Article published in FULLCOVER 9 that presents Fosun group, shareholder of Fidelidade, highlighting the group's strategy for the insurance industry and for the main player in the Portuguese market

2. On the Insurance
‘Superhighway’

3. 46
On the Insurance
‘Superhighway’
Fosun building Shanghai.

4. 47
Fosun, China’s largest privately owned conglomerate, became a truly
global insurance group last year. It further increased its shareholding in
Portugal's leading insurer group Fidelidade to just under 90% and bought
US insurer Meadowbrook Insurance Group (MIG) and Ironshore, the
Bermuda-based international specialty insurer to add to its existing Asian
insurance and reinsurance operations. The insurance operations join
Fosun’s fast-growing range of industrial, lifestyle and health businesses
as Chairman Guo Guangchang pursues his aim of becoming the Chinese
Warren Buffett and says the group is now on the ‘superhighway’ of growth.
Adrian Ladbury takes a closer look at the group’s insurance and wider
strategy and growth in recent times.

5. 48
M D S m a g a z i n e
FOSUN MILESTONES
1992
Fundan University graduates
founded Fosun with an initial
investment of US $4,00
1994
Founded Fosun Pharma
and Forte
1998
Fosun Pharma listed in China
A-share market
2002
Yuyuan
2003
Nanjing Iron & Steel
2004
Zhaojin Mining
2007
Youg’an P&C Insurance,
Hainan Mining
2008
Focus Media
FosunGroupwasoriginallyfoundedasamarketresearchcompany
by five graduates of Fudan University, China in 1992 and over the
last 34 years has transformed itself into the biggest privately held
conglomerate in China.
GuoGuanchang,groupChairmanandleadshareholder,openly
bases his strategy on that followed so successfully over the years
by legendary US investor Warren Buffett.
Putverysimply,MrBuffettusesthe‘float’generatedbyinsurance
companies that does not need to be paid back to policyholders
immediately to invest in a wide range of other businesses in
non-related sectors.
Thosebusinessesobviouslybenefitfrompreferentialtermsand
conditionsfortheircoveragefromthegroupinsurersbecausethey
know the risk profile of these companies better than any rival.
At the same time, the premiums generated feed the float in a
virtuous circle. The group also has significant investment and
asset management activities that also benefit both the industrial
operations and the insurers.
Lotsofcapitalisneededtomakethissystemworkastheinsurers
need to be diversified by line and territory to avoid dangerous
accumulation, hence the recent international expansion.
Apart from the fundamental business strategy, Mr Guo also
followsMrBuffett’sexamplebywritingalongandrevealingletter
to shareholders along with the group’s annual results.
Inhislatestletterpublishedlastmonthasherevealedthegroup’s
fullyear2015resultsheexplainedthestrategyasthus:“TheGroup
has regarded insurance as a good means to connect Fosun’s
investment capability to high quality long-term capital. On one
hand, the insurance companies can improve their profits from
underwriting by leveraging on the group’s extensive industrial
operations experience and expertise in insurance and finance,
and on the other hand may also help the group to realise higher
investment revenue through effective investment practices. As a
result, insurance plus investment will be our core business in the
future,” he explained.
JustlikeMrBuffett’sBerkshireHathaway,Fosunisdoingrather
well in this highly competitive global insurance market.
Mr Guo revealed that, as at 31 December 2015, total insurance
assets under its management reached RMB 180.6bn (us $27.9bn).
Thisaccountedfor44.6%ofthegroup’stotalassetsandrepresented
an increase from 32.9% at the end of 2014.
Total investable assets reached RMB 160.4bn (us $24.8bn), an
increase of 50.2% compared with 2014. Profit attributable to the
owners of the parent company from the insurance business rose
by 88.4% year-on-year to RMB 2.10bn (us $320m) and accounted
for 26.2% of the net profit of the group.
Theprofitincreased at acompound average growth rate (CAGR)
of 100.5% from 2013 to 2015, reported Mr Guo.
So how exactly did Fosun build such a presence in the insurance
business?

