets Stage 1 7,439 2,189 6,275 (4,577) (1,461) – – 9,865
at amortized cost Stage 2 1,237 (107) 281 4,577 – (2,615) – 3,373
Stage 3 24,966 (374) 3,085 – 1,461 2,615 (164) 31,589
Total 33,642 1,708 9,641 – – – (164) 44,827
Debt financial assets Stage 1 1,173 211 (170) 15 – – – 1,229
at fair value through Stage 2 221 (67) 107 (15) – (19) – 227
other comprehensive income
Stage 3 3,427 (20) 170 – – 19 (519) 3,077
Total 4,821 124 107 – – – (519) 4,533
Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
Note 2: Changes in PDs, EADs, and LGDs in the current year, arising from regular update of inputs to models.
302 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-311
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The following tables explain the changes in the gross carrying amount and impairment provision of
the main financial assets between the beginning and the end of the annual period due to these factors
(continued):
(in RMB million) 2021
Stages transfers
Transfer Transfer Transfer
Net increase/ between between between
(decrease) Stage 1 Stage 1 Stage 2
Gross carrying amount Stage 1 January (Note) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances to customers Stage 1 2,590,183 483,394 (79,567) (2,000) – – 2,992,010
Stage 2 37,233 (21,965) 79,567 – (50,286) – 44,549
Stage 3 34,915 (13,111) – 2,000 50,286 (40,418) 33,672
Total 2,662,331 448,318 – – – (40,418) 3,070,231
Financial assets at amortized cost Stage 1 2,601,200 160,574 (17,214) (6,377) – – 2,738,183
Stage 2 13,308 7,025 17,214 – (27,472) – 10,075
Stage 3 26,240 2,328 – 6,377 27,472 (8,038) 54,379
Total 2,640,748 169,927 – – – (8,038) 2,802,637
Debt financial assets at fair value Stage 1 508,948 (81,310) (2,851) (54) – – 424,733
through other comprehensive Stage 2 2,121 (1,278) 2,851 – (823) – 2,871
income
Stage 3 317 (268) – 54 823 – 926
Total 511,386 (82,856) – – – – 428,530
Note: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
FINANCIAL STATEMENTS
(in RMB million) 2021
Stages transfers
Charge/ Transfer Transfer Transfer
Net increase/ (recover) between between between
(decrease) for the year Stage 1 Stage 1 Stage 2
Impairment provision Stage 1 January (Note 1) (Note 2) and Stage 2 and Stage 3 and Stage 3 Write-offs 31 December
Loans and advances to Stage 1 31,718 18,662 7,077 (4,210) 38 – – 53,285
customers Stage 2 7,864 (1,220) 14,435 4,210 – (15,201) – 10,088
Stage 3 23,637 912 27,535 – (38) 15,201 (40,418) 26,829
Total 63,219 18,354 49,047 – – – (40,418) 90,202
Financial assets Stage 1 5,028 2,118 1,643 (1,054) (296) – – 7,439
at amortized cost Stage 2 1,536 1,562 1,489 1,054 – (4,404) – 1,237
Stage 3 9,336 2,579 16,389 – 296 4,404 (8,038) 24,966
Total 15,900 6,259 19,521 – – – (8,038) 33,642
Debt financial assets Stage 1 1,155 66 94 (119) (23) – – 1,173
at fair value through Stage 2 245 (39) 1,912 119 – (2,016) – 221
other comprehensive income
Stage 3 1,134 (460) 714 – 23 2,016 – 3,427
Total 2,534 (433) 2,720 – – – – 4,821
Note 1: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs.
Note 2: Changes in PDs, EADs, and LGDs in the current year, arising from regular update of inputs to models.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 303
F-312
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
The Group internally grades the financial instruments based on the credit quality and risk characteristics.
The credit rating of the financial instruments could further be classified as “low risk”, “medium risk”, “high
risk” and “default” according to the internal rating scale. “Low risk” means that the asset quality is good,
there is sufficient evidence to show that the asset is not expected to have default, or there is no reason
to suspect that the asset had incurred default. “Medium risk” means that the asset quality is acceptable or
there are factors revealing potential negative impact on the asset quality, but there is no sufficient reason
to suspect that the asset had incurred default. “High risk” means that there are factors revealing significant
adverse impact on the asset quality, but there is no event indicating incurred default. The criteria of
“default” are consistent with those of “credit-impaired”.
The following table contains an analysis of the credit risk grading of loans and advances to customers
and financial assets at amortized cost. The carrying amount of financial assets below also represents the
Group’s maximum exposure to credit risk on these assets:
Loans and advances to customers
31 December 2022
Stage 1 Stage 2 Stage 3
(in RMB million) 12-month ECL Lifetime ECL Lifetime ECL Total
Credit grade
Low risk 1,777,535 4,945 – 1,782,480
Medium risk 1,426,465 34,864 – 1,461,329
High risk 1,464 51,916 – 53,380
Default – – 38,784 38,784
Gross carrying amount 3,205,464 91,725 38,784 3,335,973
Loss allowance (53,393) (17,281) (27,245) (97,919)
Carrying amount 3,152,071 74,444 11,539 3,238,054
31 December 2021
Stage 1 Stage 2 Stage 3
(in RMB million) 12-month ECL Lifetime ECL Lifetime ECL Total
Credit grade
Low risk 1,615,901 280 – 1,616,181
Medium risk 1,363,769 9,164 – 1,372,933
High risk 12,340 35,105 – 47,445
Default – – 33,672 33,672
Gross carrying amount 2,992,010 44,549 33,672 3,070,231
Loss allowance (52,391) (10,037) (26,828) (89,256)
Carrying amount 2,939,619 34,512 6,844 2,980,975
304 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-313
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(3) CREDIT RISK (CONTINUED)
(b) Expected credit loss (Continued)
Financial assets at amortized cost
31 December 2022
Stage 1 Stage 2 Stage 3
(in RMB million) 12-month ECL Lifetime ECL Lifetime ECL Total
Credit grade
Low risk 2,843,703 – – 2,843,703
Medium risk 92,594 3,889 – 96,483
High risk 24,646 13,137 – 37,783
Default – 1,492 69,868 71,360
Gross carrying amount 2,960,943 18,518 69,868 3,049,329
Impairment provision (9,865) (3,373) (31,589) (44,827)
Carrying amount 2,951,078 15,145 38,279 3,004,502
31 December 2021
Stage 1 Stage 2 Stage 3
(in RMB million) 12-month ECL Lifetime ECL Lifetime ECL Total
Credit grade
Low risk 2,563,219 – – 2,563,219
Medium risk 152,547 3,289 – 155,836
High risk 22,417 6,786 – 29,203
Default – – 54,379 54,379
Gross carrying amount 2,738,183 10,075 54,379 2,802,637
Impairment provision (7,439) (1,237) (24,966) (33,642)
FINANCIAL STATEMENTS
Carrying amount 2,730,744 8,838 29,413 2,768,995
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 305
F-314
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK
Liquidity risk is the risk of not having access to sufficient funds or being unable to realize an asset in a
timely manner at a reasonable price to meet the Group’s obligations as they become due.
The Group is exposed to liquidity risk on insurance policies that permit surrender, withdrawal or other
forms of early termination. The Group seeks to manage its liquidity risk by matching to the extent possible
the duration of its investment assets with the duration of its insurance policies and to ensure that the
Group is able to meet its payment obligations and fund its lending and investment operations on a timely
basis.
The banking business of the Group is exposed to potential liquidity risk. The Group utilizes multiple
regulatory methods, establish comprehensive liquidity risk management framework, effectively recognize,
measure, monitor and control liquidity risk, maintain sufficient liquidity level to satisfy various funds
requirement and to face adverse market status. In case of monitoring liquidity risks effectively, the Group
pays attention to the funds resources and diversified utilization, keeps relatively high liquidity assets
consistently. The Group monitors the sourcing and usage of funds, deposit to loan ratio, and quick ratio
on a daily basis. Moreover, when adopting various benchmarks for management of liquidity risk, the Group
compares the expected results against the ones derived from stress tests, critically assesses the potential
impact to the future liquidity risk, and formulates remedial actions according to specific situations. The
Group seeks to mitigate the liquidity risk of the banking business by optimizing the assets and liabilities
structure, and maintaining stable deposits, etc.
