PROSPECTS

(1) Market Environment

In this year of the 70th anniversary of the PRC, the fundamentals for insurance business development remains favourable generally. China will adhere to the general tone of making progress while maintaining stability and deepen supply-side reform in accordance with the requirement of high quality development. It is expected that China’s economy will continue to run within a reasonable range which will provide a positive external environment for the development of the industry. Social and livelihood policies for shoring up weakness will be expedited, and in particular, the central government’s financial subsidies for agricultural and critical illness insurances will be increased. The deepening and advancing of the role of insurance in serving social governance will give rise to new policy-related opportunities for the industry’s development. People’s consumption structure is at a stage of transformation and upgrading with profound changes taking place, and as a result, the strong demand for health and endowment insurance products will grow further and create new space for business development. The implementation of urbanization and regional development strategies will also narrow the development disparity between the urban and rural areas and between the eastern and the central and western regions. The immense county area and the central and western regions will be an important source of incremental premium income. As the State has pushed forward an all-round opening up and building the “Belt and Road” with joint efforts, it is positive for the insurance industy to make good use of the two markets and two types of resources and explore new growth points.

(2) Development strategy and operation plan

In 2019, the Group will adhere to new development concepts, the overall keynote of seeking progress while maintaining stability and serving the real economy, and coordinate efforts in stabilising growth and earnings, promoting reform, lowering cost and preventing risks in tandem with its “3411 Project” and in accordance with the requirement of high quality development. It will actively push forward business model reform, strengthen corporate governance structure, put more effort into market-oriented reform and actively cut cost and increase profits and enhance the quality of its human captial. The Group will also strengthen the Party’s leadership, accelerate quality, efficiency and momentum reforms, and solidly propel the Group’s transforming to a high quality development. PICC P&C will unswervingly deepen “two integrations”, pursue dis-intermediary, lower costs, improve services and strengthen customer stickiness. It will thoroughly accomplish key tasks of fostering a sound marketing culture, building up the marketing team, strengthening the development of company controlled direct marketing channel and maintaining its cost-leading position. It will consolidate the development of motor vehicle insurance and policy-based business while putting more effort in the development of commercial nonvehicle insurance, pursuing success in the “central city attacking battle” and “county market defending battle”, consolidating advantages and maintaining leading market position. PICC Health will insist on deepening comprehensive reform, strengthen professional capability, drive the flattening of organisational structure, optimize resource allocation, emphasize on product innovation, enhance expense control of medical insurance, optimize and achieve excellence in commercial health insurance, and promote the outstanding features, business size and value creation of health management services. PICC Life will persistently strengthen the building of the individual insurance sales team, reinforce policy, senior management and back office foundation, upgrade product mix, enhance embedded value of businesses, strengthen internal control and accountability and ensure steady business development. The investment segment will actively develop wealth management business while providing good services to its principal business. PICC AMC will strengthen cooperation with the entrusted parties to make appropriate allocation to major asset classes, playing a major role in stabilising investment income of the Group while actively accelerate public fund and third party asset management business. PICC Investment Holding will expedite its transformation and development, properly carry out assets operation business, strengthen active management, proactively expand the scales of direct investment entrusted business and financial product business. PICC Capital will seize investment opportunities amid economic restructuring and increase development and allocation of non-standard products to satisfy the Group’s need of insurance asset allocation. The emerging segments will strengthen the building up of professional capability in their respective sectors, create boutique companies and further integrate into the overall development of the Group. PICC Financial Services will play a bigger role in advancing the Group’s internet transformation and fin-tech application. PICC Reinsurance will thoroughly explore the Group’s resources in outward reinsurance, accelerate development of third party market business and develop reinsurance business in respect of life and health insurance. PICC Pension will establish sound market-oriented operation regime, create endogenous vitality in development, consolidate the foundation for sustainable development, grasp opportunities in the occupational annuities market, increase the scale of entrusted annuities and enhance investment management capability. PICC Hong Kong will explore the Hong Kong market and act as a platform for business in Southeast Asia in accordance with the development requirement of being a professional, mid-sized boutique company with special characteristics.