6. 49
f u l l c o v e r
First step with Yong’an
Xi’an-based Yong’an Insurance P&C was founded in 2003
andwasFosun'sfirstinvestmentintheinsurancemarket.
The Group holds a 19.93% equity interest in Yong’an, a
national insurance company that underwrites all types
of non-life insurance business and was ranked 11th in the
P&C market in 2014.
TheChinesemarketiscurrentlyhighlycompetitiveand
profits are not easily found.
Financial details are hard to come by for Yong’an, but
Mr Guo’s letter accompanying the group 2015 results
states that the insurer has ‘taken the initiative’ and will
be continuing to ‘adjust and transform’ its business in
2016, indicating that it has experienced a tricky time of
late along with the wider Chinese market.
The group said that Yong’an has discontinued certain
‘less efficient’ businesses and ‘constantly optimised’
its business portfolio. It has also increased per capita
production capacity, reduced claims settlement costs,
enhanced innovative development and actively explored
Internet applications.
Despite the need for ‘adjustment’ Yong’an recorded
gross premium income of RMB 8.1bn, net profit of
rmb 833.3m, investable assets of RMB 10.9bn, net
combined ratio of 98.0%, solvency adequacy ratio
of 263.7%. The total investment return reached 10%.
So the results show that Yong’an is not doing bad at all.
Second step Pramerica
Fosun’s next big step into the insurance market came in
September 2012 when it announced a joint venture with
US financial services giant Prudential Financial.
The company, named PramericaFosun Life Insurance
CompanyLimited(PFI),isa50/50jointventurethatstarted
with registered capital of rmb 500m.
ThecompanywasChina’sfirstlifeinsurerjointlyfunded
by a Chinese private investor and a foreign investor.
MrGuosaidatthetime:“Thelifeinsuranceindustryin
Chinaisexperiencingrapidgrowth,drivenbyanincreasing
focusonprotectingthelivelihoodsoffamiliesaroundthe
country. We look forward to benefitting from PFI’s deep
actuarial experience, asset management expertise and
137-year history of success in the life insurance industry,
as we move forward together to develop products that
address the life insurance needs of this market.”
In the latest financial report for 2015 Fosun said that in
recentyearsthepremiumreceivedbyPFIhasgrownrapidly
on the back of several innovative projects.
He said that the company continuously promotes
productinnovationandisalsoexploringanewsalesmodel
of“Insurance+HealthManager+RetirementCommunity+
OverseasAssetAllocation,”andcrowd-fundinginsurance.
The group now offers a comprehensive set of product
lines that span from life, accident, critical illness to
universal life and health insurance.
In 2015 the new annualised premium income and the
totalpremiumofPFIreachedrmb125.3mandrmb978.1m
respectively (both including universal life insurance
policyholders’ deposits).
The company also recorded gross premium income
of rmb 57.2m, net loss of rmb 113m, investable assets of
rmb 1.9bn, a solvency adequacy ratio of 985.5% and the
total investment return reached 6.9%.
Climbing to the peak
Then in January of 2013 Fosun createdPeak Reinsurance
CompanyLimited(PeakRe),aHongKongbasedreinsurer
designed to capture the growing demand for modern
reinsurance solutions in the Asia Pacific region. The
company started with an initial capital of Us $550m.
Peak Re is actually held jointly with the International
Finance Corporation (IFC), a member of the World Bank
Group focused on private sector development. It invested
us $82m (14.9%) in the company.
At the time of launch Mr Guo said: “Together with
Fosun’s other insurance projects, we believe our
investment in Peak Re will create an anchor revenue
stream from the insurance business to support our
investment activities and steadily making inroads to
establish Fosun as ‘a premium investment group.’”
The biggest step forward in Fosun’s
insurance growth story came in
May 2014 with Fosun’s completion
of its €1.038bn acquisition of 80% of
the share capital and voting rights
of each of Fidelidade, Multicare and
Cares, collectively now known as the
Portuguese Insurance Group.

7. 50
M D S m a g a z i n e
2010
Club Med
2011
Folli Follie
2012
Pramerica Fosun Life
Insurance, Peak Reinsurance
2013
St. John, Alma Lasers,
Saladax, Caruso, Atlantis
Resort, Sanya, 28 Liberty in
New York, Loyds Chambers
in London
2014
Fidelidade, Secret Recipe,
REN, Osborne, Studio 8,
Tom Tailor, ROC Oil, IDERA,
Luz Saúde, BHF Kleinwort
Benson Group SA, Hainan
Mining IPO
2015
Ironshore, MIG, Thomas
Cook, Club Med, Cirque du
Soleil, Hauck & Aufhäuser
Privatbankiers (H&A),
Silver Cross, RPIM, Phoenix
Holdings, Zhejiang Internet
Commerce Banking Co., Ltd.
commenced operation
The group pointed out that Asia Pacific has been
underinsured in general for too long. It pointed out that,
in the aftermath of a series of natural catastrophes in
Asia Pacific in 2011, including the Thai floods, Tohoku
earthquake and tsunami in Japan, New Zealand
earthquake and Australian floods, less than 22% of the
totaleconomiclossregisteredwasinsured.Thiswassignif-
icantlybelowtheratioofinsuredlosstoeconomiclossseen
in the US and Europe at that time, which stood at approx-
imately 63% and 50% respectively.
Moreover, in 2010 China suffered its most devastating
floodsinadecadethatcausedaroundus$50bneconomic
loss, of which only Us $1bn was covered by insurance.
PeakRethereforeplannedtoinvest‘significantly’inthe
research and development of risk management solutions
for households and business in the region. It said that,
in cooperation with IFC and Fosun, Peak Re planned to
enteremergingAsianmarketsincludingChina,Indiaand
Indonesia in its first five years.
The new reinsurer also said that it planned to grow
both organically and strategically via the acquisition of
portfolios of profitable underwriting business.
Last year the reinsurer took some big steps to diversify
itself by territory and product line.
Itannounceditsplantoacquirea50%stakeinCaribbean
insurance group NAGICO Holdings Limited in July 2015,
currently pending for regulatory approvals.
Peak Re also set up a Zurich branch in September 2015
to get closer to its clients in Europe and further diversify
the book of business.
Fosun revealed that the reinsurer’s business in Asia
Pacificexpanded‘steadily’andaddedthatithasalsomade
‘solid’ progress in Europe and North America.
In 2015, the gross premium written from Europe and
North America accounted for 41.5% of the total premium
income, showing an increase of 24.4% from 17.1% in 2014.
By the end of last year Peak Re had served over 285
customers in 47 markets around the world, compared to
175 customers by the end of 2014.
The company wrote gross premiums of us $582.7m in
2015 compared to us $288.1m for the same period in 2014.
Net profit was us $59.2m, up by us $17.6m on 2014.
The net combined ratio was 96.8%, solvency adequacy
ratio was 754%, investable assets were us $913m and total
return on investment was 6.4%.
Based on Fosun Institutional Presentation.

