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Recently, 30 million shares of equity held by Wuhan Iron and Steel Group Co., Ltd. (hereinafter referred to as "Wuhan Iron and Steel Group"), the eighth largest shareholder of Beibu Gulf Property & Casualty Insurance, are being listed for transfer, and it is worth noting that this is the second listing of this equity. At the end of 2022, Wuhan Iron and Steel Group proposed to clear its equity with a reserve price of 47.6621 million yuan, but there was no follow-up, and after half a year, the equity was "listed" again, and the transaction reserve price at this time was 42.8959 million yuan after 9 discounts.
Listed twice, Wuhan Iron and Steel Group intends to liquidate its equity holdings at a discount
Recently, a 30 million share of Beibu Gulf Property & Casualty Insurance is being publicly listed and transferred on the Shanghai United Equity Exchange, the equity holder is Wuhan Iron and Steel Group, the equity accounts for 2% of the total share of Beibu Gulf Property & Casualty Insurance, the transfer reserve price is 42.8959 million yuan, and the listing information disclosure date is from May 31 to June 13, 2023.
Blue Whale Insurance noted that the 30 million shares listed in the transaction are all the shares of Beibu Gulf Property & Casualty currently held by Wuhan Iron and Steel Group, and once the transaction is implemented, Wuhan Iron and Steel Group will withdraw from the shareholders of Beibu Gulf Property & Casualty Insurance.
From the perspective of the shareholding structure of Beibu Gulf Property & Casualty Insurance, 64% of its equity is state-owned shares, the remaining 36% of its equity is the shares of corporate legal persons, and the actual controller is Guangxi state-owned assets. State-owned Guangxi Financial Investment Group Co., Ltd. and Guangdong Hongfa Investment Co., Ltd. each hold 20% of the shares, ranking as the largest shareholder, Guangdong Communications Investment Group Co., Ltd. holds 19%, Guangxi Beibu Gulf International Port Group Co., Ltd. and Guangxi Changjiang Tiancheng Investment Group Co., Ltd. hold 12.67% and 10% respectively. Wuhan Iron and Steel Group is the 8th largest shareholder of Beibu Gulf Property & Casualty Insurance, with a 2% shareholding.
But whether the transaction can be successfully landed is still unknown. It is reported that as early as the end of 2022, Wuhan Iron and Steel Group listed the 30 million shares of Beibu Gulf Property & Casualty Insurance on the Shanghai United Equity Exchange, and the transfer price at that time was set at 47.6621 million yuan according to the appraisal price, and the information disclosure date was from December 27, 2022 to January 29, 2023.
Obviously, the listing at the end of 2022 did not follow, after half a year, the 30 million shares were publicly sold again, at this time the price of 42.8959 million yuan has been discounted by 9% compared with the appraisal price.
From an industry perspective, the decline in the equity attractiveness of insurance companies is a common symptom of the current industry. For example, at 10 a.m. on May 12, the auction of 171.37 million shares of Hyder Property & Casualty officially ended, and because no bids were made, the final auction was completed, which was the second auction of the equity.
On November 21, 2022, the 269 million shares of Great Wall Life held by CMIN Investment Capital Management Co., Ltd. were auctioned at a 7% discount to the appraisal price, but were ultimately auctioned because no one bidd.
Tongfang shares, which twice listed 50% of the shares of Tongfang Global Life in September and December last year, announced at the end of April this year that since the listing, a number of interested parties have contacted the company. According to market conditions, the company made a price adjustment for the transfer of 50% equity interest in Tongfang Global Life and appropriately extended the listing period, but during the listing period, the parties did not reach an agreement on the delisting. In the end, it was decided to temporarily suspend the listing.
"The long profit cycle of insurance companies, the superimposed industry is in the context of a deep transformation period, the performance of small and medium-sized insurance institutions fluctuates significantly, and the difficulty of operation increases, so it is difficult to achieve ideal shareholder returns, capital is prohibitive," a relevant person in charge of an insurance company analyzed to Blue Whale Insurance, "On the other hand, the relatively small proportion of shares transferred and the lack of control of the transferee after entering the market are also one of the reasons why the first transfer of Beibu Gulf Property & Casualty Insurance was cold and sold at a discount." ”
The dilemma of property insurance in Beibu Gulf: losses for two consecutive years, bottleneck in premium growth, and difficulty in capital increase
Naturally, there are also reasons for the trading target Beibu Gulf Property Insurance itself.
