South Africa’s Discovery Plans to Take a Stake in Ping An Health
South Africa’s Discovery Plans to Take a Stake in Ping An Health
Companies Join Hands to Develop China’s Health Insurance Market
1 December 2009 - Ping An Insurance (Group) Company of China Ltd (hereafter “Ping An” or “the Group”, HKEX: 02318; SSE: 601318) announced today it has entered into a non-binding term sheet to cooperate with South Africa’s largest medical health insurer Discovery (JSE: DSY; ISIN: ZAE000022331). Discovery proposes to purchase no more than 24.99% stake in Ping An Health Insurance Company of China,Ltd. (hereafter “Ping An Health”), a subsidiary of Ping An, to jointly develop China’s vast health insurance market.
Pursuant to the term sheet, Discovery will subscribe for new shares equaling to no more than 24.99% stake in Ping An Health’s total enlarged issued share capital. The transaction may proceed pending a definitive agreement between the companies and approvals from China Insurance Regulatory Commission and South African Reserve Bank.
With the introduction of social protection system reform and medical system reform, the inadequacies of the current level of insurance coverage, low protection and lack of professional health services have become more apparent against the backdrop of rising living standards in China, while the demand for more comprehensive medical and health management services outside traditional health insurance is not being met. According to relevant statistics, in the West, commercial health insurance accounts for about 40% of the total cost of hygiene coverage on average, compared to only 4% in China. Based on international average coverage rate of 10%, China’s commercial health insurance will reach RMB 300 billion by 2013. It can be said that, the potential of China’s health insurance market is immense, particularly in the new health and medical management market.
The win-win strategic partnership between Ping An and Discovery is self-evident. On one hand the strategic cooperation lends support for Discovery in entering China’s promising market, while quickly allowing the sharing of Ping An’s vast channel and customer resources. On the other hand, Discovery, as the largest medical health insurer in South Africa, has advanced medical health insurance expertise through combining traditional insurance with advanced new health management. Through this partnership, Ping An Health will be able to benefit from the intellectual property of Discovery’s health management products as well as its expertise in areas such as risk management, enabling it to link up with world-leading product development and business systems, as well as advanced operating platform and risk management skills.
According to Ping An, the cooperation has pulled together the benefits of a vast market, a comprehensive distribution network and the most advanced technologies, and is a milestone in Ping An’s rapid development in the area of new medical health insurance business, as well as a positive driver in the development of China’s health insurance market. Ping An’s long term strategic goal is the establishment of a world-leading integrated financial services group based on its three pillar businesses: insurance, banking and asset management. Medical health insurance is part of that long term development strategy. Through the cooperation with a competitive and professional partner, Ping An is confident that it will be able to further accelerate the growth of its health insurance business to the benefit of the industry in China.
Founded in 1992, Discovery principally engages in the business of medical health insurance. The company entered the life insurance market in 2000. Through Vitality, Discovery successfully merged its medical health operation with that of traditional insurance. It has since grown to become South Africa’s largest medical health insurer, accounting for over 40% of the market. It has also formed joint venture companies in Britain and the United States. According to Discovery, China’s nascent commercial medical health insurance market presents excellent opportunities and potential for growth, and the purchase of a stake in Ping An Health will benefit Discovery in the long term.
It is understood that Ping An Health currently focuses on providing health insurance products to individuals and groups focused on providing cover outside the Social Health Insurance schedule of benefits, and has established distinct advantages in the market. In the past three years, sales at Ping An Health have climbed more than 400%, demonstrating a sustained and strong growth momentum.
About Ping An
Ping An is the first financial conglomerate established in China with insurance as its core business together with a diverse range of businesses including securities, trust, banking, asset management and enterprise annuity. Founded in 1988, the Shenzhen-headquartered Group has listed its shares on the Hong Kong Stock Exchange since June 2004, and on the Shanghai Stock Exchange since March 2007, under the name of “Ping An of China”. As at 30th June 2009, the consolidated total assets and total equity of the Group were RMB 885.4 billion and RMB 101.8 billion, respectively, under International Financial Reporting Standards (IFRS). The Group offers financial services including insurance, banking, investment and wealth management to about 47 million customers and over two million corporate clients. In recognition of its growing stature and operational excellence, Ping An has been included in Forbes “Global Listed Companies 2000” and Financial Times “Global 500” numerous times.
About Ping An Health
Ping An Health Insurance Co. of China,Ltd. was founded on 13th of June, 2005, with the approval of China Insurance Regulatory Commission. It is a professional health insurance company owned by Ping An Group of China with a registered capital of RMB 500 million and headquartered in Shanghai. Ping An Health provides services of health insurance, accident insurance, committed governmental health insurance management, health consulting, reinsurance, and etc.
About Discovery
Discovery is a leading financial services institution founded on the principles of consumer engagement, product innovation and product integration. It offers its clients solutions in the areas of health insurance, life insurance, financial services and investments. It was founded in South Africa in 1992, and listed on the JSE Johannesburg Stock Exchange in South Africa in 1999. It currently has operations in South Africa, the United Kingdom and the United States, with an organically-grown global client base of around 3 million. Annual revenues are in the order of $3bn. Discovery covers several thousand large employers and over 150,000 small companies and medium employers, including a large number of Global Fortune 500 companies.
