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Ping An Insurance expects earnings lift from financial, healthcare tech

Profit from healthcare and financial technology more than doubled at Ping An Insurance (Group) Co. of China Ltd. in 2017, and the country's second-largest insurer by market share said it expects the business to continue increasing its contribution to earnings.

Ping An's healthcare and fintech business line was the second-largest contributor to 2017 net profit after the core life insurance business, the insurer said during a March 21 earnings conference.

The segment, which includes the Ping An Good Doctor healthcare platform that is preparing for a Hong Kong listing, made a net profit of 14.62 billion yuan in 2017, up from 6.19 billion yuan in 2016. That represented 16.4% of the group's total net profit of 89.09 billion yuan for 2017, compared with the 40% contribution from life insurance, the company said.

"We expect fintech's profit contribution to become even more significant and bigger," Ping An COO and Chief Information Officer Jessica Tan told the conference.

Ping An has in recent years branched into technology research and development, such as artificial intelligence, big data, online underwriting and finance, and it has said it hopes to cross-sell to its more than 400 million online customers. As of end-2017, the company had 3,030 patent applications, three times more than it had a year earlier.

Ping An Healthcare and Technology Co. Ltd., which operates Ping An Good Doctor, filed an IPO application to the Hong Kong Stock Exchange in late January. Its latest fundraising round, which saw it collect $400 million from investors including the Softbank Vision Fund, valued the company at $5.40 billion, Ping An said in its annual report.

As of end-2017, Ping An Good Doctor had 192.8 million registered users, up 47% from 131.5 million in the prior year.

Another fintech unit, Shanghai Lujiazui International Financial Asset Exchange Co., also known as Lufax, became profitable for the first time in 2017, Ping An added. Lufax is an online wealth management platform that operates in China and Singapore, and it is also one of China's largest peer-to-peer lenders. Lufax's assets under management grew 5.3% in 2017 to 461.70 billion yuan, while its loan balance almost doubled to 288.43 billion yuan.

Ping An Medical and Healthcare Management Co. Ltd., another technology-driven managed care platform, was valued at US$8.8 billion after its first funding round, Ping An noted, while OneConnect Financial Technology Co. Ltd. was valued at US$7.4 billion.

Credit Suisse said in a report March 21 that Ping An could unlock HK$14 per share by listing the four tech units. The company's shares closed down 3.2% at HK$88.30 apiece in March 21 trading.

"The conglomerate strategy and product diversification will ensure Ping An stays ahead of peers," CLSA wrote in a research report released March 21.

While the top lines of most Chinese life insurers took a hit in 2017 amid a regulatory crackdown on the sale of short-term policies, Ping An outperformed as it sold more long-term, protection-oriented policies, and expanded into areas beyond insurance. Full-year 2017 profit was up 42.8% for Ping An, and the company doubled its dividend to 1.50 yuan per share, equivalent to a payout ratio of 30.8%.