Founded in 2013, Beibu Gulf Property & Casualty became profitable in 2016 and remained profitable until 2020. However, in 2021, Beibu Gulf Property & Casualty Insurance had a net loss of 159 million yuan, which it said was affected by factors such as comprehensive auto insurance reform, business structure adjustment, and high compensation payments in various business segments in 2021, and there was a certain deviation between the achievement of various indicators of business development planning, especially profit and compensation cost indicators, and strategic risk appetite.
In 2022, Beibu Gulf Property & Casualty Insurance will have a net loss of 99.899 million yuan, a year-on-year decrease of about 60%. In the first quarter of 2023, there was still a net loss of 42.1459 million yuan, but compared with the net loss of 95.466 million yuan in the same period last year, it has been significantly reduced.
In terms of premiums, Beibu Gulf Property & Casualty Insurance has also fallen into the bottleneck period of insurance business revenue growth in the past two years. From 2016 to 2020, Beibu Gulf property insurance premiums increased steadily, reaching RMB1.497 billion, RMB2.048 billion, RMB2.833 billion, RMB3.088 billion and RMB3.608 billion respectively, but in 2021, the income of property insurance business in Beibu Gulf contracted slightly to RMB3.587 billion, and the premium income increased slightly to RMB3.6 billion in 2022.
From the perspective of business structure, the main types of Beibu Gulf Property & Casualty Insurance are mostly in the dilemma of underwriting losses. According to the data of 2022, the annual revenue premium of motor insurance, the largest insurance type of Beibu Gulf Property & Casualty Insurance, was 1.462 billion yuan, a year-on-year contraction of more than 20%, the business accounted for 40.6%, the corresponding underwriting loss reached 39.785 million yuan, the second largest insurance type of agricultural insurance accounted for nearly 34%, and the underwriting loss was as high as 70.1858 million yuan. During the same period, Beibu Gulf Property & Casualty Health Insurance and Accident Insurance also had underwriting losses of 24.4 million yuan and 65.6957 million yuan respectively.
In this context, in the past two years, Beibu Gulf Property & Casualty Insurance has begun to seek to improve its capital strength. In November 2021, Zhongheng Group, a related party, successively announced its intention to participate in the capital increase and share expansion of Beibu Gulf Property & Casualty Insurance and the announcement of subscribing to the first capital replenishment bond of Beibu Gulf Property & Casualty Insurance in 2021. It revealed that Beibu Gulf Property & Casualty Insurance plans to issue 300 million additional shares, increasing the registered capital from 1.5 billion yuan to 1.8 billion yuan.
But then, Zhongheng Group was questioned by the Shanghai Stock Exchange to clarify whether it would take financial investment as the direction of business development. In December of the same year, Zhongheng Group proposed to terminate its participation in Beibu Gulf Property & Casualty Insurance's capital increase and share expansion and subscription of capital supplementary bonds.
After the 300 million yuan capital increase was put on hold, Beibu Gulf Property & Casualty Insurance once again promoted a capital increase of 500 million yuan in 2022, which is reported to have entered the 2022 annual budget of Beibu Gulf Property & Casualty Insurance and passed by the resolution of the shareholders' meeting.
Regarding the capital increase trend, Beibu Gulf Property & Casualty Insurance stated that it is to meet the expanding insurance business scale and solvency needs of Beibu Gulf Property & Casualty Insurance. But so far, there has been no substantial progress. However, in the 2022 annual report, Beibu Gulf Property & Casualty Insurance also bluntly stated that under the background of strict supervision, under the influence of factors such as the continuous impact of the epidemic on the economic downturn and the fact that state-owned assets and state-owned enterprises must not deviate from the main business, the company's capital increase and share increase work cannot form a substantial landing, which will have a certain impact on the company's expansion of business scale.
Blue Whale Insurance will continue to pay attention to the further performance and capital strength of Beibu Gulf Property & Casualty Insurance.