Luo Yuping, a wealthy businessman in Guizhou who has long tried to turn the bow of real estate to the insurance industry, “fell a big somersault” in the insurance business last year.
On the one hand, the attempt to acquire 21% – 25% equity of Huaxia life insurance has lasted for more than four years and there is still no dawn, but the deposit of 7 billion yuan has already been paid to the other party’s account; On the one hand, Zhongrong life lost 6.536 billion yuan last year. It is expected that the income of Zhongrong life will still decline in 2022 and the pre tax profit will be negative. Holding the first listed company in Guizhou Province, Luo Yuping did not play the card of Zhongtian Financial Group Company Limited(000540) ( Zhongtian Financial Group Company Limited(000540) , Zhongtian Financial Group Company Limited(000540) . SZ).
The controlling shareholder of Zhongtian Financial Group Company Limited(000540) is jinshiqi International Holding Co., Ltd., while Luo Yuping holds 74.8% of the shares of jinshiqi International Holding Co., Ltd. and is the actual controller of Zhongtian Financial Group Company Limited(000540) company.
It can be seen that recently, Zhongtian Financial Group Company Limited(000540) and a number of insurance companies between the “love and hate” constantly. The lawsuit with Evergrande life insurance and Bohai life insurance has not been settled, and the negative effects brought by Huaxia life insurance and Zhongrong life insurance continue to appear.
In January this year, Zhongtian Financial Group Company Limited(000540) once released a performance forecast, saying that the net profit attributable to the shareholders of the parent company of the listed company in 2021 is expected to be a loss of 2.5-4 billion yuan, a decrease of 537.15% – 799.45% over the same period of the previous year. On April 29, when Zhongtian Financial Group Company Limited(000540) officially released its 2021 annual performance report, it also issued a performance forecast amendment announcement, which revised the net profit attributable to the parent company of the listed company in Zhongtian Financial Group Company Limited(000540) 2021 to a loss of 6.22 billion yuan – 7.08 billion yuan, a year-on-year decrease of 118764% – 133802%.
The reason is still real estate and insurance. In short, Zhongtian Financial Group Company Limited(000540) additionally accrued large amount of expected credit loss and additionally recognized the loss of changes in fair value in combination with the impact of the current market situation of real estate and other industries. Affected by the real estate and other industries, the asset side business income of Zhongrong life insurance has great uncertainty, Zhongtian Financial Group Company Limited(000540) so the profit forecast of Zhongrong life insurance was adjusted, and the impairment test was conducted for the asset group corresponding to the goodwill formed by the acquisition of the latter, and then the large amount of business reputation impairment provision was added.
Since Zhongtian Financial Group Company Limited(000540) was issued with a qualified opinion with emphasis by ShineWing certified public accountants, and was issued with an unqualified internal control audit report with emphasis. On May 5, the Shenzhen Stock Exchange issued an inquiry letter to Zhongtian Financial Group Company Limited(000540) . The inquiry letter involves 11 questions, many of which point to Huaxia life and Zhongrong life. On May 19, Zhongtian Financial Group Company Limited(000540) responded.
Zhongrong life insurance had a net loss of 6.536 billion yuan last year, and risks occurred in real estate investment
In November 2016, the capital increase of Zhongrong life was approved by the former CIRC, and the registered capital of the company increased from 500 million yuan to 1.3 billion yuan. The actual controller of Zhongrong life was also changed from Tsinghua University and Luo Yuping to Luo Yuping. In terms of shareholders, Guiyang Financial Holding Co., Ltd. (hereinafter referred to as Guiyang financial holding) and its wholly-owned subsidiary United copper foil (Huizhou) Co., Ltd. currently hold 36.36% of the equity of Zhongrong life, and are the largest shareholder of Zhongrong life. Guiyang financial holding is a wholly-owned subsidiary of Zhongtian Financial Group Company Limited(000540) company.
The solvency reports of insurance companies in 2021 and 2022 have not been disclosed one after another, but the solvency reports of each insurance company in 2021 and 2022 have not been disclosed in the first quarter. On April 30, Zhongrong life also announced that due to the actual situation of the company, the company delayed the disclosure of the 2021 annual information disclosure report, which is expected to be disclosed no later than June 30, 2022.
