Ping An Health sees strong return on equity continuity

It reported capital and surplus (C&S) of $1.22b in 2023.

AM Best expects Ping An Health Insurance Company of China’s capitalisation, as measured by AM Best’s Capital Adequacy Ratio (BCAR), to remain strong over the next three years.

Ping An Health is the second-largest specialised health insurer in China by gross premiums written. 

Unlike domestic property and casualty insurers, which are limited to short-term products, Ping An Health offers both short- and long-term health insurance. The company also leverages Ping An Life’s strong agency network to boost sales. However, a key challenge remains its reliance on ESB, which accounts for more than half of its top line. 

To address this, the company has developed innovative products such as coverage for sub-standard populations and chronic medication, aiming to diversify its offerings and capture new market segments.

Ping An Health’s balance sheet is also assessed as very strong, alongside adequate operating performance, a neutral business profile, and sound enterprise risk management. 

The company also benefits from both implicit and explicit support from its major shareholders, Ping An Insurance (Group) Company of China and Discovery Limited, which provide capital, financial support, and assistance with business development and risk management.

The outlook improvement comes as Ping An Health continued to show strong operating results, largely driven by its expanding individual medical insurance business, particularly through its flagship product, E Sheng Bao (ESB). 

Despite market competition impacting ESB’s loss ratio, the company has maintained solid underwriting profits and a steady double-digit return-on-equity over the past five years—outperforming domestic peers. 

Additionally, Ping An Health has improved its operating efficiency, with a declining expense ratio, whilst mitigating the effects of market volatility through a higher allocation to fixed-income assets.

As of year-end 2023, Ping An Health reported capital and surplus (C&S) of $1.22b under IFRS 17. 

The company’s risk-adjusted capitalisation remains robust, supported by steady growth in C&S due to net profit accumulation and capital injections from shareholders.