8. 51
f u l l c o v e r
Fosun arrives in Europe… Via Portugal
ThebiggeststepforwardinFosun’sinsurancegrowthstory
came in May 2014 when Chinese President Xi Jinping and
Portuguese President Aníbal Cavaco Silva witnessed the
signing of documents to secure Fosun’s completion of
its €1.038bn acquisition of 80% of the share capital and
voting rights of each of Fidelidade, Multicare and Cares,
collectivelynowknownasthePortugueseInsuranceGroup.
The three companies were wholly-owned subsidiaries
of Caixa Seguros e Saúde (CSS), the insurance arm of
Portugal’s state-owned bank CGD.
Fosun said that, following the successful completion
of the acquisition, it had made a ‘major stride’ towards
becoming a world-class investment group underpinned
bythetwindriversof‘insurance-orientedcomprehensive
financial capability’ and ‘profound industrial foothold
based investment capability.’
This, said the group, moved it closer towards
implementingthe‘WarrenBuffettmodelofdevelopment’.
The Portuguese Insurance Group’s unaudited total
assets reached €12.8bn by end-2013. On a pro forma basis
after consolidating the Portuguese Insurance Group, the
proportionofFosun’sinsuranceassetstotheGroup’stotal
assets increased significantly from 3% to 39%.
“As insurance is the core business for Fosun’s
development, the cooperation between Fosun and the
Portuguese Insurance Group will undoubtedly be a
long-term and stable one. Meanwhile, Fosun is fully
confident about the existing management team and has
committed to maintaining the stability of the ongoing
business strategy. Through efforts of both parties and
synergiesderivedfromsharedresourcesinvariousaspects,
Fosunhopestodevelophigherqualityproductsandservices
aspartofitseffortsinachievingsustainablereturnstoour
shareholders, employees and customers,” stated Fosun.
The Chinese group said that it would also facilitate
collaborationandsynergywithotherinsurancecompanies
that it had invested in, again following the Buffett model.
“For instance, we will facilitate collaboration with
Peak Reinsurance to lower the reinsurance costs and to
cooperate with Yong’an P&C Insurance in technologies,
products and sales channels to achieve rapid business
development. On the other hand, Fosun will make use of
itscoreinvestmentcapabilitytooptimizetheinvestment
portfolio to improve the investment returns for the
Portuguese Insurance Group, especially combining with
Fosun’s global investment strategies. Fosun will also
review in at full lengths the investment opportunities
across Europe and OECD markets while broadening its
business scope, with a view to minimizing systemic risks
of geographical concentration through diversification,”
explained Fosun.
The Chinese group added that it had been actively
identifying different types of ‘value investing opportu-
nities’ around the world and decided that, despite
Portugal’s recent economic problems, it believed that
that country remains a highly attractive key market and
matches well with Fosun’s global expansion strategy.
“Fosunstaysvigilantandisattentivetootherinvestment
opportunities in other sectors of the Portuguese market,
in particular the sectors of property, tourism and brand
products,” added Fosun.
Fosun’s representative office was set up in Lisbon from
where it would be able to provide better support to the
Portuguese Insurance Group and explore investments
in other sectors in Portugal and further promote
‘Sino-Portugal’economicexchangeandcooperation,said
the group.
“ThismovewillalsoallowFosuntocontributeitseffort,
albeit minute, to recovery of the economy in Portugal.
Fosun aspires to play the role as a bridge that facilitates
businessdevelopmentsinChinabycompaniesoriginated
in Portugal, and developments in Portugal by companies
originated in China,” added the group.
Inearly2015,Fosunfurtherincreaseditsequityinterest
in Fidelidade to 84.986%.
Fosun Insurance Portugal is now a significant global
operator in the Portuguese insurance market.
Fosunexplainedinitslatestsetofannualresultsthatit
sells its products in all key lines of business and benefits
from the largest and most diversified insurance sales
network in Portugal.
Thisincludesexclusiveandmulti-brandagents,brokers,
own branches, Internet and telephone channels. It also
has strong distribution partnerships with the post office
andCaixaGeraldeDepósitos,aleadingPortuguesebank.
Fosun Insurance Portugal is also active in seven
countries on three continents (Europe, Asia and Africa).
DuringtheReportingPeriod,FosunInsurancePortugal
reported gross premium income of €3.9bn, a non-life
businessnetcombinedratioof98.4%,asolvencyadequacy
ratio of 215.7% and net profit of €301.1m.
“International business of Fosun Insurance Portugal
continued to reveal a strong commercial performance,
reaching overall €202.1m in direct insurance premiums,
anincreaseof13.7%comparedto2014,”reportedFosunat
the end of March this year.
Xi’an-based Yong’an Insurance
P&C was founded in 2003 and
was Fosun’s first investment in
the insurance market.