Zhongtian Financial Group Company Limited(000540) major subsidiaries and joint-stock companies with an impact of more than 10% on the company’s net profit source: Zhongtian Financial Group Company Limited(000540) 2021 Annual Report
Although Zhongrong life did not disclose relevant information, Zhongtian Financial Group Company Limited(000540) revealed part of the performance of Zhongrong life last year in the annual report. By the end of 2021, Zhongrong life had achieved an operating revenue of 14.096 billion yuan, a net profit of -6.536 billion yuan and a net asset of -3.333 billion yuan. Zhongrong life insurance has also become the company with the most serious losses among Zhongtian Financial Group Company Limited(000540) major holding and participating companies.
In the annual report, Zhongtian Financial Group Company Limited(000540) said that Zhongrong life was affected by factors such as changes in the market environment and debt default of real estate enterprises. The financial assets held by Zhongrong life were subject to credit risk, and the asset impairment was withdrawn according to the accounting standards, resulting in a significant decline in owner’s equity. According to the impairment test results, Zhongtian Financial Group Company Limited(000540) 2021 the provision for impairment of goodwill related to the asset group of Zhongrong life was 1.345 billion yuan.
The Shenzhen Stock Exchange also paid attention to this goodwill impairment. The Shenzhen stock exchange required Zhongtian Financial Group Company Limited(000540) to explain the main reasons, and demonstrate and analyze the rationality of withdrawing large goodwill impairment reserves in combination with the development of Zhongrong life’s industry, business environment, operating efficiency, changes in major financial indicators, comparable companies in the same industry, etc.
Zhongtian Financial Group Company Limited(000540) in response, Zhongrong life said that due to the influence of real estate and other industries, its asset side business income has great uncertainty. Therefore, the management of Zhongrong life adjusted the profit forecast of Zhongrong life. The growth rate of scale premium in the forecast period is expected to shrink and adjust the business structure from 2022 to 2024, gradually optimize the business structure in 2025 and later years, and the premium will show a stable growth trend based on the development scale of the life insurance industry and the development plan of Zhongrong life, combined with the historical business trend of Zhongrong life.
Zhongtian Financial Group Company Limited(000540) also pointed out that the actual revenue and profit indicators of Zhongrong life in 2021 were lower than expected, and the future income of its asset side business was uncertain, and the return on debt investment involving the real estate industry was expected to be lower than expected. Therefore, the expected value of the comprehensive investment return of Zhongrong life in 2022 was reduced from 6.78% of the previous year to 2.16%, resulting in a decline in the predicted profit margin. On the other hand, due to the operating pressure caused by the sharp loss and decline of net assets in 2021, in the forecast from 2022 to 2024, Zhongrong life needs to shrink and adjust the business structure to meet the regulatory requirements of capital adequacy ratio. Therefore, it is expected that the income will decline and the pre tax profit will be negative in 2022. With the gradual optimization of business structure in subsequent years, the income will return to growth and the profit will turn positive at the same time.
what “thunder” has Zhongrong life stepped on in its real estate investment
On March 23, Zhongtian Financial Group Company Limited(000540) once issued an announcement on the periodic reply to the letter of concern of Shenzhen Stock Exchange.
It is mentioned that in 2021, due to the impact of the real estate industry, the business of Zhongrong life did not meet expectations, and its asset side business formed a large impairment loss.
The main products involved by Zhongrong life insurance include “Tianjin Yuanjian Gongchuang No. 3 equity investment fund partnership (limited partnership)” “20 Shenye 03”, “21 Shenju 01”, “China Minsheng trust Zhixin No. 763 Baoneng automobile project collective fund trust plan”, “Shenzhen Zizhu emerging industry upgrading equity investment fund partnership (Limited partnership)” “Minmetals trust Huizhi No. 9 collective fund trust plan” and bonds of a real estate company.
