The insurance market is a blue ocean, but the insurance competition is a red ocean. If shareholders enter the market impulsively, they may be burned with lust, and in the face of long-term insurance, once they are unable to increase their capital, they may not only trap the insurance company but also harm themselves.
On June 27, a shareholder of Beijing Life Insurance was listed on the Beijing Equity Exchange to transfer all the shares it held. Judging from public information, the shareholder is the Investment Management Center of Beijing Supply and Marketing Cooperatives (hereinafter referred to as "Beijing Supply and Marketing Cooperative"), one of the three largest shareholders of Beijing Life Insurance, with 400 million shares transferred, accounting for 13.986% of the total share capital, and a reserve price of 817,761,420 yuan.
The disclosure of the transfer information is from June 28, 2024 to July 25, 2024. Judging from the announcement, after the expiration of the information release period, if the intended transferee is not solicited, the information disclosure content will be extended according to a cycle of 5 working days until the intended transferee is collected. From this point of view, the determination of Beijing supply and marketing cooperatives to withdraw is quite firm.
In fact, in recent years, affected by factors such as capital market fluctuations, continuous decline in interest rates, and the return of state-owned enterprises to their main business, more and more local insurance companies have changed their equity, and many local state-owned assets are also trying to withdraw from the non-main business sector. Regarding the transfer of the equity of Beijing Life Insurance held by the Beijing Supply and Marketing Cooperative, it had previously happened in the Beijing Equity Exchange.
From partial to full transfer
Judging from the listing information, other shareholders of Beijing Life Insurance have given up the right of first refusal, and the 400 million shares of Beijing Life Insurance held by Beijing Supply and Marketing Cooperatives (accounting for 13.986% of the total share capital) have been registered as pledged on June 14, 2024, and the pledgee is the Beijing Xuanwu Branch of the Agricultural Bank of China, and the written consent of the pledgee has been obtained for this equity transfer.
It is not surprising that the Beijing Supply and Marketing Cooperatives are determined to withdraw this time, and there was a similar operation three years ago.
In May 2021, Beijing Supply and Marketing Cooperatives listed and transferred 142,714,142 shares of Beijing Life Insurance held by Beijing Equity Exchange for the first time, accounting for 4.99% of the total equity, with a reserve price of 361,580,500 yuan.
On November 28, 2023, Beijing Supply and Marketing Cooperatives pre-disclosed information on the Beijing Equity Exchange that it would list and transfer all the shares it held in Beijing Life. "A Smart Insurance" has also analyzed:
November 30, 2023
The major shareholder of Beijing Life Insurance intends to change: if it withdraws, it may remove a major obstacle to capital increase and share expansion
It should be noted that in addition to the Beijing Supply and Marketing Cooperative, Beijing Life Insurance also has shareholders who have also planned to withdraw. For example, Beijing Hanjian Group Co., Ltd. (hereinafter referred to as "Hanjian Group"), the joint largest shareholder of Beijing Life Insurance, proposed to withdraw, but later in the process of equity transfer transactions, it went to court with Xiamen Gangyi Group Co., Ltd. and Xiamen Junchuang Investment Co., Ltd., the intended transferees, due to disputes over the development of equity acquisition, loan contracts and share pledge contracts, and the equity of Beijing Life held by Hanjian Group was also frozen or pledged.
In addition, in 2021, China Geothermal Energy Industry Development Group Co., Ltd. (now renamed "China Hengyouyuan Development Group Co., Ltd.") also announced that its wholly-owned subsidiary, Hengyouyuan Investment Management Co., Ltd., signed an equity transfer agreement with Beijing Rungu Investment Co., Ltd., and Hengyouyuan intends to sell its 4.99965% stake in Beijing Life, with a total of 143 million shares at a price of 237 million yuan. Later, this equity transfer was also lost.
Frequent public transfers, rarely landed
On the road to equity transfer, Beijing Life Insurance is not alone.
For example, in January this year, China Coal Energy Group Co., Ltd. (hereinafter referred to as "China Coal Energy Group") once again listed on the Beijing Equity Exchange to transfer 100 million shares of China Coal Property Insurance (accounting for 8.2% of the total share capital), with a proposed transfer reserve price of 91.55232 million yuan. However, from the current point of view, this equity transfer is still ongoing, and China Coal Energy Group is still among the shareholders of China Coal Property Insurance.
On January 11, SINOMACH Finance Co., Ltd. (hereinafter referred to as "SINOMACH Finance") was listed on the Shenzhen Stock Exchange to transfer 20 million shares of Guoren Property Insurance held by it, accounting for 0.499% of the total share capital, with a reserve price of about 16.484 million yuan. This part of the equity was transferred in October 2023, and the reserve price of the transfer at that time was 18.3155 million yuan. That is to say, SINOMACH Finance is transferring its equity in Guoren Property Insurance at a discount, even so, the equity transfer has not been fruitful so far.
On April 23, China Huadian Group Capital Holdings Co., Ltd. (hereinafter referred to as "Huadian Capital") listed and transferred its 7.6% stake in Yongcheng P&C Insurance on the Beijing Equity Exchange, which is the second time that Huadian Capital has listed and transferred the equity of Yongcheng P&C Insurance on the Beijing Equity Exchange, the last time was in December 2022. At present, this part of the equity is still in the pre-disclosure stage, and there is still great uncertainty about the outcome.
