Ping An Insurance (Group) Company of China, Ltd. Reports a Record High Net Profit

Shanghai, China and Hong Kong, March 19, 2008 - The company's "Three-pillar" Strategy Further Strengthened

Ping An Insurance (Group) Company of China, Ltd. ("Ping An" or "the Group", HKEX: 2318; SSE: 601318) today announced its 2007 annual results. Benefiting from favourable economic conditions, Ping An achieved a healthy growth across all its business segments and a record high net profit in 2007.

Highlights of the 2007 results, under International Financial Reporting Standards ("IFRS"), are:

Under PRC Accounting Standards, the Group's net profit was RMB15,581 million, an increase of 107.9% over 2006. Total assets reached RMB651,104 million and total shareholders' equity grew to RMB109,218 million. Premium income increased by 18.2% to RMB100,945 million and earnings per share were RMB2.11.

The Board of Directors has proposed a final dividend payment of RMB0.50 per share for the year 2007.

Consolidated results of the Group under IFRS                       
For the year ended 31 December                                               2007         2006 (in RMB million)                                                    

Gross written premiums, policy fees and premium
deposits                                                                                   99,676       84,276
Less: premium deposits                                                           (19,270)     (14,580)
Gross written premiums and policy fees                                     80,406       69,696
Total income                                                                         137,051       88,198
Operating profit before tax                                                       22,004        8,548
Net profit                                                                                19,219        8,000
Earnings per share (RMB)                                                           2.61         1.27

                                                                   
Breakdown of net profit by business segments:                       
Life insurance                                                                           10,883        5,704
Property and casualty insurance                                                  2,073         1,048
Banking                                                                                    1,537          71
Other businesses                                                                       4,726         1,177

Strengthening of the "three-pillar" strategy

Commenting on the achievements in 2007, Ping An Chairman and CEO Ma Mingzhe said, "Leveraging on the positive domestic and foreign market trends, Ping An continued to enhance its integrated financial services and global investment platform. By fully capitalizing on the favorable economic environment during 2007, all business segments experienced a healthy development with a further strengthening of the Group's "three-pillar" strategy. Our insurance business continued to maintain strong growth momentum. We achieved a new record high in our life insurance business and realized significant improvements in business scale and service quality with an enlarged sales force. The integration and transformation of the banking business was completed smoothly, which substantially strengthened the banking business of Ping An. Shenzhen Ping An Bank has achieved significant growth in the business since its establishment. The investment business capitalized on the buoyant market conditions and was a major contributor to the significant increase in the Group's net profit. In addition, the Group also realized a substantial increase in the returns from investment of the insurance assets and recorded strong growth in income from securities brokerage and investment banking businesses.

"2008 is the 20th anniversary of the establishment of Ping An. During the past 20 years, the Group has grown from a small insurance company with only 13 employees to an integrated financial services group with about 70,000 employees, 300,000 sales agents, as well as over 40 million customers. Ping An has gradually expanded from a business focused solely on property and casualty insurance to an integrated financial services group covering life insurance, property and casualty insurance, banking, asset management, corporate annuity, trust and securities business. The Group has grown not only in scale and diversity, but has also established a stronger foundation for a more sustainable operation going forward. I am very honored to have witnessed and be part of this landmark transformation."

The significant increase in 2007 consolidated net profit was primarily due to the better performance across the Group's portfolio of businesses and the strong total investment returns. Under IFRS, life insurance business, property and casualty insurance business, banking business and securities business accounted for approximately 56.6%, 10.8%, 8.0% and 7.8%, respectively, of the Group's net profit in 2007.

The Group's embedded value was RMB150,311 million as at 31 December, 2007, an increase of 129.2% over 2006.