In the announcement, Zhongtian Financial Group Company Limited(000540) focused on Baoneng department, HNA department and a real estate company, namely Evergrande. In May this year, Zhongtian Financial Group Company Limited(000540) received the civil complaint served by Xi’an Intermediate People’s court, and Bohai life brought a lawsuit against the company and its controlling shareholder jinshiqi International Holding Co., Ltd. with contract disputes. As of the disclosure date of this announcement, Xi’an Intermediate People’s court has accepted the case and has not yet held a court session.
Bohai life is an important insurance sector of HNA Group. Bohai life told surging news at that time that it was the counterparty’s breach of contract, so filing a lawsuit was also a measure to resolve the company’s risks.
Prior to this, in March this year, Zhongtian Financial Group Company Limited(000540) also announced that the wholly-owned subsidiary Zhongtian Chengtou Guiyang international financial center recently received a summons from Guiyang intermediate people’s court, and Evergrande life sued Zhongtian Chengtou for housing sales contract disputes, demanding the return of all transaction prices of 1.916 billion yuan and the payment of liquidated damages of 287 million yuan.
It is worth noting that in February this year, Zhongrong life quietly made a major personnel change. Zhu Jialin, who once served as chairman of Hengda life insurance, joined Zhongrong life insurance as vice chairman. Zhu Jialin once served as president of Evergrande financial group, vice president of Evergrande group, legal representative and chairman of Evergrande life insurance; Executive president and executive vice president of Evergrande group; Directors of Evergrande life insurance, etc.
Chen Shikun, deputy general manager of Evergrande life insurance, joined Evergrande life insurance in June 2021. According to the official website of Zhongrong life, Chen Kun is committed to assisting the chief investment officer to establish and improve the asset allocation system, strictly abide by the risk bottom line and improve the efficiency of the company’s capital utilization.
plans to acquire 21% – 25% equity of Huaxia life by “snake swallowing elephant”. Can you get back the 7 billion deposit
Zhongtian Financial Group Company Limited(000540) plans to acquire the equity of Huaxia life back to 2017.
In November of that year, Zhongtian Financial Group Company Limited(000540) announced that it planned to purchase 21% – 25% equity of Huaxia life insurance from Beijing Millennium Shihao Electronic Technology Co., Ltd. and Beijing Zhongsheng Century Technology Co., Ltd. with cash of no more than 31 billion yuan. If this transaction is completed, Zhongtian Financial Group Company Limited(000540) will become the largest shareholder of Huaxia life insurance.
However, how did Zhongtian Financial Group Company Limited(000540) buy the equity of Huaxia life insurance with a value of 31 billion yuan? This news also attracted much attention from the market.
According to relevant regulations, the funds for Zhongtian Financial Group Company Limited(000540) acquiring the equity of Huaxia life insurance must be its own funds, but Zhongtian Financial Group Company Limited(000540) doesn’t have so much funds on hand. Therefore, the controlling shareholder of Zhongtian Financial Group Company Limited(000540) jinshiqi International Holding Co., Ltd. (hereinafter referred to as jinshiqi holding) established a subsidiary called jinshiqi Industrial Investment Co., Ltd. (hereinafter referred to as jinshiqi property investment) through its subsidiaries Zhongtian Financial Group Company Limited(000540) through the sale of its wholly-owned subsidiary Zhongtian Urban Investment Group Co., Ltd. operating real estate business to Jinshi banner industrial investment, it obtained 24.6 billion yuan of funds. Together with the 7 billion deposit paid before, it can just pay the 31 billion yuan price for the acquisition of relevant equity of Huaxia life.
This design, on the one hand, satisfies that the funds for Zhongtian Financial Group Company Limited(000540) acquiring the equity of Huaxia life insurance are self owned funds. On the other hand, this transaction actually leveraged at least 10 billion yuan of debt funds, but the borrower has become the property investment of Jinshi banner. Among the 24.6 billion yuan acquisition funds of jinshiqi industrial investment, 18 billion yuan initially came from Zhejiang Zheshang Industrial Finance Asset Management Co., Ltd., of which 8 billion yuan was equity investment and 10 billion yuan was shareholder loan.
In order to complete the acquisition, Zhongtian Financial Group Company Limited(000540) shares were suspended for 16 months. Due to the difficulty of acquisition, Zhongtian Financial Group Company Limited(000540) , which was once expected to exchange non-financial business for funds, recovered the real estate business.
