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FOR IMMEDIATE RELEASE
HONG KONG - AUGUST 20, 2021 09:03 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Ping An Health Insurance Company of China, Ltd. (Ping An Health) (China). The outlook of the Credit Ratings (ratings) is stable.
The ratings reflect Ping An Health’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the implicit and explicit support that the company receives from its two major shareholders, Ping An Insurance (Group) Company of China, Ltd. (Ping An Group) and Discovery Limited, with respect to capital and financial support, business development, investment and risk management.
Ping An Health’s capital and surplus continued to grow at a robust rate over the past few years, underpinned by capital injections and full retention of profits. On 22 July 2021, the company announced its plans to further raise capital worth CNY 2.6 billion (USD 402 million) from its shareholders, subject to regulatory approval. AM Best expects this capital boost to strengthen the company’s risk-adjusted capitalisation, which remains supportive of Ping An Health’s fast-paced expansion in underwriting and asset risks over the short to intermediate term, as measured by Best’s Capital Adequacy Ratio (BCAR).
Ping An Health has consistently delivered positive operating earnings since 2017. The company’s net profit improved by 47% to CNY 595 million in 2020, as a combined result of favourable performance in underwriting and investments during the year. Notwithstanding, the underwriting margin has exhibited a moderately declining trend over the past few years due to heightened market competition, in particular the upward pressure in acquisition costs. AM Best will continue to monitor the company’s underwriting performance as it realises its strategic advantages in distribution capability and efficiency. On the other hand, investment performance remained stable, supported by an increasing trend of interest and dividend income.
The company benefits from the supportive regulatory environment in the health insurance segment and the high level of control over its distribution channels. Thus, AM Best expects continued fast-paced business expansion at Ping An Health over the short to intermediate term, albeit at a more subdued rate compared with the prior few years. Still, the company maintains a moderate level of product concentration in its underwriting portfolio. More than half of the total gross premium written was sourced from a single individual health product over the past few years.
Negative rating actions could occur if Ping An Health’s risk-adjusted capitalisation weakens such that it no longer supports the current balance sheet strength assessment; for example, due to higher-than-expected underwriting or investment risks that materially deviate from the company’s business plan. Negative rating actions could also occur if the level of support Ping An Health receives from Ping An Group is reduced or if the parent group’s credit fundamentals deteriorate significantly.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.