AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Ping An Property & Casualty Insurance Company of China, Ltd. (Ping An P&C) (China). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ping An P&C’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.

Ping An P&C’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). As of year-end 2022, the company’s consolidated capital and surplus (C&S) reached RMB 119.9 billion (USD 17.32 billion). Ping An P&C’s C&S increased at a compound annual growth rate of 11.3% over the five-year period from 2018 to 2022 through net profit retention after dividend distribution. Other supporting factors include its vast liquid and diversified investment portfolio dominated by bonds or funds that consist of fixed-income underlying assets, healthy regulatory solvency position, as well as good financial flexibility with proven ability to access domestic debt markets through issuance of capital supplementary bonds.

Ping An P&C’s operating performance is assessed as strong. It has demonstrated good and better-than-average profitability with a five-year average return on equity of 16.2% from 2018 to 2022. In 2022, the company experienced its first underwriting loss in over a decade, due to deterioration of its credit and guarantee line. The company has been actively reducing its exposure in this product line since 2022 and has ceased underwriting new policies since November 2023. Conversely, the company maintains its competitive advantage in its largest business line – motor insurance. The motor line has continued to deliver favourable underwriting profit over the last few years since the motor comprehensive reform in September 2020, owing to a combination of strong control over distribution channels, data-driven underwriting know-how, and automated claims processing. The company’s net profit is supported by its robust investment income, with an average investment yield including gains and losses of 4.8% from 2018 to 2022.

Ping An P&C’s favourable business profile is supported by its sizeable insurance portfolio, diversified channels and geographic span in China, as well as brand recognition. The company has been the second-largest non-life insurer in China since 2009, with approximately 20% of the market share based on 2022 non-life direct written premiums. In 2022, its gross premiums written (GPW) reached RMB 298 billion (USD 43.1 billion). Ping An P&C has strong brand recognition in the domestic market for its key motor book of business, which accounts for around 68% of its total GPW in 2022. The company is also actively expanding its non-motor lines including but not limited to accident and health, liability and agriculture. Ping An P&C has devoted significant efforts to harness new technologies, improve business efficiency and risk management.

Ping An P&C is well-positioned at its current ratings level. Negative rating actions could also arise if there is a sustained deteriorating trend in Ping An P&C’s underwriting and operating performance. Negative rating actions also could occur if the company’s balance sheet strength were to weaken significantly, for example, due to materially heightened underwriting leverage or investment exposure to risky assets. Though unlikely on the intermediate term, positive rating actions could occur if the company demonstrates a strengthening trend of its footprint in the global market, while maintaining its very strong consolidated risk-adjusted capitalisation and strong operating performance.

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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