According to the exclusive report of surging news, the former capital provider of Jinshi banner industrial investment, Zhejiang industrial finance management, withdrew from the shareholder seat of the company and was replaced by Country Garden Real Estate Group Co., Ltd. Less than a year later, country garden also officially withdrew. At that time, there was news that local state-owned assets may be involved in the transaction of Zhongtian Financial Group Company Limited(000540) acquiring the equity of Huaxia life insurance, but there was no definite news in the end.
In July 2020, the China Banking and Insurance Regulatory Commission announced the takeover of six institutions, including Huaxia life and Tian’an life. In July 2021, the CBRC announced to extend the takeover period of Huaxia life for one year. This also makes Zhongtian Financial Group Company Limited(000540) no progress in the equity acquisition of Huaxia life insurance.
ShineWing certified public accountants Co., Ltd. issued the audit report with qualified opinions with emphasis and the internal control audit report with unqualified opinions with emphasis on Zhongtian Financial Group Company Limited(000540) this time. One of the main reasons is that the Zhongtian Financial Group Company Limited(000540) financial statements are due to the progress of Huaxia life’s equity acquisition transaction and the recoverability of deposit, the measurement rationality and disclosure adequacy of non-public market investment The improvement measures related to the significant uncertainty of the going concern assumption have not been fully disclosed.
Shenzhen Stock Exchange also requires Zhongtian Financial Group Company Limited(000540) to explain whether there is any risk of failure to reach relevant transactions in combination with the latest progress of this major asset restructuring, and Zhongtian Financial Group Company Limited(000540) plans to take measures to eliminate matters related to reserved opinions.
Zhongtian Financial Group Company Limited(000540) said that the subsequent measurement of the deposit of 7 billion yuan paid by the company for the equity transaction of Huaxia life was mainly affected by the progress of the transaction. If the transaction was not finally concluded, the company may recover the deposit or face the risk that the deposit could not be recovered in full. The company will conduct accounting treatment on the deposit of RMB 7 billion in accordance with the accounting standards for business enterprises, the company’s accounting policies and accounting estimates, including estimating the recoverable amount and withdrawing the credit impairment loss according to the recoverable amount.
“According to the expiration of Huaxia life’s takeover in July 2022, seek all parties to make efforts to promote the acquisition, or recover the paid transaction deposit of 7 billion yuan.” Zhongtian Financial Group Company Limited(000540) scale.
According to Zhongtian Financial Group Company Limited(000540) previous transaction arrangement, once it unilaterally cancels or terminates the framework agreement and the supplementary agreement to the framework agreement, resulting in the failure of this transaction, it will face the risk of deposit loss of 7 billion yuan.
But for now, Zhongtian Financial Group Company Limited(000540) wants to take over the equity of Huaxia life insurance for a long time. The market situation of the real estate industry makes Zhongtian Financial Group Company Limited(000540) deeply in debt crisis. According to the announcement on the failure to repay part of the debts of the company and its holding subsidiaries disclosed on April 30, Zhongtian Financial Group Company Limited(000540) overdue debts are about 4.04 billion yuan, accounting for 33.98% of the company’s audited net assets. According to the annual report, as of the end of last year, Zhongtian Financial Group Company Limited(000540) short-term loans and interest bearing liabilities due within one year totaled 18.241 billion yuan, with a monetary fund balance of 1.737 billion yuan.
In addition, the measures for equity management of insurance companies issued in March 2018 clearly stipulates that investors and their related parties and persons acting in concert can only become the controlling shareholders of an insurance company operating similar businesses. If the investor is an insurance company, it shall not invest in the establishment of an insurance company engaged in similar business. The total number of investors, their related parties and persons acting in concert who become controlling and strategic shareholders of insurance companies shall not exceed two.
At the 2021 annual performance presentation meeting of listed companies under Guizhou jurisdiction and the collective reception day for investors on May 13, Zhongtian Financial Group Company Limited(000540) financial director he Zhiliang made it clear that up to now, the company holds 36.36% of the shares of Zhongrong life insurance, and the company has no plan to dispose of these shares.