9. 52
M D S m a g a z i n e
Given the group’s existing presence in the potentially
massive Chinese primary life and non-life markets, the
Asian and international reinsurance market, mainland
Europeanlifeandnon-lifemarketandtheUScommercial
specialty markets, the addition of Ironshore gave Fosun
arguably the final piece in its jigsaw, for now at least.
As the Ironshore deal was revealed, Mr Guo stressed
the Buffett style synergies that the companies will
enjoy within the Fosun family. He said: “Now and in the
coming year, Fosun will strengthen its integration and
collaborationefforts,seekingtoestablishacross-regionand
cross-industry global insurance and financial group. We
encourageourinvestedcompaniestocollaboratewherever
applicable, seeking to connect them to Fosun’s resources
withourglobalinsuranceandfinanceplatformstoenhance
their competitiveness in their respective industries.”
And Ironshore did not hang around long to take
advantage of its new group potential for in January it
announcedthatitsLloyd’ssubsidiary,PembrokeManaging
Agency, would set up an office in Shanghai to join the
Lloyd’s China platform.
The Shanghai Pembroke Managing Agency will
underwrite specialty lines of business, initially focused
on the agriculture, marine and healthcare sectors.
Tracy Ma was appointed underwriting manager of the
entity and reports to Hui Yun Boo, managing director of
Ironshore’s Asia Pacific region.
“Ironshore’sparentFosun,headquarteredinShanghai,
positions us with clear distinction in the local market,
allowing us to offer onshore specialist products to meet
growing demand within this vibrant city,” said Mark
Wheeler,chiefexecutiveofficerofIronshoreInternational.
Ms Boo said the new Shanghai office complements
Ironshore’s existing regional presence in Asia Pacific
growthhubs,suchasSingapore,HongKong,Tokyo,Sydney
and Auckland.
Interestingly only two months later on March 22, the
boardofdirectorsofFosunannouncedthattheCompany
is considering pursuing an initial public offering of the
ordinary shares of Ironshore.
“As at the date of this announcement, no final decision
has been made by the respective board of directors of the
Company and Ironshore on whether, when, or where to
proceed with the Possible IPO,” stated the group.
Whatever Fosun decides to do with Ironshore it is clear
that the Chinese group will continue to build its business
in the international insurance space. As Ms Lan Kang
states in the following Q&A Fosun will remain focused on
thismarketanduseitsPortugueseandinternationalbases
to seek further growth opportunities. Watch this space! •
Next stop United States!
Despite the scale of the Portuguese acquisition China’s
Warren Buffett was not ready to stop there and the next
target was in the huge US insurance market.
In July of last year Fosun announced the completion of
its acquisition of 100% of Meadowbrook Insurance Group
(MIG)forus$439m.“Meadowbrookwillfurtherstrengthen
Fosun’scapabilitytoaccesslong-termhigh-qualitycapital
andenhancetheGroup’sinsurancebusinesscapabilitieson
boththeliabilityendandinvestmentend.Wearecommitted
toleveragingFosun’sglobalresourcestosupportlong-term
and stable development of Meadowbrook,” said Mr Guo.
Meadowbrook is a property & casualty insurer and
insurance administration services company focused
on specialty niche markets. It markets and underwrites
specialty property and casualty insurance programs and
products on both an admitted and non-admitted basis
through a diverse network of independent retail agents,
wholesalers,programadministratorsandgeneralagencies.
Critically, Meadowbrook possesses a full range of
non-lifeinsurancelicensesin50statesnationwide,which
cover admitted and non-admitted product lines.
The completion of the Meadowbrook acquisition gave
Fosun a strategic insurance platform in the US, enabling
theGrouptoestablishasignificantpresenceintheworld’s
biggest property and casualty market.
Last year MIG recorded gross premium income of
us $726.5m and net profit of us $34.3m on the back of a net
combined ratio of 100.3% and solvency adequacy ratio of
200.3%. MIG has investable assets of us $1,570.6m.
And now international specialty market
In February of last year, as Fosun was preparing its
acquisition of MIG, it completed the acquisition of approx-
imately 20% of the total outstanding ordinary shares of
Ironshore, the Bermuda-based international specialty
insurance group. The purchase price was approximately
us $466.6m.
Truetoform,inNovemberoflastyear,theChinesegroup
completed the acquisition of the remaining interests in
Ironshore for us $2bn in cash.
Ironshore is a big step forward for Fosun into the
highly valuable and currently popular large corporate
andcommercialinsurancemarket.ApartfromBermuda,
Ironshore has operations in the US, Lloyd’s and Ireland.
In 2015 Ironshore’s gross premium income reached
us $2.16bn and it delivered a net profit of us $57.8m on
the back of a net combined ratio of 96.7%. The solvency
adequacy ratio was approximately 166% and total
investable assets were us $5.1bn.

