Since the beginning of this year, many insurance companies have announced capital increases. Generally speaking, the main purpose of capital increase of insurance companies is as follows, including improving solvency, meeting regulatory requirements, introducing strategic or financial shareholders to carry out shareholder business, expanding business scope, expanding growth space, etc.
In particular, after the official implementation of the second phase of the C-ROSS project in 2022, the former China Banking and Insurance Regulatory Commission (CBIRC) has officially revised and improved the three-pillar framework for prudential supervision of the insurance industry. Affected by this, the demand for capital replenishment of insurance companies has become more and more intense.
According to the disclosure of the China Insurance Association and the State Administration of Financial Supervision, since the beginning of this year, more than double-digit insurance companies have launched or officially landed capital increase plans, with a total amount of more than 10 billion.
When taking stock of the capital increase of insurance companies since the beginning of this year, we found that some insurance companies need to increase their value because of business expansion, and some insurance companies have ushered in the capital increase of new shareholders and realized the "replacement" of the largest shareholder, and at the same time, state-owned assets have shown great interest in the capital increase of the insurance industry.
Today, we will take stock of the typical capital increase events in the insurance industry since the beginning of this year.
1
Centennial Life increased its capital by 110 million yuan, and the largest shareholder officially changed hands
On April 12, Centennial Life Insurance Co., Ltd. (hereinafter referred to as "Centennial Life") issued two consecutive equity change announcements to disclose the equity change of Centennial Life.
One of the announcements was a capital increase announcement, and the other was an equity transfer announcement, and with the landing of the two announcements, the fate of Centennial Life has also completely changed.
In the announcement of the capital increase, Centennial Life announced that the company would issue 110 million new shares, at a price of 1 yuan per share, and the company's registered capital would increase from 7,794.8 million yuan to 7,904.8 million yuan. According to the capital increase plan, the company's new registered capital was all subscribed by one new shareholder. After the capital increase, the new shareholder, Dalian State-owned Financial Capital Management and Operation Co., Ltd. (hereinafter referred to as "Dalian Jinyun Company"), holds 1.39% of the shares.
The 1.39% stake has changed the actual controller of Centennial Life, because immediately following the announcement of the capital increase, Centennial Life also issued an announcement on the transfer of shares. The announcement announced that Dalian Rongda Investment Co., Ltd. (hereinafter referred to as "Dalian Rongda Investment"), the original shareholder of Centennial Life, intends to transfer its 800 million shares of Centennial Life to Dalian Jinyun Company. After the completion of the share transfer, Dalian Jinyun Company holds 910 million shares of Centennial Life, accounting for 11.51% of the total share capital of Centennial Life, and Dalian Rongda Investment no longer holds shares of the company. After the change of shareholders, the shareholding ratio of Dalian Jinyun Company will increase from 1.39% to 11.51%.
The 11.51% stake in Dalian Jinyun also officially surpassed the 11.39% stake in Centennial Life held by Wanda Group, and the first Chinese-funded life insurance legal entity in Northeast China also ushered in the change of ownership of the largest shareholder.
Centennial Life has been a very hot topic in the industry in the past few years, because in the five quarters from 2022 to the first quarter of 2023, Centennial Life has suffered a huge loss of 3.75 billion, and it has lost all its profits in the seven years from 2015 to 2021 at one time.
In addition, while net profit has fallen sharply, Centennial Life's net worth has also shrunk rapidly. The data shows that at the end of the fourth quarter of 2021, the net assets of Centennial Life were still 8.166 billion yuan, but by the first quarter of 2022, it shrank to 4.405 billion yuan, and in the second, third and fourth quarters of the next year, its net assets were 4.958 billion yuan, 1.941 billion yuan, and 323 million yuan respectively, and in the first quarter of 2023, its net assets have turned negative, at -420 million yuan, and in just over a year, its net assets have shrunk by 8.586 billion yuan.
