With the introduction of five new shareholders and an increase of registered capital of 1.5 billion yuan, China South Korea Life Insurance Co., Ltd. (hereinafter referred to as “China South Korea life”) has made the latest progress in the public introduction and investment project. On March 25, Zhejiang Orient Financial Holdings Group Co.Ltd(600120) Financial Holding Group (hereinafter referred to as ” Zhejiang Orient Financial Holdings Group Co.Ltd(600120) “) announced that five intended investors had signed the capital increase agreement on China South Korea life insurance on March 24.
After the capital increase is approved, the proportion of Zhejiang Orient Financial Holdings Group Co.Ltd(600120) shareholding of Chinese shareholders of China South Korea life insurance will change from 50% to 33.33%, becoming the single largest shareholder of China South Korea life insurance. Han Hua Life Insurance Co., Ltd., a foreign shareholder, did not participate in the capital increase, and its shareholding ratio decreased from 50% to 24.99%. This means that China South Korea life insurance will change from a Sino foreign joint venture to a Chinese funded insurance company. Among the new investors of China South Korea life insurance, many are local state-owned enterprises in Zhejiang Province.
Yinzhan investment project is launched, and China South Korea life insurance is expected to become a joint venture with Chinese capital
After Xiaokang life, another joint venture life insurance company will appear. On March 25, Zhejiang Orient Financial Holdings Group Co.Ltd(600120) announced that the capital increase project of China South Korea life insurance had been widely solicited, and five intended investors had been delisted in Zhejiang Property Exchange on March 18. After competitive negotiation, the capital increase agreement was signed on March 24.
The capital increase project of China South Korea life can be traced back to April 2021. At that time, China South Korea life was listed in Zhejiang equity exchange. The listing price of capital increase is not less than 1.21 yuan / 1 yuan of registered capital, and the total amount of funds raised will not be less than 1.818 billion yuan.
The announcement shows that the capital increase of China South Korea life insurance will increase the registered capital by 1.5 billion yuan, of which Zhejiang Orient Financial Holdings Group Co.Ltd(600120) invested 303 million yuan to subscribe for the registered capital of 250 million yuan, and introduced Zhejiang Changxing Financial Holding Group Co., Ltd. (hereinafter referred to as “Changxing financial holding”), Wenzhou state-owned capital financing management Co., Ltd. (hereinafter referred to as “Wenzhou Guojin”), Wenzhou Power Investment Co., Ltd. (hereinafter referred to as “Wenzhou Power”) Wenzhou Transportation Development Group Co., Ltd. (hereinafter referred to as “Wenzhou jiaofa”) and Guotai Junan Securities Co.Ltd(601211) Zhengyu Investment Co., Ltd. (hereinafter referred to as “Zhengyu investment”) are five external investors.
After the capital increase, the registered capital of China South Korea life insurance will increase from 1.5 billion yuan to 3 billion yuan. Significant changes have also taken place in the shareholding of shareholders of China South Korea life insurance. Specifically, Zhejiang Orient Financial Holdings Group Co.Ltd(600120) will hold about 1 billion shares of China South Korea life insurance, and the shareholding ratio will change from 50% to 33.33%, becoming the single largest shareholder of China South Korea life insurance. Hanhua Life Insurance Co., Ltd., a foreign shareholder of China South Korea life insurance, will not participate in the capital increase, and the shareholding ratio will be reduced from the original 50% to 24.99%. The shareholding ratios of the five newly introduced shareholders Changxing financial holding, Wenzhou Guojin, Wenzhou electric power, Wenzhou jiaofa and Zhengyu investment were 20.23%, 5.52%, 5.49%, 5.49% and 4.95% respectively.
It is worth mentioning that the shareholding ratio of foreign shareholder Hanhua Life Insurance Co., Ltd. decreased to 24.99%, which means that China South Korea life insurance will change from a Sino foreign joint venture insurance company to a foreign-funded insurance company. According to the foreign investment law, in the registered capital of Chinese foreign equity joint ventures, the proportion of capital contribution of foreign joint ventures is generally not less than 25%.
However, the above equity changes need to be approved by the CBRC.
1 the first profit in 2020 is 8.16 million yuan, and the profit turns into loss in 2021
When the shares of insurance companies were auctioned at a discount and listed companies gave up one after another to prepare for the establishment of insurance companies, what kind of company is China South Korea life insurance, which can still win the “favor” of five investors?
Public information shows that China South Korea life insurance, established on November 30, 2012, is the only national life insurance company with headquarters and registered place in Zhejiang Province, with a registered capital of 1.5 billion yuan. The two original shareholders of China South Korea life insurance are Zhejiang International Trade Group Co., Ltd. (hereinafter referred to as “Zhejiang International Trade Group”) and Korea Hanhua Life Insurance Co., Ltd., with each party contributing 250 million yuan. By the end of the fourth quarter of 2021, its comprehensive and core solvency adequacy ratio was 120.88%.