10. GUO GUANGCHANG MEETS ROLE MODEL
AT US-CHINA CEO ROUNDTABLE
Last September Chinese President Xi Jinping attended
the US-China CEO Roundtable in Seattle hosted by the
Paulson Institute and the China Center for the Promotion of
International Trade. This was the highlight of the second day of
President Xi’s visit to the United States.
Xi Jinping stressed at the roundtable that, due to
differences in stages of development, the Chinese and U.S.
economies are highly complementary. He said that there
is greater room and opportunity for bilateral economic
and trade cooperation. The Chinese President added that
China supports large US companies that establish regional
headquarters and research centres in China and encouraged
more small and medium US enterprises to expand their
business in China. Meanwhile, Chinese investments in the
United States will also continue to grow, he said.
There were 15 CEOs from China’s biggest companies
including Guo Guangchang of Fosun who took part in the
discussion along with 15 CEOs of the biggest corporations in
the US including Warren Buffett of Berkshire Hathaway.
Jokingly, Guo Guangchang called himself a student
of Mr Buffet at the roundtable as he introduced Fosun’s
US investment projects, including the recently acquired
Meadowbrook Insurance Group (MIG) and Ironshore, and its
participation in Sino-US cultural and artistic cooperation and
exchange programs.
At the roundtable, Guo Guangchang said that the United
States has the world’s largest concentration of superior
resources, and given Fosun’s focus on the four major fields of
insurance, private banking, health and happy & lifestyle, the
Group actively explores superior projects for cooperation.
At that point, Fosun’s scale of investments in the United
States had already surpassed US $5bn, creating a total of
4,895 job opportunities, Mr Guo said. Apart from Ironshore
and MIG, these investments include: the establishment
of three pharmaceutical laboratories in Silicon Valley for
seamless 24/7 global research and development as well as
over 10 investment cooperation projects, such as the New
York landmark 28 Liberty, renowned US womenswear brand,
St. John, innovative Hollywood film company, Studio 8, and a
number of other venture capital projects.
During the roundtable, Mr Buffett and the ‘Chinese
Buffett’ had the chance to meet face to face and reached
a consensus: Continue to be optimistic for the Chinese
economy and continue to adhere to value investing discipline.
53
fu l l c o v er

11. 54
M D S m a g a z i n e
USA
2013
2014
2015
28 Liberty
St. John
Studio 8
MIG
Ironshore
Ambrx
NoMad Luxury
Residential Tower
at Madison Avenue
New York
Lloyds Chambers
Thomas Cook
RPIM
Silver Cross
UK
2013
2015
Italy
2013 Caruso
2015 Palazzo Broggi
Spain
2014 Osborne
Portugal
2014 Fidelidade
Luz Saúde
REN
Canada
2015 Circe du Soleil
FOSUN
Grasping Global
Investment
Opportunities
IllustrationbyJoséCardoso

12. 55
f u l l c o v e r
Israel
2013 Alma Lasers
Greece
2011 Folli Follie
Malaysia
2014 Secret Recipe
Japan
2014 IDERA
Note:Theabovementionedcompanies/projectsincludeinvestments
madebyFosun,itssubsidiariesandfundsunderit'smanagement.
*Currentlyunderapprovalbyregulatoryauthorities.
Australia
2014 ROC OIL
73 MILLER STREET
Germany
2014 Tom Tailor
2015 H&A
France
2010 Club Med

13. 56
M D S m a g a z i n e
INTERVIEWING LAN KANG
Chinese Conglomerate Fosun Group burst onto the European
and international insurance market in 2014 when it acquired
leading Portuguese insurer Fidelidade. This was rapidly followed
by major investments in Bermuda-based international specialty
insurer Ironshore and Meadowbrook in the United States. These
international investments add to Fosun’s existing portfolio of
investments in Chinese insurers. fullcover interviewed
Lan Kang, Vice-president of Fosun Group and President of Fosun
insurance Group to discover more about the group’s plans for the
Portuguese and international Insurance market and how it fits
into the fast-growing group’s wider strategy.
Fosun playing the
long game

14. 57
f u l l c o v e r
What are your investment and strategic objectives?
When considering investment opportunities, the most
important thing to consider is how we can create value
through our investments. Nowadays, when capital
becomes a commodity, we need to think about why
other companies would take our investment versus
the ‘others’ and how we can add value in addition to the
capital provided.
There are three areas of investments that we are
focusing on: Health, Happiness, and Affluence of
the people. We have already built our competitive
advantages in the health and happiness industry. For
example, Fosun Pharma is a leading pharmaceutical
company in China. We have acquired United Family
Healthcare, the leading high-end hospital in China. We
have also invested in some ‘internet+ health services’
projects, like Guahao.com. Last year we finalised the
privatisation of Club Med, the French holiday resort
group, that we believe has huge potential in business
expansion globally. Our investment in the financial
services sector, in particular the insurance sector, also
provides long lasting wealth preservation for consumers.
Lan Kang, Vice-president of Fosun Group and President of Fosun Insurance Group.
We need to provide the
resources that are needed
and create synergies
among all of our portfolio
companies. We also have
to build strong corporate
governance and risk
management systems
and attract and develop
global talents.
Fosun was founded in 1992. Could you share with us
how Fosun became one of the largest private Chinese
conglomerates in such a short space of time?
Fosun’s rapid growth in the past two decades or so has
been built largely on the tremendous growth of China’s
economy as well as the strategic decisions the company
has made along the way, which is equally important
to its success. Beginning in 1992 shortly after they
graduated from college, the founders of Fosun Group
started the business in market research and consulting
services with little funding capital. They successfully
accumulated some capital and later tapped into the
healthcare and real estate businesses, having observed
that China was going through a process of quick
urbanization. Further investment into manufacturing
and resources proved to be also very successful thanks to
the booming infrastructure sector in China.
Since 2008, as China’s economic engine has been
shifting from industrialisation and urbanisation to
consumption and personal finance, Fosun continued to
invest by ‘combining China’s growth momentum with
global resources’.

