Many Insurers Conducted Equity Transfers

This year, some insurers of China conducted the equity transfers.

This March, Guodian Capital Holding Co. as a subsidiary of state-owned Guodian Corporation had purchased a 50% stake in Old Mutual-Guodian Life Insurance, previously known as Skandia-BSM Life Insurance; and Shao Guoyong, the General Manager of Guodian Finance Company, was appointed as the Board Chairman of the life insurance joint venture. By the end of November 2009, Old Mutual-Guodian Life had total assets of CNY 2.96 billion and total liabilities of CNY 2.73 billion.

The largest Chinese commercial bank Industrial and Commercial Bank of China (ICBC, 601398.SH, 1398.HK), on October 28 inked the agreement with the parents of the financial center Shanghai-based AXA-Minmetals Assurance Co., Ltd. on the equity acquisition of the insurer.

This time, Beijing-based ICBC paid a total of CNY 1.2 billion for some stakes that AXA and China Minmetals Corporation hold in the Sino-foreign life insurance joint venture. After the deal, ICBC will control a 60% stake in AXA-Minmetals Assurance, and AXA and China Minmetals Corporation will take a 27.5% and 12.5% stake respectively. Also after the move, AXA-Minmetals Assurance will be altered into ICBC-AXA Life Insurance.

Both AXA and China Minmetals Corporation are understood not to totally withdraw from the joint venture life insurer, as they might make further investment in the future. In addition, these two minority shareholders expect to benefit from the robust performance of ICBC-AXA Life with the reliance on ICBC.

Days ago, ICBC-AXA Life was approved by China Insurance Regulatory Commission (CIRC) to increase its registered capital from CNY 1.405 billion up to CNY 1.605 billion. That was the second time for ICBC-AXA Life to raise the capital base this year. After the move, the shareholding proportions of all shareholders will maintain unchanged. The outlets and customer resources make ICBC attractive to ICBC-AXA Life Insurance. As the largest commercial bank of China's Mainland, ICBC runs outlets in almost all provinces and provincial-level cities across the country. ICBC is expected to help raise the premium revenues of the newly acquired insurance unit. On the other hand, state-owned ICBC makes further progress on its way to diversified operation. In this way, the lender could not only sharpen its competitive edge, but also boost the comprehensive services.

Other insurers that have conducted the equity transfer this year include Ancheng Property and Casualty Insurance, New China Life Insurance, Tian'an Insurance and Ming An Insurance Co., (China).