DISCOVERY AND PING AN GROUP SIGN AGREEMENT FOR PARTNERSHIP IN PING AN HEALTH INSURANCE COMPANY
24 August 2010 - Ping An Insurance (Group) Company of China Ltd (hereafter "Ping An" or "the Group", HKEX: 02318; SSE: 601318) announced today that South Africa's largest private health insurer Discovery (JSE: DSY; ISIN: ZAE000022331) and Ping An signed their agreement to enter into a partnership in Ping An Health Insurance Company (hereafter "Ping An Health"), a subsidiary of Ping An, to jointly develop China's vast health insurance market.
According to the agreement, Discovery will initially acquire 20% of Ping An Health. This landmark agreement will not only be a major commercial milestone for both companies, but also symbolises the deepening and mutually beneficial economic and business ties that exist between South Africa and China.
Ping An Health aims to play a key role in developing the emerging Chinese private health insurance market
The healthcare environment in China is undergoing a period of transformational change as the Chinese government pursues a series of healthcare reforms. While the vast majority of the population will continue to rely on a Social Health Insurance (SHI) system, the demand for private healthcare is growing. This is driven partly by increasing affluence and more innovative health insurance solutions. The growing disposable income amongst the 80m-90m middle- and upper-income households means many consumers can afford top-up cover. There is also increasing demand for cover for private healthcare facilities, diagnostics and branded drugs that fall outside the schedule of services covered by SHI.
The Chinese government recognises that individuals may wish to supplement the coverage they receive through SHI and is actively encouraging private health insurers to address this need. This partnership is therefore likely to be a positive driver in the development of China's health insurance market.
The benefits to Ping An Health of the strategic partnership between Ping An Group and Discovery are self-evident
As an integrated financial services conglomerate with core interests in insurance, banking, and investment, Ping An provides immediate scale, brand and distribution. As at 31 December 2009, the consolidated total assets and total equity of the Group were RMB 935 billion and RMB 91 billion, respectively. The Group offers financial services including insurance, banking, investment and wealth management to about 51 million customers and over two million corporate clients.
Discovery Holdings is a world leader in consumer-engaged health insurance and wellness. Founded in 1992, Discovery Holdings, with a market capitalisation of ZAR 20 billion, is South Africa's largest health insurer, and one of the world's leading players in consumer engagement in insurance. Discovery's highly differentiated and innovative approach to insurance is underpinned by its unique science-based wellness programme, Vitality. In the UK, Discovery has a joint venture with the Prudential in both health and life insurance (PruHealth, and PruProtect), and has recently acquired Standard Life Healthcare. In the US, Discovery has a stand-alone wellness company.
Adrian Gore, Discovery's Chief Executive, said: "Ping An is an excellent partner. The Group is a leader in the Chinese insurance market, providing immediate scale, brand and distribution capability in this rapidly growing market."
According to Alex Ren, Ping An's Chief Insurance Officer: "Both Ping An and Discovery have a vision to fundamentally change the markets in which they operate, and provide consumers with innovative, benefit-rich products. Discovery is a global leader in consumer-engaged healthcare, and we are excited to have them as a partner. Through this cooperation, Discovery will also be able to share the massive distribution channel and customer base brought by Ping An."
Ping An selected Discovery as a partner for its health insurance subsidiary as a result of Discovery's unique experience in operating in both developed and developing markets. With over 2.9 million health insurance clients in South Africa and the United Kingdom, Discovery is today one of the largest health insurers in the world.
Ping An Health will draw on Discovery's health product, systems, data and risk management assets, and will continue to leverage off Ping An Group's comprehensive distribution network, scale and local market expertise. Over the past 18 months, Discovery has worked actively to develop a model that will enable Ping An Health to benefit from all of Discovery's specialist health insurance assets, while also ensuring that these are adapted to local market conditions. This has included building a team led by members of its South African executive that will be deployed in Ping An Health.
Ping An Health will innovate in response to major social trends in health and wellnesss
Ping An Health's Chairman and CEO, Mr Lu Min, notes that Ping An Health will use the combined assets of Ping An and Discovery to capitalise on the significant social trends towards wellness and consumer engagement.
"We believe that with full access to the assets of both Ping An and Discovery, Ping An Health is ideally positioned to innovate in response to these trends with products that consumers both need and want."