15. 58
M D S m a g a z i n e
wealth management realms, we can help the insurance
companies explore synergies in product development,
distribution optimisation, integrated finance platform
and various other areas.
On the other hand, we can help to improve the
asset-liability management and investment portfolio of
the insurance company by leveraging Fosun’s excellent
investment capabilities.
Furthermore, for overseas insurance companies,
Fosun can provide additional value by connecting
China’s momentum with global resources.
Fosun is dedicated to helping its portfolio insurance
companies to improve underwriting profitability by
focusing on operational excellence, strengthen the
balance sheet and enhance market competitiveness
through innovation and evolution.
Then, only when the insurance operational side is
sound and profitable, we can utilise the long-term float to
achieve better investment returns.
Why did you enter the insurance market when it is
so competitive and pricing is so soft especially for
non-life commercial business?
It is true that global insurance markets, especially developed
markets, are facing fierce competition and alternative
capital surplus. However, the range between great and
mediocre companies is huge. Our task is to identify value
investment opportunities despite the challenging market
conditions and create value after investment.
For instance, specialty insurance has outperformed
other lines of business in the United States in recent years.
Ironshore, a strong player in this segment, appears to be
an interesting and unique opportunity for us.
We believe that sound fundamentals, underwriting
expertise and excellent management talent are crucial
for the success of an insurance company. We are proud
to tell that all of our overseas insurance portfolio
companies have achieved profitable financials in 2015.
Why has Fosun decided to expand outside of Asia to
expand its insurance business, why not concentrate
on markets closer to home?
Actually, we are not restrained in terms of geographic
areas. We select the best opportunities that fit Fosun’s
strategy. In 2014, it was Fidelidade in Portugal and in
2015, we invested in Ironshore and Meadowbrook in the
United States. Maybe there will be another star performer
for Fosun in Asia or somewhere else in the world in
2016. But we have not neglected our home market.
Our insurance companies in China and reinsurance
companies in Hong Kong have all been managed by
strong teams of insurance professionals and have been
doing well.
What are the selection criteria for your
investment projects?
For insurance projects, we have 10 investment
guidelines. These are:
1. Market leader in the segment;
2. Great management team;
3. A good combination of asset scale and operating
capability;
4. Relatively low cost of liability;
5. Reasonable valuation;
6. Prudent risk management;
7. Market opportunity;
8. Controlling stakes to acquire;
9. Potential improvements on the asset side; and,
10. We understand that every project is unique and
we always evaluate each project comprehensively
and rigorously with, but not limited to, the above
mentioned guidelines.
What are the major challenges that Fosun faces
with its overseas investments such as Fidelidade,
Ironshore and Meadowbrook?
For such overseas investments you need deep local
knowledge and capabilities to gain access to the best
investment opportunities. This is critical because
there is growing market competition that is driving
prices up. You also need to obtain understanding and
trust from foreign regulators and there is increasing
complexity in risk management.
What are the guiding principles when you are
dealing with your portfolio’s companies?
You need to select and/or build a leadership team with
strong entrepreneurship and partnership. We need
to provide the resources that are needed and create
synergies among all of our portfolio companies. We
also have to build strong corporate governance and
risk management systems and, of course, attract and
develop local talents and provide them with a global
platform on which to grow.
Why did Fosun choose the insurance market as one
of its key markets? How does it fit with the rest of
the group’s activities?
The insurance sector is the best channel to connect
Fosun’s unique expertise in investments and industries
with long-term stable capital.
On the one hand, given Fosun’s strong industry
capabilities in health, happiness, real estate and

16. 59
f u l l c o v e r
Could you explain the importance of Fidelidade for
the strategy of Fosun?
As our first investment in the overseas insurance realm,
Fidelidade opened a new chapter for Fosun Group.
Simply by looking at the numbers, in 2014, Fosun’s
asset had increased by €13bn with the transaction of
Fidelidade. And we all know there is much more value
embedded apart from the numbers.
Fidelidade is a strategic platform in Europe which
helps Fosun to better connect China’s momentum with
global resources, to better understand the insurance
operations in the Solvency II environment and to better
implement our ‘Insurance + Investment’ core strategy
prudently and effectively.
In the past two years, Fosun has provided strong
support to Fidelidade to improve its underwriting
profitability and financial performance. We fully
understand that for policyholders, financial strength
of the insurance company is the top priority. We are
dedicated to help Fidelidade achieve a stronger and
brighter future.
Where does Fosun see the best opportunities for
profitable growth in insurance markets worldwide
– by geography and line of business?
We will be looking for companies with strong leadership,
competitive and innovative products and services, as
well as operational excellence, more than geography
and line of businesses.
Is Fosun keen to expand in the larger corporate
multinational insurance space and if so how? Will
Ironshore be the main platform for this business?
The short answer to the first question is ‘Yes’; but it’s
worth further elaboration. Our goal in the insurance
sector is to build up a global insurance holding
company with world-class insurance management and
investment capabilities. We will continue to search
for high-quality insurance investment opportunities
globally based on our rigorous investment guidelines
and prudent risk management. We will never embrace a
growth strategy that is aggressive and irrational. •
Shanghai: where traditional and new architectural co-exist.
LAN KANG
→ Lan Kang is Vice President and Chief Human Resources
Officer at Fosun, as well as President of Fosun Insurance
Group. She currently serves on the board of 6 insurance
companies that Fosun has invested in, including Yong’an P&C
Insurance and Pramerica Fosun Life Insurance in China, Peak
Reinsurance in Hong Kong, Meadowbrook Insurance Group
in the US, Ironshore in Bermuda and Fidelidade Insurance
Group in Portugal.
→ Prior to joining Fosun Group, she was a Senior Client
Partner focusing on executive search and leadership
development at Korn/Ferry International’s Greater
China Office. She also spent over four years working in
management consulting at McKinsey & Company’s Greater
China office. She assisted many leading multinational and
local Chinese companies in strategy development, operation
improvement, and change management, and is experienced
in talent acquisition and organization development.
→ Lan Kang spent 9 years in the US, before returning to
China in 2002, right after receiving her M.B.A. with Honors
from The Wharton School, University of Pennsylvania. She
also obtained her Bachelor of Science degree from Zhejiang
University in China, and a Master of Science degree from
Tulane University in the U.S.