After the first quarter of 2023, Centennial Life has not released a solvency report, and we have no way of knowing its true operating situation, but as a long-established life insurance company, Centennial Life has contributed a lot of hot-selling products in the market, and its premium scale is also in the forefront of the industry.
However, the chaos of management and operation also caused the insurance company to fall into a quagmire for a while, and now it has officially ushered in the largest major shareholder, and we believe that the future operation and management thinking of Centennial Life is also expected to change, and the loss situation will improve.
Like Centennial Life, Cindat Life also welcomed new state-owned shareholders this year. On January 23, Wusan Zhongda Group issued an announcement on the progress of participating in the capital increase and investing in Xintai Life Insurance, stating that Xintai Life Insurance recently received the "Reply of the Zhejiang Supervision Bureau of the State Financial Supervision and Administration on the Change of Registered Capital and Shareholders of Xintai Life Insurance Co., Ltd." (Zhe Jin Fu [2024] No. 8) from the Zhejiang Supervision Bureau of the State Financial Supervision and Administration of the People's Republic of China, approving the change of the registered capital of Xintai Life Insurance Co., Ltd. to 10.204 billion yuan.
According to public information, this is the "package" of Zhejiang state-owned assets into Xintai Life, of which Wusan Zhongda and Hangzhou City Investment Group Co., Ltd., Hangzhou Xiaoshan Environment Group Co., Ltd., and Hangzhou Xiaoshan Qianjiang Century City Equity Investment Co., Ltd. plan to jointly increase capital and invest in Xintai Life, with a capital increase of no more than 9.374 billion yuan, and subscribe for 5.2 billion shares of Xintai Life, with a total of 51% of the shares.
From the perspective of shareholders, this is a typical case of a local government bailing out a local financial company.
Founded in 2007, Cindat Life has been in turmoil, and has since increased its capital several times, and by 2016, the registered capital was changed to 5 billion yuan. At the same time, most of the shares held by the top three shareholders of Xintai (47% of Zhejiang Yongli, 20% of Beijing Jiusheng and 15% of Zhejiang Huasheng) were pledged to Baoshang Bank. Baoshang Bank belongs to the "Tomorrow Department", and with the thunderstorm of the "Tomorrow Department", Cindat Life Insurance is once again in the whirlpool.
After that, in 2021, Cindat Life Insurance underwent another equity change, and Zhejiang Huasheng Logistics Co., Ltd., Zhejiang Yongli, and Lisi Group collectively withdrew from the list of shareholders of Cindat Life.
The entry of four state-owned shareholders also officially announced the end of the equity dispute of Cindat Life. In the future, we will continue to pay attention to Cindat Life.
2
Professional pension companies ushered in high-frequency capital increases, and business expansion became a key word
On April 10, Taikang Pension Insurance Co., Ltd. (hereinafter referred to as "Taikang Pension") disclosed that the company's shareholder Taikang Insurance Group Co., Ltd. (hereinafter referred to as "Taikang Group") intends to increase its capital by 2 billion yuan, and after the capital increase, the company's registered capital will increase from 7 billion to 9 billion yuan. It is worth mentioning that in September last year, Taikang Pension received a capital increase of 1 billion yuan from Taikang Group, and it had just been approved by the regulator.
The main reason why Taikang Group wants to make such a large and frequent capital increase in Taikang Pension is to meet the needs of Taikang Pension's business development and solvency.
According to the data, by the end of 2023, the company's cumulative insurance business income during the year was 26.016 billion yuan, an increase of 18.9% year-on-year, and the cumulative insurance contract liabilities were 62.501 billion yuan, an increase of 30.8% year-on-year. At the same time, after the capital increase, as of the end of the fourth quarter of 2023, Taikang Pension's core solvency adequacy ratio and comprehensive solvency adequacy ratio were 94.84% and 189.68%, respectively, which was significantly improved compared with the beginning of 2023.
