The Competitive Advantages and Moat Analysis of Ping An

Last week, I went to 4S shop to renew my car insurance, as the insurer sold different companies insurances, I asked which companie car insurance was sold most in her mind. The girl just give me a quick reply: Ping An, and around 70% of her customers adopts Ping An insurance. OK, that’s maybe just one special case, however, more and more people chooses Ping An as their insurer. 

As I mentioned in my another post : Ping An, a World-Leading Technology-Powered Retail Financial Services Groupin the last 30 years, Ping An has grown from a small area company to one of the most influntial conglomerate in China. So it makes me wonder that what’s the competitive advantages and moat analysis of Ping An.

  1. The brand

In 2019, internet users of Ping An group increased 6.9% from the beginning of 2019 to 576 million. The number of yearly active users reached 269 million. Retail customers of Ping An group grew by 6.6% from the beginning of 2019 to 196 million. In the first half of 2019, the Company acquired 20.09 million new customers, 33.8% of whom were sourced from internet users within the Group’s five ecosystems. Aside Alibaba and Tencent, Ping An has the most user base in China. 

Ping An has already won global recognition and award. As we can see from the below graph, Ping An takes the No.1 in the insurance brands globally.

From 2019 Annual Results Announcement

2. Integrated Finance Businesses

As Ping An vision is to become a global leader in integrated personal finance, Ping An is dedicated to Build an integrated financial services platform that is in line with the vision of “One Customer, One Account, Multiple Products and One-Stop Services” and promote cross-selling.

From 2019 Annual Results Announcement

Under the “finance + technology” and “finance + ecosystem” strategies, Ping An focuses on five ecosystems, namely financial services, health care, auto services, real estate services, and smart city services. Moreover, Ping An provides customers with diverse, excellent products and services by empowering financial services with technologies, empowering ecosystems with technologies, and empowering financial services with ecosystems.

Through customer migration, for example, “insurance customers to banking and investment customers” and “offline financial business customers to online service users”, it’s easy to expand customers base in different base. 

As we can see from Ping An 2019 Annual report, through the number of life agents is reduced, the customer number and contract number per customer are growing, which contributed to the groups profit growing. 

From 2019 Annual Report

As Ping An has more than 500 Million internet users, it’s the engine to migrate internet users to different business customers. And through cross selling, more and more customers will hold more than one contracts. 

From 2019 Annual Results Announcement

We all know than if one customers holds more contracts, the customer will be more loyal to the company. 

3. Excellent Life and Health Insurance Business

When we read Ping An annual reports in each year, we will find out Life and Health Insurance business is the main profit source, and still growing very quickly. 

From 2019 Annual Results Announcement

Ping An is one of my favorite companies, one of the reasons is the high ROE. However, if we study closely, the ROE of Life and Health business is more than 40%. If other business performed not well, the group financial performance will not be impacted very much.

From 2019 Annual Results Announcement

4. Technology-Powered Business Transformation

Ping An invests heavily in R&D to build leading technological capabilities. Ping An’s technologies have been widely applied in areas including financial services, health care, and smart city services. Ping An develops the technologies to support its five ecosystems, namely financial services, health care, auto services, real estate services, and smart city services. As we can see Ping An has achieved great success in the technological innovation.

From 2019 Annual Results Announcement

Ping An applies an array of technologies to diverse scenarios to increase efficiency, cut costs, enhance risk management, and offer excellent products and service experiences. Moreover, Ping An shares leading innovative products and services with others to develop and empower business ecosystems with advanced technologies.

From 2019 Annual Results Announcement

Conclusion:

The above four points is my perspectives about the competitive advantages and moat of Ping An, and I believe that Ping An will maintain its competitve and moat in the long run.



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