Two days after Allianz Insurance Group announced that it had been approved to establish China's first foreign-funded insurance holding company, another insurance group also from Europe, France AXA Group (AXA, hereinafter referred to as "AXA") announced on November 27 that it would acquire 50% of the equity of AXA Tianping Property Insurance Co., Ltd. (hereinafter referred to as "Tianmao Group", 000627.SZ) and five other companies, including Tianmao Industrial Group Co., Ltd. (hereinafter referred to as "Tianmao Group", 000627.SZ). This joint venture property insurance company will become the first national property insurance company wholly owned by foreign capital.
Announcement issued by AXA in the early morning of November 27 stated that it had signed an agreement with the existing Chinese shareholders of AXA Tianping to acquire its total 50% equity in AXA Tianping. The total acquisition consideration will reach RMB 4.6 billion (approximately 584 million euros), of which RMB 1.5 billion (approximately 190 million euros) will be adopted to reduce capital and repurchase . The transaction is calculated based on the financial position of 2017, which is equivalent to a 2.4x BV ratio. After the transaction is completed, AXA will complete the consolidation of AXA balance.
On the same day, Tianmao Group, the other party in the equity transaction, issued an announcement stating that on November 26, it and five shareholders including Shanghai Yike Venture Capital Co., Ltd. (hereinafter referred to as "Shanghai Yike"), Shanghai Rixingkang Bioengineering Co., Ltd. (hereinafter referred to as "Shanghai Rixingkang"), Hainan Huage Industrial Investment Co., Ltd. (hereinafter referred to as "Hainan Huage"), Hainan Luda Technology Co., Ltd. (hereinafter referred to as "Hainan Luda") signed an AXA Tianping Share Sales and Purchase Agreement with AXA in Shanghai, selling a total of 78.2841 million shares of AXA Tianping at a price of approximately 10.87 yuan per share.
Tianmao Group stated in the announcement that the transfer of all shares of Ansheng Tianping will further improve and adjust the company's industrial and investment structure, and better develop its main life insurance business, namely Guohua Life Insurance. Last month, it just increased its capital in Guohua Life Insurance by 4.845 billion yuan and introduced three new shareholders to it.
The actual controller of Tianmao Group is Liu Yiqian , known as the " legal person shares king". He is also the chairman of Xinliyi Group , the controlling shareholder of Tianmao Group. His identity in the insurance industry is the chairman of Guohua Life Insurance.
For ordinary people who eat melons, Liu Yiqian is famous for drinking tea with a rooster cup of Ming Dynasty photographed 280 million yuan.
For the melon-eating crowd in the art circle, Liu Yiqian is famous as the husband of Wang Wei, the founder of Long Art Museum and art collector.
html AXA, which entered the Chinese insurance market by acquiring the Shanghai branch of Swiss Fengtai Insurance Co., Ltd. 112 years ago, realized its dream of sole proprietorship insurance in China through this full takeover. AXA CEO Thomas Buberl said the acquisition further reaffirms AXA uses China business as its main growth engine for its entire group.After the policy door for further expansion of the insurance industry was opened, in addition to AXA taking AnXA Tianping as a wholly-owned subsidiary, another foreign property insurance company, China Capital Investment (Group) Co., Ltd., a Chinese shareholder of Shiwai Property Insurance, withdrew in July, and its foreign-owned shareholder Shiwai International took over, and its foreign-owned shareholding ratio further increased to 97.45%.
Tianmao has a profit of 600 million yuan from a premium exit
AXA Tianping Insurance has a total of 6 shareholders. In addition to the major shareholder AnXA, which holds 50% of the shares, five companies, Shanghai Yike, Shanghai Rixingkang, Hainan Huage, Hainan Luda and Tianmao Group, hold 14.89%, 7.45%, 10.10%, 8.31%, and 9.25% of the shares respectively, with a total of 50% of the shares. This time, five Chinese shareholders have withdrawn together.
(Picture from Ansheng Tianping official website)
Liu Yiqian revealed in an interview with "Securities China" that day that the transaction was a reflection of the wishes of Chinese and foreign shareholders. According to the previous agreement, Ansheng has priority for Ansheng Tianping to acquire equity.