Life Insurance: Strong Growth in Business Scale and Service Quality

The following table highlights key financial and operating data in Ping An's life insurance business under IFRS:

Life insurance business:                                             

For the year ended 31 December                        2007         2006  (in RMB million)                                                    
                                                                        
Gross written premiums and policy fees               59,913       53,622
Individual life                                                     51,577       45,870
Bancassurance                                                     678          928
Group insurance                                                 7,658         6,824
Premium deposits                                              19,270       14,580
Individual life                                                     12,714        9,296
Bancassurance                                                    6,556        5,284

Gross written premiums, policy fees and premium                     
Deposits                                                          79,183       68,202

Market share(in terms of gross written premiums,     
|policy fees and premium deposits)                     16.0%         17.0%                     

Ping An Life is one of the most profitable life insurance companies in the PRC. In 2007, Ping An continued to enhance business performance through "Two-Tier Market Development" strategy, product innovation and service enhancement and achieved a new record high in life insurance business. Capitalizing on significant improvement in business scale and service quality, the Group's life insurance business set new records with gross written premiums, policy fees and premium deposits of RMB79,183 million, this represents a 16.0% market share in China's life insurance market. The net profit increased 90.8% from RMB5,704 million in 2006 to RMB10,883 million in 2007.

Gross written premiums, policy fees and premium deposits for individual life, bancassurance and group insurance businesses recorded growth of 16.5%, 16.5% and 12.2% to RMB64,291 million, RMB7,234 million and RMB7,658 million respectively. The first year premiums, policy fees and premium deposits of individual life business up 34.9%, from RMB12,205 million in 2006 to RMB16,464 million in 2007. The major reasons for the increase were the enlargement of the sales force to more than 300,000 agents, their increased productivity and the launch of new investment-linked products.

Commission expenses of insurance operations, which were paid primarily to our sales agents, increased by 37.3% from RMB6,559 million in 2006 to RMB9,004 million in 2007. Commission expenses as a percentage of gross written premiums, policy fees and premium deposits increased from 9.6% in 2006 to 11.4% in 2007 as a result of the increased sales in individual life products, which have a relatively higher level of commission.

General, administrative and other expenses were up by 45.3%, from RMB6,039 million in 2006 to RMB8,776 million in 2007.

The 13-month and 25-month persistency-ratio remained at a healthy level above 90% and 80% as a result of improvements in customer service.

Property and Casualty Insurance: Recorded Exceptionally Strong Growth

The following table highlights key financial and operating data in Ping An's property and casualty insurance business under IFRS:

Property and casualty insurance:                                    

For the year ended 31 December                        2007         2006 (in RMB million)                                                     |

Gross written premiums                                    20,493       16,074
Automobile insurance                                       14,319        11,057
Non-automobile insurance                                  5,087          4,207
Accident and health insurance                            1,087           810
Market share
(in terms of gross written premiums)                 10.3%         10.7%

The property and casualty insurance business recorded growth in all its business segments in terms of product types, distribution channels, geographic regions and customer types. Gross written premiums and net profit increased by 27.5% and 97.8% to RMB20,493 million and RMB2,073million respectively. The domestic agricultural insurance business experienced significant growth in 2007 but since Ping An Property & Casualty's involvement in this area is limited, the Group's market share in the market dropped slightly to 10.3%.

Among the three business lines of the property and casualty insurance business, the continued increase in demand for automobiles in China, in combination with the implementation of a compulsory third party liability insurance, led to an increase of gross written premiums in automobile insurance business of 29.5% to RMB14,319 million in 2007. On the other hand, gross written premiums attributable to non-automobile insurance business also posted a growth of 20.9% to RMB5,087 million as a result of the increase in sales of commercial property insurance.

Through the continued focus on disciplined underwriting and service enhancement, the loss ratio of the property and casualty insurance business significantly decreased from 69.6% in 2006 to 66.0% in 2007. Due to the increase in gross written premiums, claims increased by 34.5% from RMB7,178 million in 2006 to RMB9,651 million in 2007. Similarly, commission expenses also increased by 27.4% from RMB1,572 million in 2006 to RMB2,003 million in 2007.

General, administrative and other expenses increased by 42.4% from RMB3,029 million in 2006 to RMB4,313 million in 2007 as a result of the increase in gross written premiums and intensified competition in the industry.

