2019 Annual Report CORPORATE CULTURE of CHINA RE GROUP
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2019 Annual Report CORPORATE CULTURE OF CHINA RE GROUP MISSION Diversifying economic risks Assisting the robust development of the insurance industry VISION Becoming a world-class reinsurance group with outstanding expertise and eminent brand CORE VALUES Integrity Expertise Responsibility Aspiration BASIC AWARENESS Risk awareness Service awareness Compliance awareness Collaboration awareness BUSINESS PHILOSOPHY Prudence Innovation Openness Mutual-benefit TABLE OF CONTENTS Financial Highlights 3 Honours and Awards 4 Statement from the Chairman 7 Management Discussion and Analysis 11 Directors, Supervisors, Senior Management and Employees 56 Corporate Governance Report 67 Report of the Board of Directors 96 Report of the Board of Supervisors 110 Embedded Value 113 Independent Auditor’s Report 123 Financial Statements and Notes 131 Denitions 278 Corporate Information 284 China Reinsurance (Group) Corporation 2 2019 Annual Report FINANCIAL HIGHLIGHTS Highlights of financial information of the Group for the past five accounting years are extracted as below: Unit: in RMB millions, except for percentages and unless otherwise stated 2019 2018 Change (%) 2017 2016 2015 Total assets 396,638 340,907 16.3 242,800 211,207 328,993 Total liabilities 299,660 253,653 18.1 167,430 139,067 258,036 Total equity 96,978 87,254 11.1 75,370 72,140 70,957 Gross written premiums 144,973 122,257 18.6 105,336 86,677 80,434 Net profit 6,645 3,899 70.4 5,336 5,233 7,675 Net profit attributable to equity shareholders of the parent company 6,049 3,730 62.2 5,256 5,146 7,579 Earnings per share (RMB) 0.14 0.09 62.2 0.12 0.12 0.20 Net assets per share attributable to equity shareholders of the parent company (RMB) 2.05 1.84 11.3 1.75 1.68 1.65 Increase of 2.42 percentage Weighted average return on equity (%)1 7.32 4.90 points 7.22 7.28 12.99 Note: 1. Weighted average return on equity = Net profit attributable to equity shareholders of the parent company ÷ balance of weighted average equity. China Reinsurance (Group) Corporation 3 2019 Annual Report HONOURS AND AWARDS CHINA RE GROUP The awarded unit Title of the honours and awards received Awards organisation 2019 Best Reinsurance Company Financial News Influential Insurance Group of the Year hexun.com Best Corporate Governance Award China Financial Market 2019 Ark Award for Gold Insurance Brand Securities Times Most Socially Responsible Award for Hong Kong gelonghui.com China Re Group Listed Companies Advanced Poverty Alleviation Unit the CPC Qinghai Province Committee and the People’s Government of Qinghai Province First Prize of the Annual Outstanding the CBIRC Research Results of the Banking and Insurance Industries China Reinsurance (Group) Corporation 4 2019 Annual Report HONOURS AND AWARDS CHINA RE P&C CHINA RE LIFE The awarded unit Title of the honours and awards received Awards organisation “Easy Fund” innovation project was granted the Ministry of Industry and Information “Blockchain Application Innovation Technology of the PRC and Shenzhen Outstanding Case Award” of CITE2019 Municipal People’s Government Two “Outstanding Informatisation Project China Information Industry Association Award for China Insurance Industry “and and China Financial CIO Union “Innovative Informatisation Project Award for China Insurance Industry” 2018-2019 Outstanding Case of San Nong Fin-Tech Innovation Alliance Inclusive Financial Service Award Outstanding Financial Bond Issuer Award China Central Depository & Clearing China Re P&C Co., Ltd. 2019 Most Innovative Insurance Company Financial News Breakthrough Informatisation Project Award for China Information Industry Association China Insurance Industry and China Financial CIO Union China Re Life Outstanding Financial Bond Issuer Award China Central Depository & Clearing Co., Ltd. China Reinsurance (Group) Corporation 5 2019 Annual Report HONOURS AND AWARDS CHINA CONTINENT INSURANCE CHINA RE AMC CHINA RE UK The awarded unit Title of the honours and awards received Awards organisation 2019 “Top 500 Asian Brands” World Brand Lab 2019 Ark Award for Gold Insurance Brand Securities Times Best Technology Innovative Insurance Financial News Organisation of the Year China Continent 50th of “2019 Top 100 Financial Innovation” China Economic Net Insurance Best Corporate Governance of the Year Finance.china.com.cn and Nowadays Insurance Golden Sound Award for “Best Customer 51Callcenter and Zibo Municipal Contact Centre – Customer Service” People’s Government (Honorary Award 2019) 2019 Ark Award for Insurance Asset Securities Times Management Gold Risk Control, 2019 Ark China Re AMC Award for the Gold Medal Insurance Investment Team -Fixed Income Team Beijing Integrity Enterprise Beijing Municipal Bureau of Economy