Tianmao Group announced that as of the end of the third quarter of 2018, AXA Tianping's net assets per share were 4.57 yuan, and the transfer price per share was about 10.87 yuan, corresponding to a price-to-book ratio of 2.38, and the total transfer amount was about 851.099 million yuan.
In addition to cash payment, this equity transaction has 1.5 billion yuan of capital reduction. That is, reduce the registered capital of AXA Tianping and purchase the corresponding proportion of the reduced capital shares from the transferor using the payment of the reduced capital amount as the consideration.According to the agreement, the transaction needs to leave 10% of its sale consideration, i.e. 460 million yuan as the regulatory amount, and the payment time is two years after the actual delivery occurred.
Tianmao Group announced that as of the date of the announcement, its holdings of 9.2511% of AXA Tianping's equity was 227.833 million yuan, and the actual investment income of this equity transfer will be approximately 623 million yuan.
It is understood that the cumulative cost of Tianmao Group investing in AXA Tianping is about 200 million yuan. This means that after 14 years, its equity investment in AXA Tianping made more than three times its profit.
(Picture from Tianmao Group Announcement)
According to Tianmao Group Announcement, for this equity transfer, AXA Tianping's price-to-book ratio is higher than that of the four insurance A-shares, especially 0.01 higher than Ping An, the highest among the four companies. Regarding the transfer price, Tianmao Group announced that it was "fair and reasonable".
When AXA acquired 200 million shares of Balance Auto Insurance Company (hereinafter referred to as "Balance Auto Insurance"), one of the predecessors of AXA Group, the cost of about 3.9 billion yuan (485 million euros), the acquisition of 78.2841 million shares was 4.6 billion yuan. In four years, its equity has shown a significant premium.
An insurance industry insider said that although the business scale of a Chinese company is incomparable, AXA Tianping's premium income ranks first among foreign property insurance. The ability of AXA balance sheet to be transferred at a price of 10.87 yuan at least shows that AXA, as a veteran insurance group, recognizes its value. As a small company, it has good growth potential and has been layout and precipitation for 14 years. More importantly, AXA Balance Auto Insurance has completed its layout across the country, which alone is much better than other foreign property insurance companies. Perhaps this is particularly valued by Ansheng.
AXAN Balance data shows that it has established 25 branches and 93 branches nationwide. In addition to AXA Tianping itself, it has a wholly-owned subsidiary AXA Tianping Insurance Sales Company, and holds a 1% stake in China Insurance Auto Service Technology Service Company.
AXA Asia CEO Gordon Watson said the deal will further consolidate its leading position in the Chinese market and in the Asian region. After wholly owning and fully managing AXA Balance, AXA will further accelerate its strategic deployment, leverage AXA’s global expertise in health and digital, and build AXA Balance into a leading insurer embracing healthcare and mobile solutions.
With AXA taking over the full takeover, the board of directors and management team of AXA Tianping is also facing adjustments. Currently, there are five directors on the board of directors of Ansheng Tianping, and three from Ansheng. It is understood that AXA has confirmed for AXA China CEO Xavier Veyry as AXA China CEO. Currently, the chairman and CEO of Ansheng Tianping is Hu Wu, the former veteran of Balance Auto Insurance.
The equity transaction and personnel appointment are subject to approval by the China Banking and Insurance Regulatory Commission and the Swiss Financial Market Regulatory Bureau .
Balance Transformation Road
In February 2014, AXA announced the completion of the 50% equity acquisition of Balance Auto Insurance, renamed it AXA Balance Auto Insurance, and Balance Auto Insurance, the first professional auto insurance company in China, has transformed it into a joint venture.