306 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-315
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
The table below summarizes the remaining contractual maturity profile of the financial assets, financial
liabilities and insurance contract liabilities of the Group (excluding balances of investment-linked contracts)
based on undiscounted contractual cash flows/expected cash flows:
31 December 2022
Repayable Less than 3 to 12 1 to 5 Over
(in RMB million) Undated on demand 3 months months years 5 years Total
Cash and amounts due from banks and
other financial institutions – 299,125 160,738 129,251 178,491 9 767,614
Balances with the Central Bank and
statutory deposits for
insurance operations 240,279 40,835 598 1,618 13,577 – 296,907
Financial assets purchased under
reverse repurchase agreements – 905 85,650 5,412 – – 91,967
Premium receivables – 8,554 19,548 8,726 35,263 189 72,280
Accounts receivable – 6,239 7,303 16,156 7,447 1 37,146
Policy loans – 3,971 76,230 108,564 – – 188,765
Finance lease receivable – 2,055 32,166 81,560 93,346 494 209,621
Loans and advances to customers – 16,163 734,127 991,547 1,208,446 811,056 3,761,339
Financial assets at fair value
through profit or loss 884,852 15,394 40,833 156,073 393,044 246,838 1,737,034
Financial assets at amortized cost – 24,128 139,228 325,198 977,647 3,393,444 4,859,645
Debt financial assets at fair value
through other comprehensive income – 382 41,592 133,851 207,793 157,931 541,549
Equity financial assets at fair value
through other comprehensive income 255,103 – – – – – 255,103
Other assets – 71,998 36,848 35,715 5,485 1,185 151,231
1,380,234 489,749 1,374,861 1,993,671 3,120,539 4,611,147 12,970,201
Due to banks and other financial
institutions – 280,241 348,175 217,182 86,734 1,544 933,876
FINANCIAL STATEMENTS
Financial liabilities at fair value through
profit or loss 260 2,231 80,152 3,847 2,501 – 88,991
Assets sold under agreements to
repurchase – – 267,495 4,065 330 – 271,890
Accounts payable – 4,387 1,152 4,204 612 – 10,355
Insurance payables – 93,373 9,804 4,727 1,105 55 109,064
Policyholder dividend payable – 71,445 – – – – 71,445
Customer deposits and payables to
brokerage customers – 1,284,564 805,516 593,162 824,090 – 3,507,332
Bonds payable – – 232,385 448,189 241,987 42,764 965,325
Insurance contract liability – – 35,624 103,428 240,370 7,598,281 7,977,703
Insurance and investment contract
liabilities for policyholders – – 2,732 8,014 34,237 42,617 87,600
Lease liabilities – 259 1,232 3,959 8,678 539 14,667
Other liabilities – 52,932 37,018 64,065 96,453 14,459 264,927
260 1,789,432 1,821,285 1,454,842 1,537,097 7,700,259 14,303,175
Derivative cash flows
Derivative financial instruments settled
on a net basis – (38) (100) (456) 604 11 21
Derivative financial instruments settled
on a gross basis
Cash inflow – 8,006 1,277,050 762,245 129,244 – 2,176,545
Cash outflow – (8,885) (1,281,920) (767,601) (129,054) – (2,187,460)
– (879) (4,870) (5,356) 190 – (10,915)
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 307
F-316
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
31 December 2021
Repayable Less than 3 to 12 1 to 5 Over
(in RMB million) Undated on demand 3 months months years 5 years Total
Cash and amounts due from banks and
other financial institutions – 193,428 127,027 83,917 187,780 260 592,412
Balances with the Central Bank and
statutory deposits for
insurance operations 221,546 86,804 2,455 4,085 6,981 – 321,871
Financial assets purchased under
reverse repurchase agreements – 428 56,590 4,639 – – 61,657
Premium receivables – 8,380 19,448 5,538 46,248 220 79,834
Accounts receivable – 122 6,713 13,036 8,190 – 28,061
Policy loans – 3,603 72,867 101,828 – – 178,298
Finance lease receivable – 1,675 31,094 80,777 109,958 736 224,240
Loans and advances to customers – 19,623 743,780 896,148 1,023,335 826,218 3,509,104
Financial assets at fair value through
profit or loss 740,402 11,841 39,362 189,183 349,522 188,359 1,518,669
Financial assets at amortized cost – 19,325 124,892 397,929 968,013 2,877,915 4,388,074
Debt financial assets at fair value
through other comprehensive income – 185 38,092 105,046 215,534 140,368 499,225
Equity financial assets at fair value
through other comprehensive income 268,215 – – – – – 268,215
Other assets – 47,514 36,252 40,460 5,326 1,247 130,799
1,230,163 392,928 1,298,572 1,922,586 2,920,887 4,035,323 11,800,459
Due to banks and other financial
institutions – 256,691 221,458 236,197 93,356 4,720 812,422
Financial liabilities at fair value
through profit or loss 306 1,367 51,732 465 3,553 – 57,423
Assets sold under agreements to
repurchase – – 127,502 – – – 127,502
Accounts payable – 392 1,103 4,762 406 – 6,663
Insurance payables – 86,379 16,128 3,260 1,178 38 106,983
Policyholder dividend payable – 67,276 – – – – 67,276
Customer deposits and payables to
brokerage customers – 1,174,547 671,502 605,122 619,866 2,356 3,073,393
Bonds payable – – 314,135 546,317 232,199 46,949 1,139,600
Insurance contract liability – – 6,957 71,874 132,243 7,364,210 7,575,284
Insurance and investment contract
liabilities for policyholders – – 2,731 7,781 33,565 41,062 85,139
Lease liabilities – 212 1,559 4,428 9,223 490 15,912
Other liabilities – 27,050 43,261 75,829 108,426 12,945 267,511
306 1,613,914 1,458,068 1,556,035 1,234,015 7,472,770 13,335,108
Derivative cash flows
Derivative financial instruments settled
on a net basis – (36) 191 (104) (2,142) (2) (2,093)
Derivative financial instruments settled
on a gross basis
Cash inflow – 8,108 1,235,405 851,252 51,767 405 2,146,937
Cash outflow – (9,911) (1,235,745) (853,207) (52,375) (695) (2,151,933)
– (1,803) (340) (1,955) (608) (290) (4,996)
308 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-317
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(4) LIQUIDITY RISK (CONTINUED)
The table below summarizes the remaining contractual maturity profile of the credit commitments of the
Group:
(in RMB million) Less than 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total
31 December 2022
Credit commitments 93,804 203,173 679,558 486,699 363,726 1,826,960
31 December 2021
Credit commitments 97,420 164,186 456,632 517,234 325,735 1,561,207
Management expects the credit commitments will not be entirely used during the commitment period.
The assets and liabilities related to investment-linked contracts which are regarded as insurance contracts
are presented as policyholder account assets and liabilities in respect of insurance contracts. The assets
and liabilities related to investment-linked contracts which are regarded as investment contracts are
presented as policyholder account assets and liabilities in respect of investment contracts. The assets and
liabilities of each investment-linked fund are segregated from each other and from the rest of the Group’s
invested assets for record keeping purposes. As the investment risks of investment-linked contracts were
fully borne by policyholders, the assets and liabilities related to investment-linked contracts were not
included in the analysis of risk management. The Group manages liquidity risk related to the investment-
linked contracts by investing mainly in assets with high liquidity, as disclosed in Note 38.
(5) MISMATCHING RISK OF ASSETS AND LIABILITIES
The objective of the Group’s asset and liability management is to match the maturity and interest rates of
assets and liabilities. Under the current constraints of the shortage of long-term interest rate bond market,
however, the Group does not have sufficient long-duration assets for investment to match the duration of
insurance and investment contract liabilities. As permitted by law regulations and market conditions, the
Group actively invests in preferred stocks and other broad-term duration assets, and continuously improves
FINANCIAL STATEMENTS
the allocation of long-duration assets, considering the requirements for asset-liability duration matching
and revenue-cost matching.
