Investment

Ping An H1 net up, sells stake in health unit

By Hu Yuanyuan (China Daily)
Updated: 2010-08-25 13:30

BEIJING - Ping An Insurance (Group) Company, China's second-largest insurance group on Tuesday reported a 27.9 percent increase in net profit to 9.87 billion yuan ($1.45 billion) during the first half, as it gained from higher premiums and growth in its other lines of business.

But the sluggish capital market took its toll on the company as return on assets slid to 3.7 percent in the first six months, compared with 4.7 percent during the same period last year, the company said in a statement to the Shanghai bourse.

Life insurance premium income during the period rose to 9.3 billion yuan, compared with 7.4 billion yuan in the corresponding period a year back.

Premium income from the property and casualty sector grew to 3 billion yuan from 1.86 billion yuan.

The company also strengthened its presence in the nation's fast growing health insurance market by bringing on board a foreign strategic investor.

South Africa's largest health insurer Discovery Holdings will acquire a 20 percent stake in Ping An Health Insurance Company for 200 million yuan.

"The price, which is 1.5 times Ping An Health Insurance's net asset value, is a reasonable premium for us, considering its strong cash flow and quality assets," Adrian Gore, chief executive officer of Discovery, told China Daily.

Ping An had last year said Discovery was likely to acquire a 24.99 percent stake in the health insurance unit.

"We had to trim the stake as the regulator set a ceiling of 20 percent for foreign investors," said Gore.

The deal is still subject to approval by the China Insurance Regulatory Commission.

Ren Huichuan, deputy general manger of Ping An Insurance (Group) Company, said the partnership with Discovery will help the health insurance unit extend its product line and market reach.

Though the premium income of Ping An's health insurance unit only accounted for 0.85 percent of the overall income last year, Ren expects the business to be the fastest growing one for Ping An.

Set up in 2005, Ping An has registered capital of 500 million yuan. Its premium income last year was around 90 million yuan, with a compounded annual growth rate of over 390 percent in the past three years.

According to Lu Min, chairman of Ping An Health Insurance Company, the company will mainly target medium and high-end customers.

The government has recently embarked on a series of healthcare reforms. While a vast majority of the population will continue to rely on the public health insurance system, the demand for private healthcare is also growing.

China Daily