In the current world of insurance companies, there are many who “nibble and swallow” to increase the layout, and there are many who “dejected” to leave. On April 6, according to incomplete statistics from Beijing business daily, 12 insurance companies changed their equity in the first quarter of this year, among which foreign shareholders were particularly active. Industry insiders believe that compared with the first quarter of last year, equity changes in the insurance industry are more frequent, or it has something to do with the disagreement among shareholders caused by the downturn of property insurance and the variable business model of life insurance. The introduction of relevant policies has accelerated the opening up of the financial industry and increased the distribution of foreign capital in China.
Small and medium sized insurance companies take the lead
Recently, a news about the name change of BOCOM Life Insurance Co., Ltd. (hereinafter referred to as “bocom life”) appeared on the Xinpi announcement page of the Insurance Association. According to the announcement, on March 31 this year, with the approval of Shanghai market supervision and Administration Bureau, BOCOM Kanglian Life Insurance Co., Ltd. officially changed its name to “bocom Life Insurance Co., Ltd.” the relevant industrial and commercial change procedures have been completed and a new business license has been obtained.
Prior to that, in 2019, BOCOM life released an information disclosure announcement on the change of shareholders, which showed that the former shareholder, Kanglian group of Australia, which held 37.5% of the shares, planned to transfer all the shares of BOCOM life to MS & amp; ad Insurance Group Holding Co., Ltd. On December 8, 2020, the China Banking and Insurance Regulatory Commission issued an administrative license to approve the change of equity.
In fact, the renaming of BOCOM life insurance is just a “profile” of equity change.
According to the statistics on the official website of the Insurance Association, a reporter from Beijing Business Daily found that in the past quarter, a total of 12 insurance companies disclosed the information about the proposed change of equity, which is a small climax compared with the proposed change of equity of 5 Insurance Companies in the first quarter of last year.
Specifically, among the 12 insurance companies that released equity change information in the first quarter, there were 5 life insurance companies and 7 property insurance and reinsurance companies. Beijing Business Daily found that the “banner” of equity change in the first quarter was carried by small and medium-sized insurance institutions, and the registered capital of 12 insurance companies was less than 5 billion yuan, including Huahai Property Insurance Co., Ltd. (hereinafter referred to as “Huahai property insurance”), Ansheng Property Insurance Co., Ltd. (hereinafter referred to as “Ansheng property insurance”), Guoyuan Agricultural Insurance Co., Ltd.
Wang Xiangnan, deputy director of the insurance and economic development research center of the Chinese Academy of Social Sciences, pointed out that the main reason for the frequent change of equity of insurance companies in the first quarter was that the financial industry increased the opening of the market, fully implemented the announced policies, and promoted foreign investment in insurance and other financial fields to start or increase investment in domestic insurance companies.
“Last year, the growth and profitability of property insurance companies were in a trough, and the life insurance business model was also variable, which easily led to different opinions among shareholders of the company and prompted shareholders to adjust. Secondly, after the effective implementation of the regulatory rules on equity and corporate governance, the administration of equity change of the company was smoother.” At the same time, Wang Xiangnan added.
So, compared with large insurance companies, why did small and medium-sized insurance companies become the “main force” of equity change in the first quarter?
Li Wenzhong, deputy director of the insurance Department of Capital University of business and economics, believes that, first of all, this may be because the equity structure of large insurance companies tends to be stable through market selection in the process of development; secondly, in recent years, the market performance of large insurance companies is generally good, and shareholders will be reluctant to sell; at the same time, investment in large insurance companies requires a larger capital scale, which will also cause some investors to stop Finally, the equity change of large insurance companies may affect the financial market ecology and national financial security, and the stricter government review will also affect the equity liquidity.
Frequent financial investment transactions
In terms of the scale of equity change, in addition to Sino German Allianz Life Insurance Co., Ltd., Evergrande Life Insurance Co., Ltd. and love life insurance Co., Ltd., Sino German Allianz Life Insurance Co., Ltd. (hereinafter referred to as “Sino German reinsurance China”) has more than 20% equity change, and Huahai Property Insurance Co., Ltd., Asia Pacific Property Insurance Co., Ltd. and Huagui Life Insurance Co., Ltd The equity share ratio exceeds 10%, and the equity change share ratio of the other five insurance companies is below 10%.
What are the possible driving factors behind the equity changes of these small and medium-sized insurance companies? What impact will it have on these companies?
From the perspective of insurance companies themselves, Li Wenzhong said: “first of all, most of the equity changes in these small and medium-sized insurance companies are the equity of small shareholders. Their original shareholding is a kind of financial investment, and the investment goal has been achieved, or the equity change is required to maintain capital liquidity. Secondly, the shareholders of small and medium-sized insurance companies are likely to have conflicts due to inconsistent goals and demands, which will also lead to equity changes. “
From the perspective of macro environment, Li Wenzhong believes that recently, the supervision of the insurance industry has become stricter. Under the supervision requirements of risk prevention and return protection, the investment return cycle of insurance companies has been lengthened, which has forced some shareholders who originally invested in insurance companies to quit.
For the small-scale equity transfer, most people in the industry believe that it is a normal market behavior in financial investment.
In January this year, Qitaihe Lushan high quality coal Co., Ltd., which had twice tried to transfer all the shares of Huahai property insurance, plans to transfer 120 million shares of Huahai property insurance to Foshan Shunde HengAn Investment Co., Ltd.