At the end of 2016, Zhejiang Orient Financial Holdings Group Co.Ltd(600120) acquired 50% equity of China South Korea life insurance. At that time, when Zhejiang Orient Financial Holdings Group Co.Ltd(600120) acquired the equity of China South Korea life insurance, Zhejiang International Trade Group promised that China South Korea life insurance would make a positive profit after deducting non recurring profits and losses in 2021, that is, China South Korea life insurance would make a profit in 2021. Otherwise, Zhejiang International trade group would make up the difference in cash according to the shareholding ratio until China South Korea life insurance made a profit.
However, in 2020, China South Korea life insurance realized a profit, stepping on the node of “seven flat and eight profit”. In the eighth year of its establishment, China South Korea life insurance realized the original premium income of 1.004 billion yuan and the net profit of 8.1636 million yuan. However, after a short profit, China South Korea life insurance fell into a loss again. In 2021, the company achieved a premium income of 970 million yuan and a net loss of 117 million yuan.
Why did China South Korea life change from profit to loss in 2021? Xu Yuchen, a senior actuary, said that from the perspective of the industry, affected by the epidemic and other factors, most life insurance companies are in a state of decline in new single premiums. In addition, the A-share market in 2021 is not as stable as that in 2020 and 2019, and the investment income of China South Korea life may not be ideal.
local state-owned enterprises are expected to take the east wind of Yangtze River Delta integration
What impact will the change of shareholders have on China South Korea life insurance? Xu Yuchen analyzed that with the continuous expansion of the door of China’s insurance industry to the outside world, the restriction policy on joint venture insurance companies has been gradually lifted. At the policy level, changing from joint venture companies to Chinese funded companies will not have much impact on China South Korea life insurance.
However, the change of ownership structure may help China South Korea life improve decision-making efficiency. Xu Yuchen said that previously, China South Korea life’s Chinese shareholders and foreign shareholders held 50% respectively, with the same voice, and it was difficult to reach a consensus on different opinions. After the change of ownership structure, it is no longer a “five to five” situation. Divergent opinions can be voted, and the minority obeys the majority, which is beneficial for China South Korea life to improve decision-making efficiency.
In addition to improving decision-making efficiency, the strategic cooperation between China South Korea life insurance and Zhejiang Orient Financial Holdings Group Co.Ltd(600120) is expected to be further developed in the future Zhejiang Orient Financial Holdings Group Co.Ltd(600120) said in the announcement that the capital increase of China South Korea life insurance will bring great opportunities for the development of China South Korea life insurance and have important strategic significance for the construction of financial holding platform of listed companies. As an important licensed financial institution of the company, China South Korea life insurance will continue to promote its high-quality development in the future, further strengthen the synergy between financial control platform sectors, expand the overall scale of the company and help the construction of the company’s financial control platform.
It is worth noting that among the five companies newly introduced by China South Korea life insurance plan, four are local state-owned enterprises in Zhejiang Province, and one is a subsidiary of an old securities firm.
Specifically, Changxing financial holding is a wholly-owned subsidiary of Huzhou Changxing County Finance Bureau, Wenzhou financial holding is a wholly-owned subsidiary of Wenzhou Finance Bureau, Wenzhou electric power and Wenzhou jiaofa are holding subsidiaries of Wenzhou SASAC, and Zhengyu investment is a wholly-owned subsidiary of Guotai Junan Securities Co.Ltd(601211) .
What resource opportunities will the “blessing” of the five new shareholders bring to China South Korea life insurance? Xu Yuchen said that Changxing and Wenzhou, where the four newly introduced state-owned enterprise shareholders of China South Korea Life Insurance Co., Ltd. are located, are areas with relatively high economic development level in Zhejiang Province. In the future, China South Korea Life Insurance Co., Ltd. is expected to obtain resource preference from shareholders, especially in Enterprise cooperation and group insurance business.
Zhejiang Orient Financial Holdings Group Co.Ltd(600120) also said in the relevant announcement that the capital increase project of China South Korea life insurance is one of the 48 mixed ownership reform projects of state-owned enterprises in Zhejiang Province launched by the state owned assets supervision and Administration Commission of Zhejiang Province. The newly introduced strategic investors cover the state-owned capital of provinces, cities and counties in the Yangtze River Delta region. Wenzhou is in the implementation stage of comprehensive financial reform policy. Changxing is one of the top 100 counties and cities in China located in the central hub area of the Yangtze River Delta, Guotai Junan Securities Co.Ltd(601211) is a national head securities firm headquartered in Shanghai. The capital increase will help all parties jointly implement the national strategy of Yangtze River Delta integration and further promote the construction of common prosperity demonstration area.
Zhejiang Orient Financial Holdings Group Co.Ltd(600120) further said that at present, the aging population, consumption upgrading, medical expenditure, favorable policies and other factors are continuously releasing the insurance demand, driving the high-quality growth of the life insurance industry. After the capital increase is completed, China South Korea life insurance will rely on the empowerment of new shareholders, fully grasp the regional advantages of the Yangtze River Delta, seize the opportunity of rapid development of the industry, and give full play to the role of insurance “stabilizer”.
The reporter of Beijing business daily sent a letter to China and South Korea life insurance on the impact of equity changes, performance loss and other related issues. As of press time, no reply has been received.
