China’s Ping An Insurance (Group) Co. has 23,000 research staff, 500 big-data scientists and spends billions of dollars a year on R&D. Last year, it attracted 46 million new customers, equivalent to the population of Spain — almost all of them in its home market.
The bad news for competitors outside China is that Ping An may be getting ready for another growth leap.
China’s largest insurer by market value has evaluated buying Prudential PLC’s Asia business, people familiar with the matter said last week. Such a deal would immediately extend its reach to insurance markets from Singapore to Indonesia, bringing it into more direct competition with international brands like AIA Group Ltd. and Manulife Financial Corp.
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Prudential PLC is a separate company from Prudential Financial Inc. and the parent of Jackson National Life Insurance Company, a major U.S. annuity issuer.
A mega-acquisition like the Prudential unit would mark an abrupt departure from Ping An’s strategy of incubating various tech businesses and then spinning them off, while incorporating the technology in its main financial and insurance operations. That strategy helped Ping An supercharge growth, and won it plaudits among analysts as one of Asia’s most technologically advanced insurers.
Marrying that tech prowess with an instant customer base across Asia would make Ping An a potentially huge threat. Fifty years ago, Prudential had just a handful of branch offices in the region, which catered mainly for the expat community. Now, it serves almost 15 million customers in 14 markets.
“An acquisition is a good strategy for Ping An to expand into other regions” as it seeks to mitigate the risk of concentrating on its home market, said Lu Yunting, a Shanghai-based analyst at Zhongtai Securities Co. “Its fintech is for sure a lot stronger than global insurers’ and its hardware and software are both very competitive.”
Ping An hasn’t approached Prudential about a deal, a person with knowledge of the matter said Wednesday, and Prudential Chief Executive Officer Mike Wells said the same day that the Asian operations aren’t for sale.
When Ping An presented its technology strategy in November, analysts were immediately enthused. Deutsche Bank AG and Nomura Holdings Inc. raised their price targets, in the German bank’s case by 38%. The company wants to eventually generate half its earnings from technology and said in its slideshow that fintech may increase banks’ return on equity globally by 44% by 2025.
Technology has “materially” bolstered Ping An’s performance in terms of customer analytics, channel development, risk management and client services, Morgan Stanley analyst Jenny Jiang wrote at the time, citing the insurer’s big-data analysis that can identify prospective clients and generate sales leads more accurately.