Banking: Substantially Strengthened Banking Business
2007 is the first full fiscal year of operations for Shenzhen Ping An Bank following the acquisition in December 2006. Since the establishment of Shenzhen Ping An Bank, the Group's banking business has achieved significant growth with a net profit increase from RMB71 million in 2006 to RMB1,537 million in 2007 under IFRS. The non-performing loan ratio dropped significantly from 6.3% to 0.8%, and the capital adequacy ratio and core capital adequacy ratio were at 9.1%, a level which is comfortably above the regulatory requirement. Besides, the 2007 banking operation results also reflected the one-off benefits of non-performing assets disposal and reversals of litigation provisions amounting to RMB418 million.

Under IFRS, due to the full year contribution from Shenzhen Ping An Bank in 2007, the net interest income for the year increased significantly to RMB3,478 million from RMB112 million in 2006. The net interest spread also improved from 1.8% in 2006 to 2.7% in 2007. Primarily due to the increase of full year contribution from Shenzhen Ping An Bank in 2007, general, administrative and other expenses increased to RMB1,769 million in 2007 from RMB86 million in 2006. However, as revenue growth outpaced expense growth during the year, the cost-to-income ratio decreased from 39.1% in 2006 to 36.5% in 2007.

Investment Business: Strong Growth in Investment Income

The following table highlights Ping An's investment income under IFRS:

Consolidated investment income:                                      

For the year ended 31 December                          2007       2006
(in RMB million)                                                    
Net investment income                                      15,257     12,198
Net realized and unrealized gains                       36,487       9,773
Total investment income                                   51,744      21,971
Net investment yield                                           4.5%        4.3%
Total investment yield                                       14.1%        7.7%

In 2007, Ping An capitalized on the buoyant market conditions and the investment business was a major contributor to the significant increase in the Group's profits. Ping An realized a substantial increase in the returns from investments of the insurance assets and recorded strong income growth from the securities brokerage and investment banking businesses. Wealth management trust assets also grew to RMB47,519 million.

Under IFRS, the Group's net investment income increased by 25.1% from RMB12,198 million in 2006 to RMB15,257 million in 2007, as a result of the increase in investment assets from RMB332,164 million as at 31 December 2006 to RMB474,887 million as at 31 December 2007. In addition, higher dividend income received from equity investment funds also led to an improvement of the net investment yield from 4.3% in 2006 to 4.5% in 2007.

The strong performance of the PRC equity markets last year resulted in an 135.5% increase in the Group's total investment income, from RMB21,971 million in 2006 to RMB51,744 million in 2007. The total investment yield also improved from 7.7% in 2006 to 14.1% in 2007. In order to lock-in profits accumulated in previous periods, realized investment gains increased significantly to RMB33,987 million, whereby the total net realized and unrealized gains increased significantly to RMB36,487 million in 2007 from RMB9,773 million in 2006.

Ping An continued to improve the asset allocation of its portfolio to capture the opportunities in the capital markets. The Group's term deposits as a percentage of total investment assets decreased to 7.0% as at 31 December 2007 from 17.8% as at 31 December 2006, while the weighting of equity investments increased to 24.7% as at 31 December 2007 from 13.5% as at 31 December 2006.

The buoyant market conditions led to a significant increase in trading volumes of the PRC stock market, which in turn boosted brokerage fee income from securities brokerage business from RMB349 million in 2006 to RMB1,556 million in 2007.

Regarding the trust business, assets under management in 2007 was RMB47,519 million, which led to an significant increase of total fees and commission income to RMB656 million in 2007. Net profit increased from RMB194 million in 2006 to RMB744 million in 2007.

Prospects
Looking forward, Mr. Ma Mingzhe commented, "2008 marks the beginning of the third decade in Ping An's development. We are very confident of the long-term, strong and stable growth of the Chinese economy and Ping An. Leveraging on our strong management team, clear development strategy, prudent financial approach and stable growth of all our businesses, we strongly believe that Ping An will be able to achieve its development objectives for the next ten years and to deliver long-term, sustainable returns to our shareholders."
 

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