Old Mutual-Guodian Life Vows to Transform Strategy

Old Mutual-Guodian Life Insurance Co., a Beijing-based joint venture between China Guodian Corporation and Old Mutual Plc, has just announced that it is going to change the current investment-linked insurance-focused operating strategy.

The life insurer is understood to extend the business line and the profit-making channels via the move. As early as six years ago, Old Mutual-Guodian Life, originally known as Skandia-BSM Life Insurance, had entered the life insurance sector of China's Mainland. With a heavy focus on the investment-linked insurance, the company in 2006 gained the premium revenues of over CNY 500 million; and the figure even reached CNY 1.86 billion by 2007.

However, its premium revenues in 2008 slid to CNY 360 million, due to the gloomy performance of the capital market in the year. Last year, the company suffered net losses of about CNY 55.7 million. During the first 10 months of this year, the Shanghai Branch of Old Mutual-Guodian Life only achieved premiums of CNY 847,300 from the investment-linked insurance business.

As early as this February, Guodian Capital Holding Co. as a subsidiary of state-owned Guodian Corporation had purchased a 50% stake in Old Mutual-Guodian Life Insurance; and this March, Shao Guoyong, the General Manager of Guodian Finance Company, was appointed as the Board Chairman of the life insurance joint venture.

After the takeover, Guodian Corporation is expected to boost the diversified operation of the Sino-foreign joint venture. Having started operation for six years, Old Mutual-Guodian Life Insurance during the first nine months of this year achieved the premiums of about CNY 700 million. As the Chinese parent, Guodian Corporation has set the goal to support the life insurer to realize the profit-making in the coming three years. Guodian Corporation is expected to be in the dominant position in terms of the company operation.

CEO of Old Mutual-Guodian Life has pointed out that in the future, the life insurer is going to boost the telephone sales and the sales of group insurance products with the reliance on the brand influence of Guodian Corporation and the resources advantages of the parent group. Actually, the development of financial business especially the insurance business is one of the important strategies for Guodian Corporation. Currently, the power company has had an insurance brokerage company and a property insurance firm. By the end of last year, the corporation had total assets of CNY 419 billion; and it now operates 13 subsidiaries in 16 regions across the nation.