At that time, Xu Yuchen, a founding member of the Chinese Association of actuaries, said that from the perspective of his business scope and only 10% shareholding ratio, Lushan high-quality coal was only an ordinary financial investment rather than a strategic investment for Huahai property insurance. If the equity transfer was successful, it would not have much impact on the operation and management of Huahai property insurance.
Beijing Business Daily reporter interviewed Huahai property insurance about the latest progress of the equity change, but as of press release, no reply has been received.
In addition, the change of equity of the insurance company, which has a large number of shares pledged or frozen, also attracts people’s attention. On January 25, an Cheng property insurance announced that Chongqing Caixin Enterprise Group Co., Ltd., the former sixth shareholder, intends to transfer all the 5% equity of an Cheng property insurance to Chongqing Expressway Investment Holding Co., Ltd.
At present, there are 19 shareholders in the insurance company, including 8 major shareholders, whose shares are pledged and frozen. In recent years, several private shareholders want to clear the equity of an Cheng property insurance company. Industry insiders believe that the equity of the insurance company is relatively scattered, and the analysis says that most of the equity is pledged or frozen, which may lead to the forced change of the company’s major shareholders, and may reflect the weak financial qualification of the company’s shareholders, which may cause the concern of stakeholders.
Foreign shareholders increase their presence in China
A reporter from Beijing business daily noted that the “blood of foreign capital” in the insurance industry was accelerating in the first quarter. Foreign shareholders such as Kailin reinsurance Switzerland Limited (hereinafter referred to as “Kailin reinsurance Switzerland”), anda American Insurance Company (hereinafter referred to as “anda insurance”), Shidai compensation and liability insurance company (hereinafter referred to as “Shidai compensation and liability insurance”) were active, while SINOSURE China, Sino German Allianz Life Insurance Co., Ltd. and Shidai Property Insurance Co., Ltd. were active Ltd. (hereinafter referred to as “Shidai property insurance”) and other insurance companies are involved.
Take the dispute between Huatai Insurance Group Co., Ltd. (hereinafter referred to as “Huatai Insurance Group”) and “anda system” as an example. At the end of January this year, anda insurance plans to take over the 0.23% equity held by Jincheng Group Co., Ltd., a small shareholder of Huatai Insurance Group. In fact, as early as last year, the news that “Junzheng” capital transferred all its shares of Huatai Insurance Group to anda Tianping reinsurance was approved aroused a thousand waves in the industry. In combination with the news that “anda” has taken bear’s paw instead of fish and merged anda China into Huatai Property Insurance of Huatai Insurance Group, “anda” is expanding in China.
In addition, in the first quarter, SINOSURE China’s equity move was the largest, and its new shareholders, Kailin reinsurance Switzerland or SINOSURE us and SINOSURE se, became the only shareholders of SINOSURE China. However, to trace back to the source, this equity change may be regarded as a game of “left hand to right hand” for capital. As AXA Group of France is also the ultimate controller of Kailin reinsurance Switzerland, if the equity transfer is completed, the ultimate controller of SINOSURE China will remain unchanged.
As for the insurance layout of AXA Group in the Chinese market, there are joint venture life insurance company ICBC AXA Life Insurance Company, its ICBC AXA asset management company and wholly-owned insurance company AXA Tianping property insurance company.
In addition, small shareholders of Shidai Property & Casualty Insurance Co., Ltd. have also left the market, which is only one step away from the wholly-owned holding of foreign capital. According to its disclosure announcement in early March, Shidai compensation and liability insurance, the largest shareholder of Shidai property insurance, plans to acquire 2.8 million shares held by Kunlun Trust Co., Ltd., the former shareholder of Shidai property insurance. If the transaction is approved by the regulatory authorities, the share ratio of compensation and liability insurance of Shidai will rise from 77.58% to 77.78%; taking into account the 20% shares held by Shidai insurance and reinsurance company, Shidai will hold 97.78% of Shidai property insurance. As for the activity of foreign investment in the domestic insurance market in the first quarter, Li Wenzhong said that first of all, the regulations on the administration of foreign insurance companies and the detailed rules for the implementation of the regulations on the administration of foreign insurance companies have been implemented successively, creating a better investment environment for foreign shareholders. Secondly, foreign investment has always been optimistic about the future development of China’s insurance industry. Finally, the setting of return period of foreign shareholders is longer than that of many domestic shareholders.
“To be sure, there will be more foreign investment in China’s insurance industry in the future, which is of great significance to the healthy development of China’s insurance industry.” As for the influence of foreign investment in China, Li Wenzhong believes that, first of all, the competition in China’s insurance market will be more sufficient and the role of market mechanism can be better played. Secondly, a large number of foreign investment will bring more advanced business philosophy and management technology, and constantly promote the quality of China’s insurance industry. Thirdly, learning from the competition will enhance the market competitiveness of domestic insurance companies and speed up the internationalization of China’s insurance industry.
Wang Xiangnan also predicted that foreign investment in these insurance companies would play a greater role in further promoting the development of insurance companies in terms of product and service innovation and foreign investment. “This has promoted the increase of foreign capital market share in terms of equity in the insurance industry and accelerated the opening-up of the insurance industry,” he said
Beijing Business Daily reporter Chen Tingting Zhou Hanyi
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