Goldman Sachs to Buy into Taikang Life

The story about Wall Street investment bank Goldman Sachs' investment in Taikang Life Insurance Co. has been confirmed.

According to sources, Goldman Sachs is going to buy the stake that AXA takes in Beijing-based Taikang Life Insurance at a purchase price of USD 1.05 billion or CNY 7.2 billion. The new foreign investor is expected to get fat returns from such investment. Currently, the French insurance group AXA controls a 15.6% stake in the Chinese insurance institution. Still, the deal is pending approval from related Chinese regulatory departments.

Currently, Taikang Life Insurance takes the fourth place in China's life insurance sector. This year, the company has set the goal to enlarge its domestic market share from current 8% up to 10% and then become the third largest life insurance company in China's Mainland. In the coming three years, Taikang Life Insurance aims to get listed, according to CEO Chen Dongsheng.

Total assets of Taikang Life Insurance stand at CNY 44.6 billion currently. Last year, the company harvested premium revenues of more than CNY 67 billion, a growth of 16% from 2008. It made profits of about CNY 2.5 billion in 2009, up 47% year on year.

As early as 1994, Goldman Sachs had entered China, mainly targeting the equity investment projects. During the seven years from 2003 to 2010, the foreign investment bank has made direct equity investment into over 20 target projects in China's Mainland; but interestingly, Goldman Sachs usually acted as the minority shareholder when making investment in Asia, including China.

Over the first four months of 2010, the life insurance sector of China's Mainland had undergone a reshuffle in terms of the premiums. Based in Shanghai, China Pacific Insurance (Group) Co. (CPIC, 601601.SH) in the four months from January to April 2010 realized life insurance premiums of CNY 37.98 billion, thus making itself rank No.5 among all of the country's life insurers. In the past, CPIC had always followed China Life Insurance Co. (601628.SH) and Ping An Insurance (Group) Company of China (601318.SH), as the nation's third biggest life insurance company.

By premiums, Beijing-based New China Life took the place of CPIC as the third biggest life insurer of China's Mainland in the first four months of this year, followed by Taikang Life Insurance Company. In the four months ended April 30, 2010, New China Life obtained insurance premiums of CNY 40 billion accumulatively, indicating a growth of 80% year on year.