China Auto Insurer on the Way to IPO

Tianping Auto Insurance (Tianping Insurance), a Shanghai-based auto insurer, expects to get listed at the end of this year or the first half of 2011, insiders disclosed.

Last September, Tianping Insurance inked a listing tutorship agreement with Guotai Junan Securities and completed related registration procedures with the Shanghai Bureau of China Securities Regulatory Commission (CSRC). Noticeably, Tianping Insurance is the insurance arm of the southern boomtown Shenzhen-listed Hubei Biocause Pharmaceutical Co. (000627.SZ).

During the first six months of 2010, the listed company as the parent of Tianping Insurance benefited investment yields of CNY 20.6 million from the insurer. During the whole year of 2009, actually, the auto insurer brought CNY 28 million worth of returns to Biocause Pharmaceutical.

First-half profits of Tianping Insurance reached CNY 100 million this year and the whole-year figure is expected to be CNY 250 million, with the earnings per share of CNY 0.4. Currently, Biocause Pharmaceutical controls a 20% stake in the financial center-based insurance firm. Based upon the possible IPO price of CNY 12 per share, the market cap of those shares that Biocause Pharmaceutical has in Tianping Insurance will be CNY 1.5 billion after the insurer gets listed.

China Reinsurance (Group) Corporation (China Re) and New China Life Insurance Co. (NCI) are expected to get listed sooner or later. Both companies are the subsidiaries of China Investment Corp. (CIC). Based in Beijing, China Re earlier denied the rumor, saying that it had not submitted any IPO application to related regulatory departments. Still, the reinsurance company is guessed to have big possibility to go public circa the last three months of this year.

Currently, China SAFE Investments Limited as the subsidiary of CIC takes an 85.5% stake in China Re. With the registered capital of CNY 36.15 billion, China Re currently is the largest reinsurer in Asia and the fifth largest reinsurer in the world.

As for NCI, reports said that the life insurer has set up a special department responsible for the listing-related affairs. During the first eight months of this year, NCI's total premiums increased by 60% year on year to CNY 67 billion.

As the majority shareholder of NCI, SAFE Investments is guessed to inject about CNY 4 billion into the insurer to help NCI raise the solvency in order to meet the regulatory requirement before the listing.