, established in December 2004, had its initial registered capital of only 220 million yuan, just exceeding the minimum capital lower limit required by the regulatory authorities. When Balance Auto Insurance was established, it happened to be a downturn in the capital market, and private capital began to look for new investment opportunities in the insurance industry. Balance Auto Insurance was initiated and established by Liu Yiqian, known as the "legal person stock king". When
balance car insurance was first established, it was jointly funded by seven private enterprises including Shanghai Rixingkang, Shanghai Puyuhai, Shanghai Yike, Xinliyi Group, Hainan Luda, Shanghai Zhongzhihao and Shanghai Nanhuage. Among them, Shanghai Rixingkang, Shanghai Yike, Hainan Huage and Hainan Luda are the shareholders of the transfer to AXI, and Xinliyi Group is the controlling shareholder of Tianmao Group that withdraws this time.
, among the shareholders of the balance, they are closely related to Liu Yiqian. According to public information, Tianmao Group holds 31.25% of the equity of Yike Entrepreneurship. Liu Yiqian was the chairman of Shanghai Wuhan Cigarette Mermaid Bioengineering Co., Ltd., the predecessor of Rixingkang Biotechnology. Puhai Industrial also had related transactions with Liu Yiqian.
A senior insurance industry insider who had studied the balance auto insurance model in his early years revealed to the "Finance" reporter that balance auto insurance is a member of Liu Yiqian's new Liyi system board chart, and it mainly controls balance auto insurance through Tianmao Group, Shanghai Yike and Shanghai Puyuhai. Shortly after the establishment of Balance Auto Insurance, Balance Auto Insurance changed its coach. Liu Yiqian used a sky-high salary to poach Xie Yue, a veteran of the property insurance industry and Taiping Property Insurance Assistant General Manager, and became the second president. A group of professional managers also joined him. Under the leadership of Xie Yue, Balance Auto Insurance was the first in China to launch a "non-core business outsourcing" model and product manager system, and became the first insurance company in the industry to be approved for telephone sales in February 2006. At that time, Xie Yue once had a famous saying: "If you don't do distribution, you won't have food to eat today, and if you don't do electronic sales, you won't have food to eat tomorrow."
Under a number of innovative measures and models, as of 2007, Balance Auto Insurance, which has been established for less than three years, has achieved profitability. However, Xie Yue suddenly resigned at that time, and Balance Auto Insurance also underwent a major personnel adjustment.
The above-mentioned insurance veteran said that judging from the development history of Balance Auto Insurance, as it gradually develops and has stable profits, it prompted its shareholders to begin to reevaluate its investment value, and the insurance company has changed from an initial "sweet rib" to a "golden chicken laying eggs". Based on the arrangements to strengthen controlling rights and corporate governance, Balance Auto Insurance has experienced adjustments in professional managers and equity changes, which has become an expected event. After the establishment of
and before AXA entered in 2013, Balance Auto Insurance experienced five capital increases, and by 2010 it had increased to 630 million yuan.
AXA's property insurance layout "three steps"
Like Allianz Group , AXA also owns the wealth and life insurance sectors in the Chinese insurance market. In addition to holding shares in AXA Versicherungen AG, it also holds a 27.5% stake in ICBC AXA Life Insurance through its wholly-owned subsidiary AXA Versicherungen AG, and ranks the second largest shareholder.
Ansheng has grasped the balance of Ansheng and has gone through a tortuous road. One of the predecessors of AXA Tianping was the Shanghai branch of Swiss Fengtai Insurance Co., Ltd. (hereinafter referred to as "Fengtai Insurance"), which was established in 1997. It is the first European property insurance company to enter the Chinese market. After Fengtai Insurance was acquired by AXA in 2006, it was also under AnXA as a Shanghai branch of Fengtai Insurance. This situation is similar to the fact that after Anda Insurance Group (ACE) completed its global acquisition of Chubb Insurance Group (China), its China subsidiary, belonging to ACE.
In 2013, Fengtai Insurance Shanghai Branch announced the "separation change" and transformed into an AXA subsidiary in China. At the same time, AXA is also looking for new expansion opportunities.
On December 30, 2013, Balance Auto Insurance merged AXA's subsidiary in China with an additional 216 million shares.