(6) OPERATIONAL RISK
Operational risk is the risk of loss resulting from inadequate or failure of proper internal controls on
business processes, employees and systems or from uncontrollable external events. Operational risk in this
context includes legal risk, but does not include strategic risk and reputational risk. The Group is exposed
to many types of operational risks in the conduct of its business. The Group manages operational risk by
establishing and continuously improving risk management framework, formalizing policies and standards,
using management tools and reporting mechanism, strengthening staff education and training.
(7) CAPITAL MANAGEMENT
The Group’s capital requirements are primarily dependent on the scale, products of insurance business,
and the type of business that it undertakes, as well as the industry and geographic location in which it
operates. The primary objectives of the Group’s capital management are to ensure that the Group complies
with externally imposed capital requirements and to maintain healthy capital ratios in order to support its
business and to maximize shareholders’ value.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 309
F-318
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(7) CAPITAL MANAGEMENT (CONTINUED)
The Group manages its capital requirements by assessing shortfalls, if any, between the reported and
the required capital levels on a regular basis. Adjustments to current capital levels are made in light of
changes in economic conditions and risk characteristics of the Group’s activities. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to ordinary
shareholders or issue capital securities.
In accordance with the Notice on the Formal Implementation of China Risk Oriented Solvency System
(the “C-ROSS Phase I”) issued by the former CIRC, the Group has implemented the C-ROSS Phase I since
1 January 2016, and adjusted the objective, policy and process of capital management accordingly. In
addition, pursuant to the Notice on the Implementation of Regulatory Rules on Solvency of Insurance
Companies (II) (the “C-ROSS Phase II”) issued by the CBIRC, the Group computes solvency margin ratios
and recognizes, assesses and manages related risks from 2022 in accordance with the C-ROSS Phase II. As
at 31 December 2022, the Group was compliant with the CBIRC’s requirements for solvency margin ratios.
The table below summarizes the minimum regulatory capital for the Group and its major insurance
subsidiaries and the regulatory capital held against each of them.
31 December 2022
Ping An
Property &
The Group Ping An Life Casualty
Core capital 1,363,413 495,845 101,193
Actual capital 1,783,772 877,807 125,337
Minimum capital 819,568 399,557 56,976
Core solvency margin ratio 166.4% 124.1% 177.6%
Comprehensive solvency margin ratio 217.6% 219.7% 220.0%
31 December 2021
Ping An
Property &
The Group Ping An Life Casualty
Core capital 1,861,487 1,026,410 112,277
Actual capital 1,899,989 1,046,410 125,777
Minimum capital 813,781 454,175 45,171
Core solvency margin ratio 228.7% 226.0% 248.6%
Comprehensive solvency margin ratio 233.5% 230.4% 278.4%
Note: The data as of 31 December 2022 is computed in accordance with the C-ROSS Phase II, while the data as of 31 December 2021 is
computed in accordance with the C-ROSS Phase I.
The banking business subsidiary measures the capital adequacy ratio in accordance with the Capital Rules
for Commercial Banks (Provisional) issued by the former CBRC in June 2012. According to the requirements,
risk weighted assets for credit risk is measured by Weighted Approach, risk weighted assets for market
risk is measured by Standardised Approach, and risk weighted assets for operation risk is measured by the
Basic Indicator Approach.
310 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-319
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(7) CAPITAL MANAGEMENT (CONTINUED)
The banking operation’s core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio and capital
adequacy ratio are shown below:
31 December 2022 31 December 2021
Core Tier 1 capital adequacy ratio 8.64% 8.60%
Tier 1 capital adequacy ratio 10.40% 10.56%
Capital adequacy ratio 13.01% 13.34%
(8) THE GROUP’S MAXIMUM EXPOSURE TO STRUCTURED ENTITIES
The Group uses structured entities in the normal course of business for a number of purposes, for example,
structured transactions for customers, to provide finance to public and private sector infrastructure
projects, and to generate fees from managing assets on behalf of third-party investors. These structured
entities are financed through the issue of beneficiary notes or trust units to investors. Refer to Note 3.(6)
for the Group’s consolidation consideration related to structured entities.
The following table also shows the size, the Group’s funding and the Group’s maximum exposure to
the unconsolidated structured entities representing the Group’s maximum possible risk exposure that
could occur as a result of the Group’s arrangements with structured entities. The maximum exposure is
contingent in nature and approximates the sum of direct investments made by the Group.
The size of unconsolidated structured entities and the Group’s funding and maximum exposure are shown
below:
Unconsolidated structured entities
The Group’s
31 December 2022 maximum
(in RMB million) Size Carrying amount exposure Interest held by the Group
Securitization 43,748 3,856 3,856 Investment income and
FINANCIAL STATEMENTS
service fee
Assets management products 2,562,045 234,248 234,248 Investment income and
managed by affiliated entities service fee
Assets management products Note 1 337,773 337,773 Investment income
managed by third parties
Wealth management products 886,840 9,075 9,075 Investment income and
managed by affiliated entities service fee
Wealth management products Note 1 7,228 7,228 Investment income
managed by third parties
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 311
F-320
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
53. RISK AND CAPITAL MANAGEMENT (CONTINUED)
(8) THE GROUP’S MAXIMUM EXPOSURE TO STRUCTURED ENTITIES (CONTINUED)
Unconsolidated structured entities
The Group’s
31 December 2021 maximum
(in RMB million) Size Carrying amount exposure Interest held by the Group
Securitization 57,756 5,848 5,848 Investment income and
service fee
Assets management products 2,417,458 253,973 253,973 Investment income and
managed by affiliated entities service fee
Assets management products Note 1 333,527 333,527 Investment income
managed by third parties
Wealth management products 872,066 7,995 7,995 Investment income and
managed by affiliated entities service fee
Wealth management products Note 1 8,844 8,844 Investment income
managed by third parties
Note 1: These assets management products and wealth management products are sponsored by third party financial institutions and the
information related to size of these structured entities were not publicly available.
The Group’s interests in unconsolidated structured entities are recorded as wealth management
investments under FVPL, FVOCI and AC, and beneficial right under trust schemes under assets purchased
under reverse repurchase agreements.
The unconsolidated structured entities held by the Group included the trust plans consolidated by Lufax
Holding.
312 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-321
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group’s financial instruments mainly consist of cash and amounts due from banks and other financial
institutions, term deposits, bonds, funds, stocks, loans, borrowings, deposits from other banks and financial
institutions, customer deposits and payables to brokerage customers, etc.
(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS
The following table sets out the carrying amount and fair value of the Group’s major financial instruments
by classification:
Carrying amount Fair value
31 December 31 December 31 December 31 December
(in RMB million) 2022 2021 2022 2021
Financial assets
Cash and amounts due from banks and
other financial institutions 770,751 584,995 770,751 584,995
Balances with the Central Bank and statutory
deposits for insurance operations 295,559 320,954 295,559 320,954
Financial assets purchased under reverse
repurchase agreements 91,315 61,429 91,315 61,429
Accounts receivable 36,118 26,628 36,118 26,628
Derivative financial assets 29,278 30,957 29,278 30,957
Finance lease receivable 186,858 200,701 186,858 200,701
Loans and advances to customers 3,238,054 2,980,975 3,238,054 2,980,975
Financial assets at fair value through profit or loss 1,631,416 1,426,677 1,631,416 1,426,677
Financial assets at amortized cost 3,004,502 2,768,995 3,176,002 2,919,483
Debt financial assets at fair value through
other comprehensive income 467,031 428,530 467,031 428,530
Equity financial assets at fair value through
other comprehensive income 255,103 268,215 255,103 268,215
FINANCIAL STATEMENTS
Other assets 114,013 100,725 114,013 100,725
Financial liabilities
Due to banks and other financial institutions 918,977 797,646 918,977 797,646
Financial liabilities at fair value through profit or loss 88,770 57,376 88,770 57,376
Derivative financial liabilities 39,738 35,049 39,738 35,049
Assets sold under agreements to repurchase 271,737 127,477 271,737 127,477
Accounts payable 10,349 6,663 10,349 6,663
Customer deposits and payables to
brokerage customers 3,431,999 3,002,049 3,431,999 3,002,049
Bonds payable 931,098 1,097,523 927,784 1,098,380
Other liabilities 268,954 271,853 268,954 271,853
The assets and liabilities of the investment-linked business are not included in the above financial assets
and liabilities.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 313
F-322
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(1) CLASSIFICATION OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair value of financial instruments not carried at fair value
The following describes the methodologies and assumptions used to determine fair value for those
financial instruments which are not recorded at fair value in the financial statements, i.e., financial assets at
amortized costs and loans and receivables.
