Press Release - AUGUST 23, 2019

AM Best Affirms Credit Ratings of Ping An Health Insurance Company of China, Ltd.


CONTACTS:
 Yizhou Hong
Financial Analyst
+852 2827 3426
yizhou.hong@ambest.com

Christie Lee
Senior Director, Analytics
+852 2827 3413
christie.lee@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

HONG KONG - AUGUST 23, 2019
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Ping An Health Insurance Company of China, Ltd. (Ping An Health) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ping An Health’s balance sheet strength, which AM Best categorizes 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 financial flexibility, distribution channels and operations.

Ping An Health’s capitalization was strengthened through capital injections totaling CNY 1.15 billion (USD 174 million) in 2017 and 2018 from its shareholders. The full retention of after-tax net profits of CNY 299 million (USD 45 million) generated from the successful implementation of its turnaround strategy over the past two years also supports the company as a source of internal capital generation. The increase in available capital is supporting Ping An Health’s increased capital requirement for underwriting risk and investment risk due to the fast premium growth under its business transformation and higher asset allocation to alternative investments. AM Best expects Ping An Health’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), to remain at the strongest level based on its business plan.

Ping An Health has turned around to profit-making for two consecutive years, as a result of its transformation of business focus to individual health insurance. The company’s operating performance has stabilized, and AM Best expects the company to remain profitable over the medium term. With an increasing base of net premium earned, the company is benefiting from the economies of scale in expense management.

Offsetting rating factors include the low barriers to entry and intense competition in the local health insurance segment from life and non-life competitors. In addition, although the individual health business provides a material contribution to its overall profitability, the company is subject to product concentration risk, as the majority of its premiums come from one single individual health product.

Negative rating actions could occur if Ping An Health’s risk-adjusted capitalization weakens significantly, or if the company’s results materially deviate from its business plan. Negative rating actions also could occur if Ping An Group reduces the level of support given to Ping An Health.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.


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