17. 60
M D S m a g a z i n e
Jorge Magalhães Correia is Chief Executive Officer of
Fidelidade, Multicare and Fidelidade Assistance insurance
companies and President of the Board of Directors of
Universal Seguros (Angola) insurance company. He is also
Vice-President of the Portuguese Association of Insurers
(APS) and a member of The Geneva Association. He spoke to
fullcover about Fidelidade, its strategy for growth, its work
in the Chinese capital market and relationship with MDS.
FOSUN’S #1 INVESTMENT IN INSURANCE
Fidelidade: going
from strength to
strength

18. 61
f u l l c o v e r
In a newspaper interview you once said:”What is
expected of us to do in a year would normally take
three years to achieve.” Have you been able to keep
up with this pressure in terms of results?
My quote was intended to demonstrate the level of
enthusiasm coming from our shareholders. The entire
organisation has adapted quickly, post-privatisation,
based on two strong shareholders who complement one
another. We have taken advantage of the additional
opportunities this new context has brought; not only do
we have a more comprehensive view of the insurance
business but we are also participating in transnational
projects, bringing added value and knowledge to the
Company. Apart from this, there has not been any
particular pressure from the shareholders in connection
with profits, and earnings have actually been retained
in the Company to enhance its growth capacity.
Have there been any changes to the Organisation’s
culture?
Other than the international dimension I mentioned,
no. Of course, some things do change, for example, 150
more employees have opted to study Mandarin and
we have a China Business Unit operating in Portugal,
Angola, Mozambique, Spain and France. But the
Company’s culture and management model have not
changed - Fidelidade has always supported businesses
in the private sector and will continue to be dynamic
and innovative. We were responsible for introducing
transport insurance in Portugal, were the first to sell
life insurance and the first to issue a policy covering
industrial accidents. And we will continue to be the
main driving force behind innovation and progress in
Portuguese insurance.
The latest figures show Fidelidade has boosted its
market share to around 30%. Is this growth an early
reflection of the new management philosophy?
As I said before, there is no new management
philosophy. On the contrary, the team is continuing
with the groundwork it began prior to privatisation.
What has changed is the competitive market, which was
unable to cope with the downward spiral of prices and
results. In practically every non-life sector, Fidelidade’s
management indicators are better than the market
average; higher average premiums, fewer new and
ongoing claims, more technical reserves and proven
better levels of service. If we add to that the strength of
the brand and the highly professional broker network, it
is no surprise we’ve increased our non-life market share
in a new underwriting cycle.
In the life insurance sector, however, things are going
to be different. In 2016, we will be introducing some
JORGE MAGALHÃES CORREIA
→ Jorge Magalhães Correia began his career as a
lecturer at the Lisbon Faculty of Law. He also practised
law and held management positions at the General
Inspectorate of Finance (IGF) and the Portuguese
Securities Market Commission (CMVM).
→ He has held various positions in companies in the
finance and insurance sectors, including Administrator
and/or President of the Board of Directors of Mundial-
Confiança, Fidelidade Mundial, Império Bonança and Via
Direta the insurance companies.
→ In the hospital sector, he was Administrator of
USP Hospitales (Barcelona) and Administrator and
subsequently President of the Board of Directors of HPP
– Hospitais Privados de Portugal SGPS.