On January 21, 2014, Tianmao Group, Shanghai Pu Yuhai, Shanghai Rixingkang and Shanghai Zhongzhihao Investment Management Company (hereinafter referred to as "Shanghai Zhongzhihao") transferred their 47.71 million shares, 126 million shares, 16.728 million shares and 16.448 million shares to AXA, with a transfer price of approximately RMB 2 billion (about 251 million euros). At this point, AXA's shareholding ratio has increased to 50%.
By 2013, when AXA entered, the total premium income of Balance Auto Insurance had exceeded 5 billion yuan, of which 30% came from direct sales channels. It also established 62 branches across the country, forming a basic pattern of a national company. After AXA and Balance Auto Insurance merged, Balance Auto Insurance jumped from a medium-sized Chinese property insurance company to the largest joint venture property insurance company. The AXA balance after the merger of
has been adjusted to position it. In 2015, it launched a digital strategy to turn to the O2O model Internet insurance, and compress the telemarketing business as its strongest. This adjustment brought about a decrease in the growth rate of premiums that year.
During the transformation period after the merger, AXA balance sheet increased its investment in the brand, but its production capacity did not increase accordingly. Under the industry background of auto insurance premium reform, its auto insurance business also faces greater competitive pressure.
AXA Tianping's 2017 annual report shows that as of the end of 2017, commercial auto insurance premium income was 4.973 billion yuan, an increase of only 0.05 million yuan over the same period last year. The compensation expenditure was 2.349 billion yuan, an increase of 106 million yuan over the same period last year. The fees and commission expenditures were RMB 1.205 billion, an increase of 24.61% over the same period last year. The underwriting loss expanded to 473 million yuan, ranking first in the industry.Strictly dragged down by auto insurance business, which accounts for 90% of the proportion, the overall turn from profit to loss in 2017. The net loss in the third quarter of this year was 18.4107 million yuan, while the net profit in the last quarter was 61.0957 million yuan.
Under the trend of being strong and keeping the trend of changing auto insurance premiums, small and medium-sized companies, including AXA Tianping, are also constantly under market competitive pressure. Due to the price reduction after the third round of auto insurance premiums in 2018, Fitch recently released a report that auto insurance companies' claims ratio will steadily increase. For insurers with limited business size or no advantage in obtaining quality businesses, achieving a balance of underwriting profits remains a serious challenge.
Fitch report also believes that while the pressure of falling underwriting earnings remains, the ability of small insurers to increase capital to support growth has not been affected. For high-growth insurance companies with meager profits, it seems that continuous capital injection by issuing new shares or issuing capital supplement bonds has become an inevitable choice.
In May this year, the China Banking and Insurance Regulatory Commission issued the "Implementation Rules for the Regulations on the Management of for Foreign Insurance Companies" requiring that major shareholders of foreign insurance companies shall not transfer their shares within 5 years from the date of obtaining the shares. If the major shareholders of foreign-funded insurance companies intend to reduce their holdings or withdraw from the Chinese market, they should fulfill their shareholder obligations and replenish capital in a timely manner if necessary to ensure that the insurance company's solvency meets the requirements of the regulatory authorities.
As AXA fully takes over AXA balance, industry insiders believe that AXA may have more autonomy in strategy and market strategies. Previously, Hu Wu told the reporter of "Finance" that before the auto insurance premium reform, small and medium-sized companies rarely think about their positioning, and after the reform, they will think about where the future will be. The way out for core competitiveness is to be specialized, meticulous, and refined. The product side should be more professional, focus on market segmentation, and refined product services or pricing.
. Doing specialization, carefulness and precision is precisely the advantages of foreign-funded companies. An insurance industry insider said that AXA Tianping's auto insurance industry did have some characteristics in the past few years. For example, before the contract terms were unified, its auto insurance business contained water-related insurance, which was not available to similar businesses in the industry.
Although it has just achieved comprehensive control of AXA balance, AXA has planned for its future development. Its new future leader Xavier Veyry said that after taking over AXA Balance fully, it will be committed to realizing the vision of "transforming from payer to partner" in the future. We will use and strengthen AXA's rich product portfolio to achieve diversification of business lines and distribution networks.
