China Net Finance September 22 (Reporter Chang Shi and Cheng Yunan) On September 16, Cathay Property Insurance Co., Ltd. (hereinafter referred to as "Cathay Property Insurance") issued a two-year "Agreement Framework Cooperation Agreement" (hereinafter referred to as "Agreement 1") with the major shareholder Ant Financial , adjusting the amount of related transactions to no more than 3.5 billion yuan in the next two years. The amount of the agreement between the two parties in this period increased significantly compared with the previous period.
Interestingly, the last issue of the "Framework Cooperation Agreement for Related Transactions" (hereinafter referred to as "Agreement 2") between the two parties was released in February 2018. The agreement content does not clearly indicate the agreement term and the maximum amount limit of the agreement. The reporter checked the quarterly related transaction disclosure information of Cathay Property Insurance from 2018 to the present one by one. It was not until the "Announcement on the Disclosure of Classified and Merger of Related Transactions in the Fourth Quarter of 2019" that it was clearly stated: "In February 2018, Cathay Property Insurance Co., Ltd. and Zhejiang Ant Micro Financial Services Group Co., Ltd. signed the "Agreement on the Framework Cooperation Agreement for Related Transactions" with the validity period of the agreement of three years and the transaction amount shall not exceed 1.958 billion yuan."
Image source: Cathay Property Insurance official website disclosure
It is worth noting that the "Announcement on the Disclosure of Classified and Merger of Related Transactions in the Fourth Quarter of 2019" shows that the transaction ceiling of 1.958 billion yuan agreed by the two parties has changed in Cathay Property Insurance's "Announcement on the Disclosure of Classified and Merger of Related Transactions in the First Quarter of 2020".
"Announcement on the Disclosure of Classification and Merger of Related Transactions in the First Quarter of 2020" shows: "In February 2018, Cathay Property Insurance Co., Ltd. and Zhejiang Ant Micro Financial Services Group Co., Ltd. signed the "Related Transaction Framework Cooperation Agreement", with the agreement valid for three years and the transaction amount shall not exceed 2.3070 billion yuan", rather than the previous 1.958 billion yuan. However, the reporter did not investigate that Cathay Property Insurance issued an announcement on the amount of the agreement during this period. When and why did the amount agreed upon by
have the above changes? The reporter contacted the relevant person in charge of Cathay Property Insurance, but the other party said that he would not accept relevant interviews regarding the above agreement.
However, regardless of whether the final upper limit of the related transaction amount agreed by Cathay Property Insurance and Ant Financial in February 2018 is 1.958 billion yuan or 2.307 billion yuan, the newly proposed upper limit of the related transaction amount in the next two years of Agreement 1 can be said to have a significant increase compared with the previous one.
According to "Agreement 1", the main transaction types of Cathay Property Insurance, Ant Financial and its affiliated companies (hereinafter collectively referred to as "Ant Financial Party") are related transactions in the next two years. That is, Ant Financial provides technical platform services for Cathay Property Insurance or agents to sell Cathay Property Insurance insurance products, etc.; Cathay Property Insurance sells insurance products to end users of the Internet where Ant Financial is located.
It is worth noting that from 2018 to the first half of this year, the structure of related transactions with Ant Financial is undergoing "reversal" changes. That is, the proportion of insurance business and insurance agency business of both parties has been reduced from more than 60% to about 10%, and the proportion of related transactions in service categories has expanded rapidly.
According to incomplete statistics, the cumulative related transaction amount of Cathay Property Insurance and Ant Financial in 2018 was 1.668 billion yuan, of which the service transaction amount was 625 million yuan, accounting for 37.46%; the transaction amount of insurance business and insurance agency business was 1.043 billion yuan, accounting for 62.54%. In 2019, the two parties generated a total of 1.60572 billion yuan in related transactions, but the proportion of the two types of transactions was "flipped", that is, the proportion of service business increased to 73.05%, and the cumulative amount of related transactions was 1.173 billion yuan; the proportion of insurance business decreased to 26.95%, and the cumulative amount of related transactions was 433 million yuan.
In addition, in the first half of 2020, the cumulative amount of related transactions between the two parties was 973.1 million yuan, of which the proportion of related transactions in service categories further increased to 89.21%, with a cumulative transaction amount of 868 million yuan; the proportion of related transactions in insurance categories decreased to 10.79%, with a cumulative transaction amount of 105 million yuan.
can be seen that as the related transactions between Cathay Property Insurance and Ant Financial continue to deepen, the related transactions between the two parties focus on the conversion from insurance business to service. An industry insider analyzed to China.com Finance reporter that with the changes in the market environment, it is understandable that technology empowers insurance.Cathay Property Insurance relies on Ant Financial's technological advantages to continuously improve the company's technological application level, enrich use scenarios, achieve effective customer insights, and connect information interactions. This is a necessary action for the company's sustainable development and will be the obvious advantage of Cathay Property Insurance's future competition with other small and medium-sized property insurance companies.
"But for a smaller company like Cathay Property Insurance, if the amount of related transactions is high to 3.5 billion, there is still some pressure." The above-mentioned industry insider pointed out that although Cathay Property Insurance has relied on Ant Financial to obtain many new sources of premiums, compared with the service fees paid by Cathay Property Insurance to Ant Financial in the related transactions between the two parties, Cathay Property Insurance still needs to explore a wider source of premium income to alleviate this pressure.
Public information shows that Cathay Property Insurance was established in August 2008 and was initially established by Taiwan Cathay Life Insurance Insurance Co., Ltd. and Taiwan Cathay Century Products Insurance Co., Ltd., and then it showed a continuous loss from 2009 to 2016, with a cumulative loss of over 800 million yuan in 8 years.
In July 2016, Ant Financial invested 830 million yuan to acquire Cathay Property Insurance, with a shareholding ratio of 51%, becoming the largest shareholder of Cathay Property Insurance. Subsequently, initiated by Ant Financial, and with other shareholders, it increased its capital by 1 billion yuan in Cathay Property Insurance in 2018, making efforts to turn Cathay Property Insurance into a subsequent loss.
. In 2017 and 2018, after Ant Financial held Cathay Property Insurance, Cathay Property Insurance suffered losses of 92 million and 50 million respectively. Until 2019, Cathay Property Insurance welcomed its first profit after Ant Financial took over, with a cumulative net profit of 4.7412 million yuan. In addition, the net profit in the first half of 2020 was 3.1588 million yuan.
(Editor in charge: Meng Qianyun)
