Some people are busy with equity transfer or clearing, while others are buying and entering the market at the right time. After winning the 10% equity for Qianhai Reinsurance for 265 million yuan in July, Prudential Financial (USA) continued to increase its investment in China.
Recently, according to media reports, Prudential Finance in the United States plans to negotiate with Agricultural Bank of China to Agricultural Bank of China . The transaction may value ARMB Life Insurance . The valuation of ARMB Life Insurance may be between US$3 billion and US$4 billion (approximately RMB 21.4 billion and RMB 28.5 billion), and the proportion of the sold equity is 20%-49%, which may also involve Bank Insurance cooperative transaction.
Another person familiar with the matter revealed that with the future business expansion, ABC Life Insurance only relies on issuing bonds to support its business development. Due to the large number of small shareholders, there will still face many obstacles in the future capital increase. The company is accelerating the pace of shareholder changes and capital increase to speed up "replenishing blood", which may be an important reason why minority equity investors consider selling their shares.
US Prudential is considering acquiring a minority stake in ABC Life Insurance. Will another Sino-foreign joint venture bank-affiliated insurance company be born?
People familiar with the matter revealed that Prudential Finance is working with a financial adviser to discuss the bid for the equity of ABC Life Insurance.
It is reported that the transaction negotiations are still in progress, and the sale of equity has also caused other financial institutions to invest in ABC Life Insurance, and other investors may bid. The reporter asked ABC Life Insurance for confirmation about this matter, but no response was made as of press time.
As early as June this year, media quoted people familiar with the matter and said that minority equity investors in ABC Life Insurance, controlled by Agricultural Bank of China, are considering selling their shares. This potential transaction has attracted initial interest from foreign and local banks, insurers and fund companies.
It is worth noting that in the context of deepening opening up to the outside world, Prudential Finance in the United States has been continuously increasing its investment in the Chinese market. In July this year, Qianhai Reinsurance's 10% equity bid was again auctioned. After public bidding, the bidder was Prudential International Insurance Holdings, Ltd., a subsidiary of Prudential Finance.
According to the official website of Prudential Finance in the United States, the company's Prudential Investment Management Company has jointly established Everbright Prudential Asset Management Company with Everbright Securities , a subsidiary of Everbright Group . Prudential of the United States has also been seeking multiple opportunities in the Chinese life insurance market. It has established a representative office in China since September 1998; in 2012, Prudential of the United States and Fosun Group jointly established Fosun Prudential Life in China, with both parties holding 50% of the shares and have been in operation for 10 years.
KPMG analysts said that if they successfully acquire stake in ABC Life Insurance this time, it will be beneficial for Prudential to expand its market in , the world's second largest economy.
On the one hand, in the future, Prudential Finance will be able to rely on the bank insurance channel of Agricultural Bank of China to expand bank insurance business , and with the advantages of Agricultural Bank of China's branch advantages, it will penetrate into areas that its branches have not yet covered and expand its customer sources. In the future, Prudential Finance in the United States may also obtain priority and handling fee discounts for the Agricultural Bank of China by holding shares in ABC Life Insurance.
On the other hand, if the two parties "marriage" is successful, it may open up a new situation for the integration of individual insurance and bank insurance. "In the past, the insurance industry always seemed to have overcorrected situations. The industry entities are generally dominant in bank insurance or personal insurance, or they may make rapid and sharp turns to switch tracks. In the context of slowing industry growth, supply-side reform and innovation should be accelerated, and exploration should be explored in the construction of the ecosystem, mutual integration and empowerment of business, diversified development, etc. The two are full of imagination in transformation and upgrading and opening up the industry's integration of individual insurance and bank insurance." The above-mentioned person pointed out.
public information shows that as of the end of 2018, there were 23,400 branches in the Agricultural Bank of China, including 37 first-level branches, 386 second-level branches, 3,455 first-level branches, 19,400 grassroots business institutions and 52 other institutions. ABC Life Insurance has established nearly 400 branches nationwide, including 23 branches. As the scale of personal insurance agent channels decreases significantly and insurance consumption sinks, bank insurance channels will play an important role in insurance sales.
It is worth noting that according to Cailianshe reporters, in recent years, banks have joined hands with foreign insurance giants in joint venture life insurance companies. While capital and premiums have soared rapidly, the company's profitability should not be underestimated, such as bank-affiliated life insurance companies such as CITIC Prudential, Everbright Yongming, and Bank of Communications Life Insurance. This may be the reason why Prudential Finance continues to bet on the Chinese insurance market.
7 bank-based life insurance companies have grown capital and premiums before and after the joint venture.
compensation second-generation second phase. Under the core solvency adequacy ratio declined, and ABC Life Insurance started to replenish blood
It is reported that ABC Life Insurance was first named National Life Insurance. It was established in 2005 and was initiated and established by six companies including Beijing Zhongguancun Science City Construction Co., Ltd., Lenovo Holdings , and Chongqing International Trust and Investment Company.