Financial instruments for which fair value approximates to carrying amount
For financial assets and financial liabilities that have a short-term maturity (less than three months), it is
assumed that the carrying amounts approximate to their fair value. This assumption is also applied to term
deposits, and savings accounts without a specific maturity. For other variable rate instruments, adjustment
is also made to reflect the subsequent changes in the market rate after initial recognition.
Fixed rate financial instruments
The fair value of fixed rate financial assets and liabilities carried at amortized cost is estimated by
comparing market interest rates when they were first recognized with current market rates for similar
financial instruments. The estimated fair value of fixed interest-bearing deposits is based on discounted
cash flows using prevailing money market interest rates for financial products with similar credit risk and
maturity. For quoted debts issued, the fair values are determined based on quoted market prices. For those
debts issued where quoted market prices are not available, a discounted cash flow model is used based on
a current interest rate yield curve appropriate for the remaining term to maturity and credit spreads.
314 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-323
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY
The Group uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation techniques:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and
those prices represent actual and regularly occurring market transactions on an arm’s length basis. The
main quoted market price used for financial assets held by the Group is the current closing price. Financial
instruments included in Level 1 comprise primarily equity investments, fund investments and bond
investments traded on stock exchanges and open-ended mutual funds;
Level 2: either directly (such as price) or indirectly (such as calculated based on price) other than quoted
prices included within Level 1 that are observable for the asset or liability. This valuation method maximizes
the use of observable market data and minimizes the use of unobservable inputs;
Level 3: inputs which are based on parameters other than observable market data (unobservable inputs).
The level of fair value measurement is determined by the lowest level input that is significant to the
entire measurement. Assessing the significance of a particular input to the entire measurement requires
judgement, taking into account factors specific to the asset or liability.
Valuation methods for Level 2 and Level 3 financial instruments
For Level 2 financial instruments, valuations are generally using observable market inputs, or recent quoted
market prices. The valuation providers typically gather, analyse and interpret information related to market
transactions and other key valuation model inputs from multiple sources, and through the use of widely
accepted internal valuation models, provide a theoretical quote on various securities. Debt securities are
classified as Level 2 when they are valued at recent quoted price from Chinese interbank market or from
FINANCIAL STATEMENTS
public valuation service providers. The fair value of debt investments denominated in RMB is determined
based upon the valuation results by the CCDC. All significant inputs are observable in the market.
For Level 3 financial instruments, the consideration of being classified as Level 3 is mainly based on the
significance of the unobservable factors to the overall fair value measurement.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 315
F-324
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy:
31 December 2022
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at fair value through profit or loss
Bonds 19,212 485,472 864 505,548
Funds 295,606 203,885 4,704 504,195
Stocks 79,086 1,154 498 80,738
Wealth management investments, debt schemes and
other investments 134 343,320 197,481 540,935
394,038 1,033,831 203,547 1,631,416
Derivative financial assets
Interest rate swaps – 11,893 – 11,893
Currency forwards and swaps – 15,602 – 15,602
Others – 1,718 65 1,783
– 29,213 65 29,278
Debt financial assets at fair value through
other comprehensive income
Bonds 46,739 318,356 766 365,861
Wealth management investments, debt schemes and
other investments – 51,898 49,272 101,170
46,739 370,254 50,038 467,031
Equity financial assets at fair value through
other comprehensive income
Stocks 174,046 1 – 174,047
Preferred shares – 76,116 – 76,116
Other equity investments – 1,949 2,991 4,940
174,046 78,066 2,991 255,103
Placements with banks and other financial
institutions measured at fair value through
other comprehensive income – 2,777 – 2,777
Loans and advances to customers measured at
fair value through other comprehensive income – 331,880 – 331,880
Total financial assets 614,823 1,846,021 256,641 2,717,485
Financial liabilities
Derivative financial liabilities
Interest rate swaps – 10,062 – 10,062
Currency forwards and swaps – 23,498 – 23,498
Others – 6,128 50 6,178
– 39,688 50 39,738
Financial liabilities at fair value through profit or loss 6,858 78,093 3,819 88,770
Total financial liabilities 6,858 117,781 3,869 128,508
316 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-325
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments recorded at fair value by level of the fair
value hierarchy (continued):
31 December 2021
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at fair value through profit or loss
Bonds 8,862 410,261 220 419,343
Funds 202,292 144,823 4,068 351,183
Stocks 97,966 2,519 – 100,485
Wealth management investments, debt schemes and
other investments 79 358,843 196,744 555,666
309,199 916,446 201,032 1,426,677
Derivative financial assets
Interest rate swaps – 14,164 – 14,164
Currency forwards and swaps – 15,687 – 15,687
Others – 1,037 69 1,106
– 30,888 69 30,957
Debt financial assets at fair value through
other comprehensive income
Bonds 12,116 315,344 856 328,316
Wealth management investments, debt schemes and
other investments – 41,557 58,657 100,214
12,116 356,901 59,513 428,530
Equity financial assets at fair value through
FINANCIAL STATEMENTS
other comprehensive income
Stocks 189,540 1 – 189,541
Preferred shares – 76,115 – 76,115
Other equity investments – – 2,559 2,559
189,540 76,116 2,559 268,215
Placements with banks and other financial
institutions measured at fair value through
other comprehensive income – 11,228 – 11,228
Loans and advances to customers measured at
fair value through other comprehensive income – 248,054 – 248,054
Total financial assets 510,855 1,639,633 263,173 2,413,661
Financial liabilities
Derivative financial liabilities
Interest rate swaps – 13,237 – 13,237
Currency forwards and swaps – 15,855 – 15,855
Others – 5,957 – 5,957
– 35,049 – 35,049
Financial liabilities at fair value through profit or loss 11,976 42,438 2,962 57,376
Total financial liabilities 11,976 77,487 2,962 92,425
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 317
F-326
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The following table shows an analysis of financial instruments not recorded at fair value but for which fair
value is disclosed by level of the fair value hierarchy:
31 December 2022
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at amortized cost 135,295 2,904,900 135,807 3,176,002
Total 135,295 2,904,900 135,807 3,176,002
Financial liabilities
Bonds payable 19,599 907,886 299 927,784
Total 19,599 907,886 299 927,784
31 December 2021
(in RMB million) Level 1 Level 2 Level 3 Total fair value
Financial assets
Financial assets at amortized cost 145,590 2,622,420 151,473 2,919,483
Total 145,590 2,622,420 151,473 2,919,483
Financial liabilities
Bonds payable 16,765 1,080,510 1,105 1,098,380
Total 16,765 1,080,510 1,105 1,098,380
Financial assets and liabilities for which fair value approximates carrying amount are not included in the
above disclosure.
