CIRC Rules Urge AXA to Sell Stake in Taikang Life

The stake is estimated at USD 1.06 billion, or CNY 7 billion, and the first-round bidding will be held this Friday. The deal is expected to be completed before the end of this year, said the French insurer.

Taikang Life was established in Beijing on August 22, 1996 and in November 2000, it gained regulatory approval to introduce four foreign shareholders, including Winterthur Insurance and Tetrad Ventures Pte Ltd. In February 2005, it issued approximately 12.2 million additional shares to them and after that the stake Winterthur Insurance controlled in it reached 9.96 percent. The figure climbed to 15.6 percent after Taikang Life's capital stock expansion. AXA acquired Winterthur Insurance for USD 10 billion in 2006 and via the deal, it obtained the 15.6 percent stake the latter held in Taikang Life.

It should be the global financial crisis that caused the French insurer to make such a decision, said some industry observers. Statistics show that AXA had a net profit of EUR 1.32 billion in the first half of this year, down 39 percent from a year ago. However, others do not think so. In their opinion, it should be rules by the China Insurance Regulatory Commission (CIRC) that urged the insurer to make such a decision.

The top Chinese insurance watchdog unveiled proposals on the management of insurer' equity in September this year and according to concerned items, no peer competition is allowed provided that two or more insurers are controlled by the same company or one insurer is controlled by another. In addition to a stake in Taikang Life, AXA has a 51 percent stake in AXA-Minmetals Assurance Co., Ltd.

AXA-Minmetals Assurance was jointly established by AXA and China-based Minmetals Corp. in Shanghai in June 1999. It has stretched out reach to 12 Chinese cities and provinces and plans to double the number of the branches within two or three years. In September, it obtained regulatory approval to expand registered capital to CNY 1.205 billion from previously CNY 905 million.

Taikang Life is the fourth biggest life insurer in China and the after-tax profit it captured last year was CNY 1.69 billion.

Temasek Holdings, Blackstone Group and KKR are reportedly to bid for a 15.6 percent stake AXA SA plans to sell in Chinese insurer Taikang Life Insurance Co., Ltd.