Integrated Management And Risk Control Of China's Ping An Insurance Company

Financial industry generally involves integrated and separate business operation. To confine the operation scope of financial organization becomes the main means of controlling and avoiding risks in immature market or inefficient supervision. For the insurance industry, the ways of operation and settlement between estate insurance and life insurance are quite different so that mixed operation would probably cause many problems, such as insurance fund and business data disorder. It's certain to execute the separate business operation in condition of defective supervision and control system. By 2003, China has set up three major regulatory institutes:CBRC, CSRC and CIRC, which indicates that the separate operation, separate supervision of the china's financial system was formally established.To some extent, separate operation restricted the expansion of financial industry since opening reform and financial with the further developed of the reform and opening up policy and financial industry. Chinese government got down to adjusting the policy on the separate operation properly and mutual penetration of the three industries (insurance, banking and securities). Integrated management of Insurance industry becomes popular at the moment. Under this circumstance, China's Ping An company is chosen to be the pioneer of this change. The transformation of China's Ping An company is largely related to the dilemma of insurance industry. China's Ping An company just adopts integrated financial operation to creating highest profit instead of single financial operation in the high-speed industrial integration process of insurance, banking, securities and investment business.The author joined the Sichuan Branch of China's Ping An Annuity company (formerly known as China's Ping An Life Insurance Division) in 2006 and have worked at internal work position for almost 5 years. According to the working experience and environment, the author has great impressions on strong implementation of group integrated financial strategy of China's Ping An Company. Ping An Company has purchased 1.639 billion shares of Shenzhen Development Bank to obtain a controlling stake with its 7.825 billion shares of Ping An Bank (about 90.75% of the total share capital of Ping An Bank, at 17.75 Yuan / share price, totally about 29.1 billion Yuan) and some cash. As Ping An's integrated financial management has begun to take shape, the author wants to take it as an example to analyze the status of integrated management of china's insurance industry.Based on the description above, the structure of this thesis is as followed:The first chapter segment I introduces the overview of integrated management. The segment II tells the changing operation model (integrated-separate-integrated) in financial industry in China. The later segments mainly tell Ping An's business operation by analyzing its evolutive history so as to represent Ping An's concept'establish an international financial business'which is throughout its entire development.The second chapter explains why so many insurance companies are keen on the integrated management including Ping An. The segmentⅠof this chapter introduces the limitation of separate operation nowadays. The segmenⅡtakes the insurance industry as an example to analyze the advantages and disadvantages of IM. The segmentⅢtells why insurance companies pay much attention to IM by discussing the necessity of insurance industry at home and abroad. The segmentⅣpresents the 3 patterns of IM, characteristics and types of financial holding companyThe third chapter indicates that Ping An has achieved the success after carrying out IM strategy and Two parts are included in this chapter. The segment I is to verify the developing direction and objective of Ping An through the financial prospects proposed by chairman of the company—Mingzhe Ma. The segment II pionts out that it's non-insurance business (investment and bank business) which creates great profit to Ping An company referring to the interim results brought by itself in 2010.Jinlong Guo, who is the Director Assistant of the CASS Institute of Finance and Director of Insurance Research Institute, states Insurance industry should put the stability and security of the operation at the first place. The insurance industry which is considered as the type of prudent finance should seek for innovation and the maximum of profit after we stabilize fundamental business and control risks effectively. So the segment I of the fourth chapter depicts the potential risks of approaching to security and bank business for Ping An. The segment II analyses that there are many crossed or absent business between IM and SM. The segment III also shows the internal risk control system and the 3 risks of IM for Ping An which should be especially concerned and solved.