318 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-327
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
Reconciliation of movements in Level 3 financial instruments measured at fair value is as follows:
(in RMB million) 2022 2021
Financial assets at fair value through profit or loss
As at 1 January 201,032 198,912
Additions 65,906 184,884
Disposals (61,689) (193,205)
Transfers into Level 3 859 5,112
Transfers from Level 3 (192) (1,231)
Total gains/losses
Gains through profit or loss (2,369) 6,560
As at 31 December 203,547 201,032
Debt financial assets at fair value through
other comprehensive income
As at 1 January 59,513 47,652
Purchase 2,204 32,369
Disposals (8,904) (33,667)
Issue 546,191 696,323
Settlement (551,693) (686,779)
Transfers into Level 3 – 965
Total gains/losses
Gains through profit or loss 2,759 2,650
Losses through other comprehensive income (32) –
As at 31 December 50,038 59,513
FINANCIAL STATEMENTS
Equity financial assets at fair value through
other comprehensive income
As at 1 January 2,559 1,924
Additions 784 632
Disposals – (2)
Total gains/losses
Losses/gains through other comprehensive income (352) 5
As at 31 December 2,991 2,559
Loans and advances to customers at fair value
through other comprehensive income
As at 1 January – 202,088
Additions – 2,481,850
Disposals – (2,687,938)
Total gains/losses
Gains through profit or loss – 4,000
As at 31 December – –
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 319
F-328
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
54. CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
(2) DETERMINATION OF FAIR VALUE AND THE FAIR VALUE HIERARCHY (CONTINUED)
The gains or losses of level 3 financial instruments included in the income statement for the year are
presented as follows:
2022
(in RMB million) Realized gains Unrealized gains Total
Financial assets at fair value through profit or loss 2,394 (4,763) (2,369)
Debt financial assets at fair value through
other comprehensive income 2,759 – 2,759
5,153 (4,763) 390
2021
(in RMB million) Realized gains Unrealized gains Total
Financial assets at fair value through profit or loss 7,204 (644) 6,560
Debt financial assets at fair value through
other comprehensive income 2,930 (280) 2,650
Loans and advances to customers at fair value
through other comprehensive income 4,000 – 4,000
14,134 (924) 13,210
Transfers
For the year ended 31 December 2022 and the year ended 31 December 2021, there were no significant
transfers between Level 1 and Level 2 fair value measurements.
55. TRANSFERRED FINANCIAL ASSETS
The Group enters into transactions in the normal course of business by which it transfers recognized
financial assets to third parties or to structured entities. When the Group has neither transferred nor
retained substantially all the risks and rewards of the financial asset and retained control of the asset, the
Group continues to recognize the financial asset to the extent of the Group’s continuing involvement, in
which case, the Group also recognizes an associated liability. In other cases where the transferred financial
assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of
these financial assets, the Group continued to recognize the transferred financial assets.
The Group’s subsidiaries, Ping An Bank and Ping An Financial Leasing, entered into loan securitization
transactions. The Group may retain risks or rewards in the securitization business which would give rise to
the Group’s continuing involvement in the transferred assets. Those financial assets are recognized on the
statement of financial position to the extent of the Group’s continuing involvement, otherwise the financial
assets are derecognized.
320 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-329
55. TRANSFERRED FINANCIAL ASSETS (CONTINUED)
Other transferred financial assets that do not qualify for derecognition mainly include debt securities
held by counterparties as collateral under repurchase agreements. The counterparties are allowed to sell
or repledge those securities sold under repurchase agreements in the absence of default by the Group,
but has an obligation to return the securities at the maturity of the contract. If the securities increase or
decrease in value, the Group may in certain circumstances require the counterparties to provide additional
or return collateral. The Group has determined that it retains substantially all the risks and rewards of these
securities and therefore has not derecognized them.
The following table analyses the carrying amount of the above-mentioned financial assets transferred to
third parties that did not qualify for derecognition or continuing involvement and their associated financial
liabilities:
31 December 2022 31 December 2021
Carrying amount Carrying amount
of transferred of transferred
or continuing Carrying amount or continuing Carrying amount
involvement of associated involvement of associated
(in RMB million) financial assets liabilities financial assets liabilities
Repurchase transactions 1,070 998 2,923 2,819
Assets securitization 2,115 2,115 2,581 2,581
56. CASH AND CASH EQUIVALENTS
(in RMB million) 31 December 2022 31 December 2021
Cash
Cash and amounts due from banks and other financial institutions
Cash on hand 4,165 3,686
Term deposits 11,357 15,208
Due from banks and other financial institutions 238,978 174,345
Placements with banks and other financial institutions 58,175 70,821
FINANCIAL STATEMENTS
Balances with the Central Bank 40,450 84,028
Subtotal 353,125 348,088
Cash equivalents
Bonds 5,225 365
Financial assets purchased under reverse repurchase agreements 84,541 54,672
Subtotal 89,766 55,037
Total 442,891 403,125
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 321
F-330
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
57. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(1) RECONCILIATION OF PROFIT BEFORE TAX TO NET CASH FLOWS FROM OPERATING
ACTIVITIES:
(in RMB million) 2022 2021
Profit before tax 105,815 139,580
Adjustments for:
Depreciation of investment properties 3,645 1,620
Depreciation of property and equipment 7,508 6,718
Amortization of intangible assets 3,171 3,024
Depreciation of right-of-use assets 5,982 6,520
Amortization of long-term deferred expenses 47 539
Gains on disposal of investment properties, property and
equipment, intangible assets and other long-term assets (311) (14)
Investment income and interest revenue from
non-banking operations (160,815) (224,411)
Fair value losses/(gains) on investments at fair value through
profit or loss 32,942 22,613
Interest expenses on non-banking operations 22,888 28,082
Foreign exchange gains/(losses) (3,342) (1,267)
Net impairment losses of financial assets and other assets 83,649 105,042
Operating profit before working capital changes 101,179 88,046
Changes in operating assets and liabilities:
Changes in balances with the Central Bank and statutory deposits (18,183) (6,157)
Changes in amounts due from banks and other financial institutions (59,021) 15,105
Changes in premium receivables 6,470 13,540
Changes in account receivable (3,529) (694)
Changes in inventories 706 (1,169)
Changes in reinsurers’ share of insurance liabilities 1,883 (6,633)
Changes in loans and advances to customers (332,746) (454,989)
Changes in assets purchased under agreements to resell of
banking and securities business 588 (221)
Changes in other assets (51,959) (101,248)
Changes in due to banks and other financial institutions 127,431 (114,037)
Changes in customer deposits and payables to brokerage customers 380,410 294,760
Changes in insurance payables 2,742 11,238
Changes in insurance contract liabilities 265,701 260,088
Changes in investment contract liabilities for policyholders 50,472 56,082
Changes in policyholder dividend payable 4,169 3,470
Changes in assets sold under agreements to repurchase of
banking and securities business (25,252) 16,037
Changes in other liabilities 63,491 43,859
Cash generated from operations 514,552 117,077
Less: Current income tax charged for the year (27,643) (26,816)
Changes in income tax payable (1,004) (145)
Net cash flows from operating activities 485,905 90,116
322 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-331
57. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(CONTINUED)
(2) NET DEBT RECONCILIATION:
This section sets out an analysis of net debt and movements in net debt of current year.
Short-term Long-term
(in RMB million) borrowings borrowings Bonds payable Total
As at 1 January 2022 94,491 88,586 1,074,280 1,257,357
Cash flows 7,393 (28,825) (225,514) (246,946)
Foreign exchange adjustments 752 1,106 1,264 3,122
Other non-cash movements 5,864 178 60,207 66,249
As at 31 December 2022 108,500 61,045 910,237 1,079,782
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL
(1) KEY MANAGEMENT PERSONNEL COMPRISE THE COMPANY’S DIRECTORS, SUPERVISORS,
SENIOR MANAGEMENT AND KEY PERSONNEL
The summary of compensation of key management personnel for the year is as follows:
(in RMB million) 2022 2021
Salaries and other short-term employee benefits after tax 66 68
Individual income tax 42 46
The estimated amount of total compensation has been provided in the Group’s 2022 financial statements.
The total compensation for certain key management personnel has not yet been finalized in accordance
with relevant policies. The remaining compensation will be disclosed in a separate announcement when
approved.
Parts of the performance-based remunerations of the Company’s key management personnel will be
FINANCIAL STATEMENTS
deferred and paid over a period of 3 years in accordance with the Code of Corporate Governance of
Banking and Insurance Institutions and the Guidelines for Insurance Companies’ Remuneration Management
(Trial) issued by the CBIRC. The deferred, unpaid parts are included in the total remunerations received by
the Company’s key management personnel from the Company during the Reporting Period.