In 2007, National Life Insurance was renamed Jiahe Life Insurance . In 2010, Lenovo Holdings transferred all 120 million shares of Jiahe Life Insurance and withdrew from the ranks of shareholders. In the early days of
, Jiahe Life Insurance's performance has been sluggish and has suffered losses for many years. In 2010, its solvency adequacy ratio was only 71.26%, and even fell to -86.21% in 2011.
At the critical moment, the Agricultural Bank of China extended an olive branch to it. In February 2011, Agricultural Bank of China spent 2.59 billion yuan to acquire 51% of Jiahe Life Insurance shares. In 2012, after approval by the China Banking Regulatory Commission, it officially became its holding subsidiary and was renamed Agricultural Bank of China Life Insurance.
Backed by the big tree of Agricultural Bank of China, the premium scale of Agricultural Bank of China Life has maintained steady growth. Annual report data shows that from 2016 to 2021, ABC Life Insurance achieved insurance business revenue of 18.289 billion yuan, 23.865 billion yuan, 17.638 billion yuan, 23.229 billion yuan, 26.475 billion yuan and 29.4 billion yuan respectively. While the scale of
business has increased, ABC Life Insurance's net profit has been steadily growing overall. From 2016 to 2019, ABC Life Insurance achieved net profit of 180.043 million yuan, 111 million yuan, 139 million yuan and 332 million yuan in turn. In 2020 alone, ABC Life Insurance achieved net profit of 268 million yuan, a year-on-year decrease of 19.45%, but in 2021, it resumed positive year-on-year growth, achieving net profit of 320 million yuan.
cannot be ignored that since the products sold by ABC Life Insurance mainly include dividends and annuity insurance, the value rate of bank insurance business is relatively low, the capital consumption is severe, and it faces greater pressure on maturity payment and liquidity test.
In the first half of 2022, ABC Life Insurance's comprehensive solvency adequacy ratio was 175.46%, core solvency adequacy ratio was 99.52%, and the comprehensive risk rating was BB.
"According to regulatory requirements, the comprehensive solvency adequacy ratio of 100%, the core solvency adequacy ratio of 50%, and the comprehensive risk rating of Class B are the three bottom line requirements for solvency to meet the standard. However, considering that some classified regulatory requirements are linked to solvency, some businesses require that the comprehensive solvency adequacy ratio be achieved by reaching 120% or above. In practice, insurance companies' requirements for the safety of solvency adequacy ratio will be higher than the bottom line." Industry insiders introduced.
In addition, the second phase of repayment is implemented. In the first half of 2022, the insurance industry generally faced pressure from a decline in solvency adequacy ratio. Some companies have launched capital increase and bond issuance plans, and ABC Life Insurance is no exception.
Recently, at the second extraordinary shareholders' meeting of ABC Life Insurance in 2022, the meeting reviewed and passed the company's proposal to issue 2 billion yuan of capital supplement bonds.
It is reported that in terms of financing difficulty and time period, bond issuance financing has a shorter cycle and lower cost compared to other ways to supplement capital.
"For many insurance companies, it is not easy to increase capital in order to improve solvency. Faced with various illegal related transactions, hidden actual controllers, and the resulting insurance company crisis, supervision has strengthened the review of shareholder qualifications and the authenticity of the source of funds like never before. As a result, some insurance company shareholders cannot meet the new regulatory requirements due to their qualifications, or they are also facing the tight cash flow of , and in the face of difficulties in replenishing capital through shareholder capital increase, issuing bonds is a good choice." Industry insiders pointed out.
It is worth noting that in July 2019, ABC Life Insurance disclosed an equity transfer plan, Tibet Tengyun Investment and New Era intend to transfer 2% and 8.34% of the equity to st Century Jinyuan respectively.After the transfer is completed, Xinzhiyuan will withdraw from the shareholder list. Tengyun Investment and Century Jinyuan hold a total of 19.99% of the equity of ABC Life Insurance, and will become the second largest shareholder after ABC. However, there is no follow-up to this equity transaction since its disclosure in July 2019.
2022 second quarter solvency report shows that in addition to the Agricultural Bank of China, ABC Life Insurance is currently controlled by 49% of five companies, including Beijing Zhongguancun Science City Construction Co., Ltd., Tibet Tengyun Investment Management, Chongqing International Trust , China New Era, and Dalian Huisheng Investment.
Source: ABC Life Insurance’s second quarter solvency report for the second quarter.
Among the five small shareholders, Xinzhiyuan is related to Beijing Zhongguancun Science City Construction Co., Ltd., Dalian Huisheng Investment and Beijing Zhongguancun Science City Construction Co., Ltd. have different degrees of share pledge or freezing.
This article is from Cailianshe