In addition, Hengan Standard Pension has also seen a capital increase, according to the disclosure, Hengan Standard Pension increased the registered capital by 200 million yuan, from 200 million yuan to 400 million yuan. As the first joint venture pension insurance company in China, Hengan Standard Life is owned by Tianjin TEDA International Holdings (Group) Co., Ltd. and Aberdeen Group, each holding 50% of the shares. The capital increase of 200 million yuan is fully funded by Hengan Standard Life, and the equity structure remains unchanged after the capital increase.
In addition to the Taikang Group's capital increase in Taikang Pension last year, Taikang Pension also released a capital increase and share expansion project in Shanghai United Equity Exchange in September last year, with a proposed amount of funds to be raised not less than 1.075 billion yuan. After the completion of the capital increase and share expansion, the new shareholders of Taiping Pension will hold 10% of the shares, and the original shareholders will hold 90% of the shares.
According to estimates, the silver economy will become a new economic growth point in the mainland, and the scale of the silver economy will reach nearly 50 trillion yuan by 2050, accounting for 35% of total consumption. The 10 trillion level track is rare, and this is a track closely related to the insurance industry, so insurance companies will naturally spare no effort to target this track.
3
Zhuhai Huachuang increased its capital in Hengqin Life Insurance to break through the regulatory ceiling?
Special cases or recognized!
In March this year, Hengqin Life announced that the company's extraordinary shareholders' meeting approved the capital increase plan, which will increase the registered capital of 753 million yuan, which will be fully subscribed by the shareholder Zhuhai Huachuang Investment Management Co., Ltd. ("Zhuhai Huachuang") with a capital contribution of 1.581 billion yuan, and the registered capital will increase from 23.85 yuan to 3.137 billion yuan after the change.
After the completion of this capital increase, Zhuhai Huachuang Investment's shareholding in Hengqin Life Insurance has reached 49%, which also breaks through the regulatory requirement that the shareholding ratio of a single shareholder shall not exceed one-third of the registered capital of the insurance company. However, the Measures for the Administration of Equity of Insurance Companies also stipulate that if an insurance company needs to invest in the establishment or acquisition of an insurance company due to business innovation, specialization or group operation, there is no restriction on its capital contribution or shareholding ratio.
In addition, with the approval of the China Insurance Regulatory Commission, those who participate in the risk disposal of insurance companies, or whose equity is undertaken by a designated institution, are not subject to the restrictions on shareholder qualifications, shareholding ratios, and shareholding funds in the Measures.
Regarding the purpose of this capital increase, the relevant person in charge of Hengqin Life Insurance said that it is mainly for "capital replenishment and alleviation of solvency pressure".
At the end of the fourth quarter of 2023, Hengqin Life's comprehensive solvency adequacy ratio was 153.98% and its core solvency adequacy ratio was 119.68%, down 9.72 and 9.42 percentage points respectively from the end of the previous quarter.
However, judging from the real situation of Hengqin Life, we believe that solving the potential crisis of equity is also one of the purposes of this capital increase. According to the disclosure, 95 million yuan of the 400 million yuan shares of Zhongzhi Group, one of the shareholders of Hengqin Life Insurance, have been frozen, and at the same time, with the thunderstorm of the Zhongzhi system has become a foregone conclusion, will the remaining shares of Hengqin Life Insurance held by Zhongzhi Group continue to be frozen? or even evolve into a new crisis? We do not know. However, after this capital increase, Zhongzhi Group's shareholding in Hengqin Life Insurance decreased from 16.775% to 12.75%, and the impact was further reduced.
Therefore, whether from the perspective of business development or equity stability, Zhuhai Huachuang Investment is very important to the capital increase of Hengqin Life.
In addition to the above-mentioned insurance companies, since the beginning of this year, companies such as China United Life Insurance, Jintai Property Insurance, Changjiang Property Insurance and other companies have successively announced capital increase plans, basically for the purpose of improving solvency to cope with business expansion, and we will continue to pay attention to the capital increase events in the insurance industry.