(2) COMPENSATION OF KEY MANAGEMENT PERSONNEL OTHER THAN DIRECTORS AND
SUPERVISORS IS AS FOLLOWS
(in RMB million) 2022 2021
Salaries and other short-term employee benefits after tax 26 25
Individual income tax 17 17
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 323
F-332
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS
The remuneration of every director and supervisor is set out below:
For the year ended 31 December 2022:
2022
Emoluments
received or
receivable in
respect of director’s
other services
Remunerations in connection
received or with the management
Employer’s receivable in of the affairs of
Other contribution to respect of the Company or
Discretionary Housing employee a retirement accepting office its subsidiary Individual
(in RMB thousand) Fees Salaries bonuses(ii) allowance benefits benefit scheme as director undertaking Total income tax
Directors
Ma Mingzhe (iii) – 2,850 1,099 2 8 – – – 3,959 2,821
Xie Yonglin – 4,091 233 31 49 79 – – 4,483 2,966
Tan Sin Yin – 5,708 2,500 – 25 42 – – 8,275 6,172
Yao Jason Bo – 5,708 1,246 – 21 42 – – 7,017 5,146
Cai Fangfang – 3,000 769 31 46 68 – – 3,914 2,602
Soopakij Chearavanont 520 – – – – – – – 520 110
Yang Xiaoping 520 – – – – – – – 520 110
He Jianfeng (v) 255 – – – – – – – 255 65
Cai Xun (vi) 255 – – – – – – – 255 65
Ouyang Hui 535 – – – – – – – 535 115
Ng Sing Yip 520 – – – – – – – 520 110
Chu Yiyun 510 – – – – – – – 510 130
Liu Hong 503 – – – – – – – 503 127
Ng Kong Ping Albert (vii) 520 – – – – – – – 520 110
Jin Li (viii) 510 – – – – – – – 510 130
Huang Wei (ix) 248 – – – – – – – 248 62
Subtotal 4,896 21,357 5,847 64 149 231 – – 32,544 20,841
Supervisors
Sun Jianyi – 2,130 1,940 2 8 – – – 4,080 2,930
Wang Zhiliang – 1,201 464 111 13 70 – – 1,859 787
Gu Liji (x) 270 – – – – – – – 270 67
Zhang Wangjin (xi) 287 – – – – – – – 287 51
Huang Baokui (xii) 270 – – – – – – – 270 67
Zhu Xinrong (xiii) 234 – – – – – – – 234 58
Liew Fui Kiang (xiv) 236 – – – – – – – 236 57
Hung Ka Hai Clement (xv) 236 – – – – – – – 236 57
Subtotal 1,533 3,331 2,404 113 21 70 – – 7,472 4,074
Total 6,429 24,688 8,251 177 170 301 – – 40,016 24,915
324 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-333
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
For the year ended 31 December 2021:
2021
Emoluments
received or
receivable in
respect of director’s
Remunerations other services
received or in connection
Employer’s receivable with the management
contribution to in respect of of the affairs of
Other a retirement accepting the Company or
Discretionary Housing employee benefit office as its subsidiary Individual
(in RMB thousand) Fees Salaries bonuses (ii) allowance benefits scheme director undertaking Total income tax
Directors
Ma Mingzhe (iii) – 2,850 1,759 2 7 – – – 4,618 3,361
Xie Yonglin – 4,088 906 28 39 72 – – 5,133 3,626
Tan Sin Yin – 5,708 3,913 – 18 36 – – 9,675 7,329
Yao Jason Bo – 5,563 2,353 – 14 36 – – 7,966 6,334
Cai Fangfang – 2,997 1,407 28 36 61 – – 4,529 3,127
Soopakij Chearavanont 509 – – – – – – – 509 91
Yang Xiaoping 524 – – – – – – – 524 96
Wang Yongjian (iv) 318 – – – – – – – 318 79
Huang Wei (ix) 189 – – – – – – – 189 51
Ge Ming (xvi) 337 – – – – – – – 337 85
Ng Kong Ping Albert (vii) 199 – – – – – – – 199 40
Ouyang Hui 539 – – – – – – – 539 101
Ng Sing Yip 509 – – – – – – – 509 91
Chu Yiyun 510 – – – – – – – 510 130
Liu Hong 488 – – – – – – – 488 122
FINANCIAL STATEMENTS
Jin Li (viii) 189 – – – – – – – 189 51
Subtotal 4,311 21,206 10,338 58 114 205 – – 36,232 24,714
Supervisors
Sun Jianyi – 2,130 1,940 2 8 – – – 4,080 2,930
Wang Zhiliang – 946 565 220 18 66 – – 1,815 889
Gu Liji (x) 518 – – – – – – – 518 132
Zhang Wangjin (xi) 517 – – – – – – – 517 94
Huang Baokui (xii) 510 – – – – – – – 510 130
Subtotal 1,545 3,076 2,505 222 26 66 – – 7,440 4,175
Total 5,856 24,282 12,843 280 140 271 – – 43,672 28,889
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 325
F-334
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(i) Other non-monetary benefits include the Key Employee Share Purchase Plan and the Long-Term Service Plan
The participation of the Company’s directors and supervisors in the Key Employee Share Purchase Plan is as follows:
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Name 2022 the year the year 2022
From 25 March 2019 RMB72.79 per share Ma Mingzhe 150,000 – 150,000 –
to 27 March 2019 Xie Yonglin 86,855 – 86,855 –
Tan Sin Yin 65,925 – 65,925 –
Yao Jason Bo 63,177 – 63,177 –
Cai Fangfang 38,456 – 38,456 –
Sun Jianyi 96,139 – 96,139 –
Wang Zhiliang 2,748 – 2,748 –
From 24 February 2020 RMB80.17 per share Ma Mingzhe 200,000 – 100,000 100,000
to 27 February 2020 Xie Yonglin 239,408 – 119,703 119,705
Tan Sin Yin 149,630 – 74,814 74,816
Yao Jason Bo 119,704 – 59,851 59,853
Cai Fangfang 79,802 – 39,901 39,901
Wang Zhiliang 4,988 – 2,493 2,495
From 26 April 2021 RMB73.13 per share Ma Mingzhe 500,000 – 166,666 333,334
to 29 April 2021 Xie Yonglin 461,464 – 153,821 307,643
Tan Sin Yin 262,475 – 87,491 174,984
Yao Jason Bo 229,666 – 76,555 153,111
Cai Fangfang 164,047 – 54,682 109,365
Wang Zhiliang 8,202 – 2,734 5,468
From 18 March 2022 RMB47.56 per share Ma Mingzhe – 777,593 – 777,593
to 25 March 2022 Xie Yonglin – 741,021 – 741,021
Tan Sin Yin – 455,256 – 455,256
Yao Jason Bo – 447,689 – 447,689
Cai Fangfang – 264,074 – 264,074
Wang Zhiliang – 17,445 – 17,445
326 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-335
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(i) Other non-monetary benefits include the Key Employee Share Purchase Plan and the Long-Term Service Plan (continued)
The participation of the Company’s directors and supervisors in the Long-term Service Plan is as follows:
Unvested as at Addition Vested Unvested as at
Average price of 1 January during during 31 December
Period of purchase shares purchased Name 2022 the year the year 2022
From 7 May 2019 RMB79.10 per share Ma Mingzhe 252,762 – – 252,762
to 14 May 2019 Xie Yonglin 189,571 – – 189,571
Tan Sin Yin 189,571 – – 189,571
Yao Jason Bo 126,381 – – 126,381
Cai Fangfang 126,381 – – 126,381
Sun Jianyi 126,381 – – 126,381
Wang Zhiliang 12,638 – – 12,638
From 24 February 2020 RMB80.15 per share Ma Mingzhe 249,504 – – 249,504
to 28 February 2020 Xie Yonglin 187,128 – – 187,128
Tan Sin Yin 187,128 – – 187,128
Yao Jason Bo 124,752 – – 124,752
Cai Fangfang 124,752 – – 124,752
Wang Zhiliang 18,712 – – 18,712
From 26 April 2021 RMB72.92 per share Ma Mingzhe 274,224 – – 274,224
to 29 April 2021 Xie Yonglin 205,668 – – 205,668
Tan Sin Yin 205,668 – – 205,668
Yao Jason Bo 137,112 – – 137,112
Cai Fangfang 137,112 – – 137,112
Wang Zhiliang 13,985 – – 13,985
From 18 March 2022 RMB47.56 per share Ma Mingzhe – 420,446 – 420,446
to 25 March 2022 Xie Yonglin – 315,335 – 315,335
Tan Sin Yin – 315,335 – 315,335
Yao Jason Bo – 210,223 – 210,223
Cai Fangfang – 210,223 – 210,223
Wang Zhiliang – 23,124 – 23,124
(ii) Discretionary bonuses for the Group’s executive directors and senior management are determined on the bonus scheme approved
by the Board of Directors and the personal performance of senior management.