On May 14, Xi'an Yuhua Technology Investment Co., Ltd. listed and transferred 0.3755% of the equity of Yongan Property Insurance held by it on the Beijing Equity Exchange, with a reserve price of 22 million yuan. However, as of now, the transfer has not been successful.
In addition to the public listing on the property rights exchange, there are also insurance companies whose equity is auctioned on the auction platform, such as the 55 million shares of Guobao Life held by Shanghai Mengcheng Yunhe Technical Service Co., Ltd. will be publicly auctioned on the Ali judicial auction platform on July 26, with a starting price of 64.35 million yuan, which accounts for 2.78% of the total share capital of Guobao Life. Although it has not yet been officially auctioned, judging from the previous situation, the equity of Guobao Life Insurance has suffered the embarrassment of unsuccessful auction.
Behind the unsuccessful equity transfer cases, it may reflect the current situation of the equity of small and medium-sized insurance companies.
Judging from the above cases, most of these insurance companies are local insurance companies, and most of the shareholders who want to withdraw are central enterprises and state-owned enterprises. The reasons behind the analysis may be related to the acceleration of the return of central enterprises and state-owned enterprises to their main businesses and the initiative to clear their non-main business investments. However, the reform of state-owned enterprises has encountered a recession in the capital market, and the insurance industry is in a period of transition, while the operating pressure is increasing, further capital support is needed, which may be another important reason for shareholders to leave.
Led by local state-owned assets, it is expected to resolve risks
It is true that compared with large insurance companies, small and medium-sized insurance companies have more difficulty in equity transfer, capital increase and share expansion, which is not only related to their own attractiveness, but also related to regulatory thresholds. However, there are still some local insurers who are fortunate to have reversed their fortunes while ushering in capital. For example, Centennial Life Insurance, Xintai Life Insurance, and Groupama Property Insurance have ushered in the blessing of local state-owned assets.
On April 12, Centennial Life announced that it plans to increase its capital by 110 million yuan, which will be funded by Dalian State-owned Financial Management, and after the completion of the capital increase, Dalian State-owned Financial Management will hold 1.39% of the equity of Centennial Life. At the same time of the capital increase, Dalian Rongda intends to transfer all the shares of Centennial Life to Dalian State-owned Financial Management free of charge, and after the completion of the equity transfer, Dalian Rongda will withdraw, and Dalian State-owned Financial Management will hold 11.51% of the equity of Centennial Life.
At present, this capital increase + equity transfer has been approved by the regulator, and the registered capital of Centennial Life has been changed from 7.795 billion yuan to 7.905 billion yuan, and Wanda Group, which once wanted to withdraw, has retreated to second place. Centennial Life, which has been blessed by local state-owned assets, has also ushered in a new "general" combination, and Centennial Life has given the market new expectations.
Another insurance company that has received the blessing of local state-owned assets is Cindat Life Insurance. It is reported that on June 14, the regulatory exposure restored the equity chaos of Xintai Life, and the existence of illegal shareholders made Xintai Life in various difficulties, but fortunately, in 2023, Xintai Life Insurance and other state-owned enterprises in Zhejiang Province such as Zhongda and other properties, coupled with the support of the Insurance Security Fund and the Deposit Insurance Fund, Xintai Life Insurance has thrown away a lot of "burden".
The above two insurance companies are considered risk insurance companies, and local state-owned assets have entered, which has resolved or reduced the risk factors to a certain extent. It is not easy for the two insurance companies to win the support of local state-owned assets.
The changes of Groupama P&C Insurance are different from those of the above-mentioned insurance companies. In September 2023, AVIC Investment Holdings Co., Ltd. listed on the Beijing Equity Exchange to transfer its 50% stake in Groupama Property Insurance (formerly AVIC Group) on the Beijing Equity Exchange, and within two months, Groupama Property Insurance found a new capital, namely Shudao Group, a state-owned enterprise in Sichuan Province. Soon, the regulator also approved the equity transfer, and Groupama P&C welcomed a new Chinese shareholder.
From the transfer of equity to the finding of an intended receiver, to regulatory approval, company name change, etc., the changes of Groupama P&C Insurance have been relatively smooth. Behind this, it is not unrelated to the support of local governments and the direction of national encouragement.
At present, the major shareholder of Bohai Life Insurance is also carrying out the equity transfer and delivery. In the face of increasing capital demand, there are still a number of small and medium-sized insurance companies that may be on the way to equity transfer.
Just as some people spend impulsively, social capital is not. When the insurance license was hot, everyone thought that insurance was a blue ocean, a place of gold nuggets, but they knew little about the insurance industry and the operation rules of the insurance industry, and rushed in. The insurance industry, which is faced with continuous capital demand, is often in a dilemma, and it will also affect the normal capital increase of insurance companies, which has happened many times in the insurance industry.
In order for the insurance industry to truly grow healthily, it is not enough to have executives who understand insurance, and shareholders who understand the laws of insurance operation may be more important, so that it is possible to operate and invest for a long time, and obtain sustainable and stable income.