19. 62
M D S m a g a z i n e
Oncology insurance responds to the
challenge of cancer and is innovative
in every respect, from the attention
given to preventing the disease, to the
sums insured and personal attention
given to every case.
changes in terms of strategy and positioning because
we have come to the conclusion the new European
Solvency II regulations penalise this line of business,
making growth difficult in its current format.
Today, Fidelidade operates in the Chinese capital
market. What could this mean for the future of the
insurance Company and its stakeholders?
A number of international insurance companies
operating in Portugal have obtained this authorisation.
What few people realise is that the Chinese authorities
scrutinise every application in minute detail and
this process can take months or even years. The fact
that Fidelidade has been authorised to operate in the
Chinese capital market is further proof of our financial
and management capacity and this should be a source
of pride for Portugal. We should not forget that China
is the world’s second-largest economy and the number
of middle class citizens equates to that of the European
Union. Although we have the authorisation to operate
on the Chinese capital market, we are not yet doing so
because the investment opportunities so far, have not
justified this.
We have seen the Portuguese insurance market
become increasingly concentrated. What is your
take on this development?
A decade of not-so-prudent pricing practices, a climate
of interest rates close to zero and an economy with poor
growth perspectives make the process of concentration
inevitable. And if we add the challenges of Solvency
II into the mix, it’s not surprising the market has
contracted quickly. We are very pleased Fidelidade
prepared for such issues early on and we are now of a size
where we play an important role in the Iberian market.
2016 will also be marked by the Solvency II
directive coming into force. How do you view the
regulator’s increased stringency?
Above all, Solvency II represents higher capitals for the
same level of risk; in other words, more protection for
policyholders and greater demands on shareholders.
Solvency II brings significant improvements in terms
of risk management and reporting and management
obligations. However, it also introduces new concepts
that may have a negative impact on certain areas of
the business, such as life insurance, where the essence
of the business model may be compromised. When
Solvency 1 was in place, life insurers were a stabilising
influence in the market; they provided support for
economies and overcame the 2008 financial crisis
without requiring support from taxpayers.
Fidelidade is the leading insurer in
Portugal, currently holding a market share
of 29.8%. The company operates in all lines
of business, having the largest network of
agencies in Portugal and being present in
several countries, including Angola, Cape
Verde, Mozambique, Spain and Macau.
PORTUGAL
TOTAL PREMIUMS
€3,768M
MARKET SHARE
29.8%
FIDELIDADE IN
NUMBERS (2015)

20. 63
f u l l c o v e r
What are your main strategies for growth in the
future?
We are hoping to grow in every non-life sector,
benefiting from the ongoing rate recovery and our
increasing competitiveness. Health insurance will
continue to gain weight in Fidelidade’s portfolio,
as will our activities connected to assistance and
service provision in the insurance sector. And we will
be increasingly multinational, with 20% - 25% of our
premiums coming from other markets.
We are making a concerted effort to ensure our
technology adapts to the OECD’s predicted fourth
Industrial Revolution and are experimenting in big
data, digitisation and online platforms. Innovation is
certainly in the pipeline.
How do you envisage your relationship with
insurance brokers in the future?
Our relationship with brokers is currently good but I
believe there is still room for improvement, hopefully to
be more focused and efficient, creating more value for
both sides.
How would you describe Fidelidade’s relationship
with MDS?
We have a long-standing relationship that goes back
to the early days of MDS, in the 1980s. Over these three
decades, a true spirit of partnership has been nurtured
and strengthened and, in our opinion, this has made
it possible to bring value to a considerable number
of customers, not just through our unrivalled cover
solutions but in our risk and claims management. Our
relationship goes beyond the bounds of insurance
intermediation, extending into other areas of
collaboration such as training and reinsurance, and is
cemented in a personal relationship of trust and mutual
appreciation at all levels.
Such loyalty on both sides has helped our portfolio
remain stable during this time, and naturally, the
Sonae Group carries considerable weight for Fidelidade;
we’ve provided Workers’ Compensation and Health
insurance cover for the Group since it was founded. The
partnership with MDS however, has made it possible for
us to work with a wide range of leading Portuguese firms.
The improvements we’ve made to our organisation,
processes and products will strengthen our relationship
with and benefit our business partners, not only
in Portugal but in other external markets were we
are increasing our presence; we know this type of
collaboration makes sense. •
How is Fidelidade preparing for this new challenge?
Fidelidade began preparing for Solvency II in 2006,
almost 10 years ago, by creating its Risk Management
Department. Today we have a highly-specialised
full-time team for this purpose.
In 2014, prior to privatisation, we distributed almost
€600 million in accumulated dividends and capital,
and in 2015, as planned, our equity capital increased by
€520 million. But the structural volatility of the markets
in practically every sector and geography, coupled with
the market-to-market asset valuation rule (which makes
no sense for long-term activity), will bring permanent
and unsustainable pressure to bear on the capital of
every life insurance company. And this is changing the
face of insurance in Europe.
Our aim is to be a driving force for
innovation and progress in the insurance
sector in Angola and Mozambique and
to offer insurance options that will be
attractive to the new middle classes.
Fidelidade has a significant presence in the
Angolan and Mozambican markets. What is the
Group’s strategy here?
To serve families and companies in the same way we do
in Portugal, by offering products appropriate to their
needs at competitive prices and with excellent levels of
service. Our aim is to be a driving force for innovation and
progress in the insurance sector in these countries and to
offer insurance options that will be attractive to the new
middle classes. We are currently planning how to achieve
this and will certainly consider opportunities for growth.
As market leader, Fidelidade has pioneered the
development of innovative products and services.
Is there anything particular you’d like to highlight?
Oncology insurance, since it is our most recently
launched product, and because of the joint effort it
requires from two of the Group companies, Multicare
and Luz Saúde. This type of insurance responds to the
challenge of cancer and is innovative in every respect,
from the attention given to preventing the disease, to the
sums insured and personal attention given to every case.