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Ping An Insurance shrinks agent force for first time in years

Ping An Insurance (Group) Co. of China Ltd. shrank its agent force in the first half of 2019, the first cut in at least four years, as China's biggest life insurer by premiums increased the use of technology in customer-facing processes.

After reporting a 68.1% year-over-year rise in second-quarter net profit, the company said it had 1,286,250 insurance agents as of end-June, down from 1,417,383 as of end-2018. Still, it was more than double its sales force of 635,551 as of end-2014.

"We'd had a high-speed growth of agent force since 2015, and now, a consolidation is needed," Lee Yuansiong, co-CEO of Ping An who oversees the insurance business, said at an earnings conference Aug. 16.

"We've been firing underperforming agents. But I must say, agents are still Ping An's most important sales channel, particularly in terms of referring new businesses to other Ping An units," Lee said.

In the first half, new business value per agent rose 8.5% to 29,314 yuan from 27,027 yuan a year earlier, as the use of artificial intelligence and digital tools improved customer engagement and risk control, he said. However, income per agent declined 3.7% to 6,617 yuan from 6,870 yuan in the same period. Lee said the average income drop was largely dragged by a sharp decline in auto insurance sales as global trade friction remained elevated.

Meanwhile, Ping An's total new business value grew 4.7% to 41.05 billion yuan from 39.21 billion yuan a year earlier, which Lee said was lower than expected. He added that was because the company continued pushing for more sales of long-term protection-type policies, in response to more stringent rules around policy design in recent years.

Operating profit from technology falls

In the six months ended June 30, Ping An's technology segment reported an operating profit of 2.80 billion yuan, down 33.3% from 4.20 billion yuan a year earlier.

The segment includes online nonbank lender Lufax Holding, financial technology unit OneConnect Financial Technology Co., Ltd., as well as Ping An Healthcare and Technology Company Ltd., and Autohome Inc.

Jessica Tan, the other co-CEO of Ping An who oversees its technology business, said at the same conference that most of its technologies still require substantial capital input and are not yet at the stage of scaling up or making any profit.

"Now is not the time to look at profits. Revenue is going up, that means people want our services, but we still need to make massive investments in our underlying technologies," Tan said.

Ping An is preparing for an IPO of OneConnect in either Hong Kong or New York as early as in September, Reuters reported in June, citing unnamed sources. The Ping An unit raised US$650 million in a series A financing round in February 2018 that valued the company at US$7.40 billion at that time, according to data from S&P Global Market Intelligence.

OneConnect offers a range of technology to banks, insurers and investment institutions. Products offered include smart authentication, robo-advisory, digital retail banking and lending solutions, blockchain-enabled interbank service platforms.

Last year, Ping An spun off Ping An Healthcare and Technology in an IPO in Hong Kong and raised US$1.1 billion. The company, better known as Ping An Good Doctor, operates artificial intelligence-enhanced online healthcare platforms used by hospitals, insurers and pharmacies in China.

As of Aug. 15, US$ was equivalent to 7.03 Chinese yuan.