and Information Huatai Insurance Technology, Capital Civic Enhancement Committee Office Agency and Beijing Municipal Administration for Market Regulation China Re UK “Tou Ying Tracker 2018” Award China Daily and Grant Thornton China Reinsurance (Group) Corporation 6 2019 Annual Report STATEMENT FROM THE CHAIRMAN In 2019, China recorded a GDP of nearly RMB100 trillion with its per capita GDP exceeding USD10,000, and its economic growth steadily ranked among the top in the world. High-quality development became a prevailing consensus in the insurance industry. In response to the changing times trend and taking into account its own development reality, China Re Group adhered to the original strategy of serving the country and focused on the three major strategies, namely “platform operation, technology advancement and globalisation”, as well as the operational strategy of “stabilising growth, adjusting structure and increasing profitability”. The implementation of the “One-Three-Five” Strategy yielded fruitful results. Our operating performance improved significantly and the transformation of high-quality development had achieved remarkable results. In 2019, the business scale of China Re Group continued to grow rapidly. The gross written premiums amounted to RMB144,973 million, representing a year-on-year increase of 18.6%, which continued to surpass the average growth rate of China’s insurance industry. We continued to maintain our position as a leading domestic reinsurer, and our reinsurance gross written premiums ranked the seventh in the world. The operating performance improved significantly. Net profit attributable to equity shareholders of the parent company for the year amounted to RMB6,049 million, representing a year-on-year increase of 62.2%, and the weighted average return on equity was 7.32%. We recorded a total investment yield of 5.30%, while its net investment yield was 5.02%. The international ratings remained stable. During the Reporting Period, we maintained the Financial Strength Rating of “A (Excellent)” by A.M. Best and was rated “A” by S&P Global Ratings. China Reinsurance (Group) Corporation 7 2019 Annual Report STATEMENT FROM THE CHAIRMAN In 2019, China Re Group made new breakthroughs in serving the country’s major strategies. As the first domestic commercial insurance company to sign a memorandum of understanding with relevant ministries, we set a model for the insurance industry to serve the real economy and the Belt and Road Initiative. We deeply participated in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area (“Greater Bay Area”), and had carried out in-depth cooperation with the local governments and commercial institutions in the Greater Bay Area in exploring the issuance of catastrophe bonds, launching the insurance activities concerning customs bond insurance and cross-border medical insurance products. New progress had been made in serving the modernisation of national governance systems. Our self-developed earthquake-catastrophe model, which filled the gap in this area in China, was adopted by several insurance companies for the first time; the IDI platform was launched in Beijing, Nanning and other places; the pilot programme of environmental pollution liability insurance was fully participated in; the emergency response platform for nuclear-accident damage compensation was successfully rolled out. We had achieved new milestone in serving the construction of our industry’s infrastructure. We deeply participated in industry research and revision of policies and rules, such as phase 2 of the regulatory rules for the CBIRC’s C-ROSS, revision of new accounting standards, reinsurance market research and preparation of the new lists of serious diseases, contributing our expertise and wisdom. New achievements had been made in serving poverty alleviation of our country. In addition to the successful poverty alleviation in Xunhua County, Qinghai Province, we focused on the anti-poverty-returning insurance and the ramen industry, and continuously upgraded the “1+1+N” targeted poverty alleviation model with China Re’s own characteristics. We directly invested RMB33.24 million in poverty alleviation throughout the year. China Re Group was recognised twice as an advanced poverty alleviation unit by Qinghai Province. In 2019, China Re Group continued to make breakthroughs in its global layout. Following the acquisition of Chaucer, the business, personnel and operations of Chaucer remained stable, and it was admitted to the “Club of GBP 1 billion” of Lloyd’s in terms of underwriting capacity, which nurtured domestic innovation and formed advantages in areas such as political risk insurance and political violence insurance. China Re HK has commenced official operation, Singapore Branch was granted the life reinsurance business license,