(iii) MA Mingzhe is the Founder, Chairman (Executive Director) of the Company.
FINANCIAL STATEMENTS
(iv) Wang Yongjian resigned as a Non-Executive Director of the Company on 23 August 2021.
(v) He Jianfeng was appointed as a Non-executive Director of the Company on 1 July 2022.
(vi) Cai Xun was appointed as a Non-executive Director of the Company on 1 July 2022.
(vii) Ng Kong Ping Albert was appointed as an Independent Non-executive Director of the Company on 20 August 2021.
(viii) Jin Li was appointed as an Independent Non-executive Director of the Company on 20 August 2021.
(ix) Huang Wei ceased to be a Non-executive Director of the Company on 1 July 2022 due to the change of his personal work
arrangements.
(x) Gu Liji resigned as an Independent Supervisor on 18 July 2022 since his term of office exceed six years.
(xi) Zhang Wangjin resigned as a Shareholder Representative Supervisor on 18 July 2022 due to personal work arrangements.
(xii) Huang Baokui resigned as an Independent Supervisor on 18 July 2022 since his term of office exceed six years.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 327
F-336
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
58. COMPENSATION OF KEY MANAGEMENT PERSONNEL (CONTINUED)
(3) DIRECTORS’ AND SUPERVISORS’ EMOLUMENTS (CONTINUED)
(xiii) Zhu Xinrong was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xiv) Liew Fui Kiang was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xv) Hung Ka Hai Clement was appointed as an Independent Supervisor of the Company on 18 July 2022.
(xvi) Ge Ming resigned as an Independent Non-executive Director of the Company on 20 August 2021 because his six-year term of office
expired.
59. FIVE HIGHEST PAID INDIVIDUALS
The total emoluments of the five highest paid individuals in the Group, except for key management
personnel whose emoluments were reflected in Note 58, are as follows:
(in RMB million) 2022 2021
Salaries and other short-term employee benefits after tax 122 106
The number of five highest paid individuals in the Group whose emoluments after tax fell within the
following bands is as follows:
2022 2021
RMB5,000,001 – RMB10,000,000 1 –
RMB10,000,001 – RMB15,000,000 1 2
RMB15,000,001 – RMB20,000,000 – –
RMB20,000,001 – RMB25,000,000 1 1
RMB25,000,001 – RMB30,000,000 – 2
RMB30,000,001 – RMB35,000,000 – –
RMB35,000,001 – RMB40,000,000 2 –
The five highest paid individuals in the Group pay individual income tax in strict accordance with the local
tax rules. The tax rate is between 15% and 45%.
60. SIGNIFICANT RELATED PARTY TRANSACTIONS
(1) SHAREHOLDERS HOLDING MORE THAN 5% OF THE COMPANY’S SHARE ARE AS SET OUT
BELOW:
Name of related parties Relationship with the Company
Charoen Pokphand Group Co., Ltd. (“CP Group”) Parent of shareholders
Shenzhen Investment Holdings Co., Ltd. (“SIHC”) Shareholder
As at 31 December 2022, CP Group indirectly held 6.52% (31 December 2021: 6.80%) equity interests in the
Company and is the largest shareholder of the Company.
328 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-337
60. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(2) THE SUMMARY OF SIGNIFICANT MAJOR RELATED PARTY TRANSACTIONS IS AS
FOLLOWS:
(in RMB million) 2022 2021
CP Group
Premiums income from 63 29
Claims expenses to 29 9
Rental revenue from 26 29
Other expenses to 10 11
SIHC
Rental revenue from 1 1
Premiums income from 5 9
Interest revenue from 7 21
Interest expenses to 62 48
Other expenses to 2 –
Lufax Holding
Interest revenue from 21 –
Interest expenses to 624 827
Other revenues from 2,948 3,360
Other expenses to 2,879 4,880
Ping An Health
Interest expenses to 144 192
Other revenues from 440 361
Other expenses to 2,071 2,587
Ping An HealthKonnect
Interest revenue from 32 –
Interest expenses to 27 23
FINANCIAL STATEMENTS
Other revenues from 306 448
Other expenses to 47 178
OneConnect
Interest revenue from 3 16
Interest expenses to 10 12
Other revenues from 1,708 1,795
Other expenses to 2,598 2,325
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 329
F-338
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
60. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(3) THE SUMMARY OF BALANCES OF THE GROUP WITH MAJOR RELATED PARTIES IS AS
FOLLOWS:
(in RMB million) 31 December 2022 31 December 2021
CP Group
Customer deposits 101 –
SIHC
Customer deposits 3,266 2,127
Loans and advances to customers 590 280
Lufax Holding
Customer deposits 14,316 9,798
Loans and advances to customers 821 –
Derivative financial assets – 26
Derivative financial liabilities 447 38
Accounts payable and other payables 4,457 8,714
Accounts receivable and other receivables 4,304 661
Ping An Health
Customer deposits 4,083 4,075
Accounts payable and other payables 2,885 3,465
Accounts receivable and other receivables 82 66
Ping An HealthKonnect
Customer deposits 1,286 851
Loans and advances to customers 818 –
Accounts payable and other payables 213 232
Accounts receivable and other receivables 5,289 6,780
OneConnect
Customer deposits 788 1,132
Loans and advances to customers – 301
Derivative financial assets 10 191
Derivative financial liabilities 56 –
Accounts payable and other payables 1,511 1,617
Accounts receivable and other receivables 1,110 1,173
In addition to transactions and balances stated above, the Group transferred 100% shareholding of Gem
Alliance Limited to Lufax Holding, which issued convertible bonds amounting to USD1,953.8 million to the
Group as the consideration in 2016, and pay interest to the Group every six months at an annual rate of
0.7375%. In December 2022, Lufax Holding entered into an amended and supplemental agreement with the
Group pursuant to which the maturity date of 50% of the outstanding principal amount of the convertible
bonds was extended from October 2023 to October 2026 and the remaining 50% outstanding principal
amount was redeemed. As at 31 December 2022, the par value of these convertible bonds held by the Group
amounted to USD976.9 million.
330 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-339
61. COMMITMENTS
(1) CAPITAL COMMITMENTS
The Group had the following capital commitments relating to investments and property development
projects.
(in RMB million) 31 December 2022 31 December 2021
Contracted, but not provided for 10,031 59,273
Authorized, but not contracted for 9,517 6,898
19,548 66,171
(2) CREDIT COMMITMENTS
(in RMB million) 31 December 2022 31 December 2021
Bank acceptances 703,902 576,355
Guarantees issued 111,005 99,355
Letters of credit issued 122,487 66,869
Subtotal 937,394 742,579
Unused limit of credit cards 889,566 818,628
Total 1,826,960 1,561,207
Credit risk weighted amounts of credit commitments 506,034 431,405
Credit commitments disclosed in the table above do not include the financial guarantees accounted for as
insurance contracts by the Group.
(3) INVESTMENT COMMITMENTS
The Group’s investment commitments to associates and joint ventures are as follows:
FINANCIAL STATEMENTS
(in RMB million) 31 December 2022 31 December 2021
Contracted but not provided for 11,784 15,810
62. EMPLOYEE BENEFITS
(1) PENSION
The employees of the Group are mainly covered by various defined contribution pension plans. The Group
makes and accrues contributions on a monthly basis to the pension plans, which are mainly sponsored by
relevant government authorities that are responsible for the pension liability to retired employees. Under
such plans, the Group has no other significant legal or constructive obligations for retirement benefits
beyond the said contributions, which are expensed as incurred. Certain employees are also provided with
group life insurance but the amounts involved are insignificant.
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 331
F-340
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
62. EMPLOYEE BENEFITS (CONTINUED)
(2) HOUSING BENEFITS
The employees of the Group are entitled to participate in and make contributions to various government
sponsored funds for housing purposes. The Group contributes on a monthly basis to these funds based
on certain percentages of the salaries of the employees. The Group’s liability in respect of these funds is
limited to the contributions payable in each period.
(3) MEDICAL BENEFITS
The Group makes monthly contributions for medical benefits to the local authorities in accordance with
relevant local regulations for the employees. The Group’s liability in respect of employee medical benefits is
limited to the contributions payable in each period.
(4) KEY EMPLOYEE SHARE PURCHASE PLAN
The Group has adopted a Key Employee Share Purchase Plan for the key employees of the Company and
its subsidiaries. Refer to Note 41 for more details.
(5) LONG-TERM SERVICE PLAN
The Company has adopted a Long-term Service Plan for the employees of the Company and its
subsidiaries. Refer to Note 42 for more details.
63. CONTINGENT LIABILITIES
Owing to the nature of the insurance, bank and other financial services business, the Group is involved in
contingencies and legal proceedings in the ordinary course of business, including, but not limited to, being
the plaintiff or the defendant in litigations and arbitrations. Legal proceedings mostly involve claims on the
Group’s insurance policies and other claims. Provision has been made for probable losses to the Group,
including those claims where management can reasonably estimate the outcome of the lawsuits taking into
account any applicable legal advice.
No provision has been made for pending assessments, lawsuits or possible violations of contracts when
the outcome cannot be reasonably estimated or management believes the probability is low or remote. For
pending lawsuits, management also believes that any resulting liabilities will not have a material adverse
effect on the financial position or operating results of the Group or any of its subsidiaries.
64. EVENTS AFTER THE REPORTING PERIOD
(1) PROFIT DISTRIBUTION
On 15 March 2023, the Board of Directors of the Company approved the Profit Distribution Plan of the
Company for 2022, and declared a final cash dividend of 2022 in the amount of RMB1.50 (tax inclusive) per
share as disclosed in Note 17.
65. COMPARATIVE FIGURES
Certain comparative figures have been reclassified or restated to conform to the current year’s
presentation.
332 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-341
66. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE
COMPANY
(1) STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(in RMB million) 31 December 2022 31 December 2021
Assets
Cash and amounts due from banks and other financial institutions 31,324 32,706
Financial assets purchased under reverse repurchase agreements 1,770 4,786
Financial assets at fair value through profit or loss 8,452 6,460
Financial assets at amortized cost 1,214 1,036
Debt financial assets at fair value through other
comprehensive income 8,531 2,903
Investments in subsidiaries and associates 236,919 219,972
Investment properties 1,020 926
Property and equipment 27 38
Intangible assets 995 1,002
Right-of-use assets 31 87
Other assets 11,335 10,165
Total assets 301,618 280,081
Equity and liabilities
Equity
Share capital 18,280 18,280
Reserves 144,503 144,483
Treasury shares (10,996) (9,895)
Retained profits 128,895 108,854
Total equity 280,682 261,722
Liabilities
Due to banks and other financial institutions 19,417 17,081
FINANCIAL STATEMENTS
Income tax payable 10 28
Lease liabilities 31 91
Other liabilities 1,478 1,159
Total liabilities 20,936 18,359
Total equity and liabilities 301,618 280,081
The statement of financial position of the Company was approved by the Board of Directors on 15 March
2023 and was signed on its behalf.
MA Mingzhe XIE Yonglin YAO Jason Bo
Director Director Director
Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd. 333
F-342
Notes to Consolidated Financial Statements
For the year ended 31 December 2022
66. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE
COMPANY (CONTINUED)
(2) RESERVE MOVEMENT OF THE COMPANY
For the year ended 31 December 2022
Financial
assets at Surplus
Share FVOCI reserve General Retained
(in RMB million) premium reserves Others fund reserve profits Total
As at 1 January 128,737 211 2,976 12,164 395 108,854 253,337
Profit for the year – – – – – 63,861 63,861
Other comprehensive income – 4 (36) – – – (32)
Dividend declared – – – – – (43,820) (43,820)
Employee Share Purchase Plan – – 44 – – – 44
Others – – 8 – – – 8
As at 31 December 128,737 215 2,992 12,164 395 128,895 273,398
For the year ended 31 December 2021
Financial
assets at Surplus
Share FVOCI reserve General Retained
(in RMB million) premium reserves Others fund reserve profits Total
As at 1 January 128,737 181 2,826 12,164 395 120,592 264,895
Profit for the year – – – – – 29,731 29,731
Other comprehensive income – 30 5 – – – 35
Dividend declared – – – – – (41,469) (41,469)
Employee Share Purchase Plan – – 144 – – – 144
Others – – 1 – – – 1
As at 31 December 128,737 211 2,976 12,164 395 108,854 253,337
According to the Company’s articles of association, the Company shall set aside 10% of its net profit
determined in its statutory financial statements, prepared in accordance with PRC Accounting Standards,
to a statutory surplus reserve fund. The Company can cease such profit appropriation to this fund
if its balance reaches 50% of the Company’s registered share capital. The Company may also make
appropriations from its net profit to the discretionary surplus reserve fund provided the appropriation is
approved by a resolution of the shareholders. These reserves cannot be used for purposes other than those
for which they are created. Profits are used to offset prior year losses before allocations to such reserves.
Subject to resolutions passed in shareholders’ meetings, the statutory surplus reserve fund, discretionary
surplus reserve fund and capital reserve can be transferred to share capital. The balance of the statutory
surplus reserve fund after transfers to share capital shall not be less than 25% of the registered capital.
In accordance with the relevant regulations, general reserves should be set aside to cover catastrophic
or other losses as incurred by companies operating in the insurance, banking, trust, securities, futures
and fund businesses. The Group’s respective entities engaged in such businesses would need to make
appropriations for such reserves based on their respective year-end profit or risk assets, as determined in
accordance with PRC Accounting Standards, and based on the applicable PRC financial regulations, in their
annual financial statements. Such reserves are not available for profit distribution or transfer to capital.
In accordance with the relevant regulations, the net profit after tax of the Company for profit distribution
is deemed to be the lower of (i) the retained profits determined in accordance with PRC Accounting
Standards and (ii) the retained profits determined in accordance with IFRSs.
334 Annual Report 2022 Ping An Insurance (Group) Company of China, Ltd.
F-343
ISSUER
Ping An Insurance (Group) Company of China, Ltd.
( )
47th, 48th, 109th, 110th, 111th and 112th Floors
Ping An Finance Center
No. 5033 Yitian Road
Futian District, Shenzhen, Guangdong Province
China
TRUSTEE
The Bank of New York Mellon, London Branch
160 Queen Victoria Street
London EC4V 4LA
United Kingdom
REGISTRAR AND TRANSFER AGENT PRINCIPAL PAYING AGENT AND
PRINCIPAL CONVERSION AGENT
The Bank of New York Mellon SA/NV The Bank of New York Mellon
Dublin Branch London Branch
Riverside Two 160 Queen Victoria Street
Sir John Rogerson’s Quay London EC4V 4LA
Grand Canal Dock United Kingdom
Dublin 2, Ireland
LEGAL ADVISERS TO THE ISSUER
As to English Law As to Hong Kong Law
DLA Piper (Singapore) Pte Ltd DLA Piper LLP
#48-0 UOB Plaza 1 25th floor, Exchange Square, Block 3
80 Raffles Place, Singapore 048624 Connaught Place, Central Hong Kong
As to PRC Law
Haiwen & Partners
Unit 2605, Shanghai Kerry Center Tower 1
1515 West Nanjing Road, Shanghai, PRC
LEGAL ADVISERS TO THE MANAGERS AND THE TRUSTEE
As to English Law and Hong Kong Law As to PRC Law
Linklaters JunHe LLP
11th Floor, Alexandra House 20/F, China Resources Building
18 Chater Road 8 Jianguomenbei Avenue
Central, Hong Kong Beijing, PRC
AUDITOR
Ernst & Young
Certified Public Accountants
27th Floor, One Taikoo Place
979 King’s Road, Quarry Bay
Hong Kong
