Author: Song Han
Producer: Global Finance
The downturn in the insurance market is also testing the patience of shareholders. This year, the number of equity transfer targets of insurance companies has increased. Despite the waning enthusiasm for capital, there were also entrants.
Recently, AVIC Groupama Property Insurance *** referred to as AVIC Groupama Property Insurance) was bid by Shudao Investment Group Co., Ltd. (hereinafter referred to as "Shudao Group") two months after its half equity was listed. After regulatory approval, the company will be transformed from an "aviation-based" joint venture insurance company to a local state-owned joint venture insurance company, and Sichuan is also the location of the company's base camp, and it is expected that the company will be more "Shu" in the future.
It can be expected that in the next half a year, there will be a major adjustment within the company, the senior executives of the AVIC Department have been gradually withdrawn after the decision to withdraw from the AVIC investment, and the new executives will presumably be dispatched by Sichuan, and the company's name change will be inevitable, and it is unknown whether the company's strategy will change greatly in the future.
On November 21, AVIC Groupama Property & Casualty Insurance, a Sino-foreign joint venture insurance company, issued an information disclosure announcement on the change of shareholders.
According to the announcement, the company's shareholder AVIC Investment Holdings*** hereinafter referred to as "AVIC Investment Holdings") will transfer 50% of the company's equity held by it on the Beijing Equity Exchange, and Shudao Group will obtain the transferred equity through bidding. The transfer has been approved by the Board of Directors and is currently undergoing a regulatory approval process.
As early as September, the Beijing Equity Exchange disclosed that AVIC Investment Holdings planned to transfer half of the equity of AVIC Groupama Property Insurance at a reserve price of 88.5 billion yuan. The foreign shareholder, UNITAMA Mutual Reinsurance National Corporation (hereinafter referred to as UNITA), waived the right of first refusal and the right of concomitant **.
From the listing of the project to the buyer's bidding, it took less than two months. After the completion of the transfer, Shudao Group will replace AVIC Investment Holdings as the new shareholder, and AVIC Investment Holdings will no longer hold the equity of AVIC Groupama Property Insurance and withdraw from its list of shareholders.
The new shareholder, Shudao Group, was established in 2021 and is a provincial state-owned enterprise established through the reorganization and integration of Sichuan Communications Investment Group Co., Ltd. and Sichuan Railway Industry Investment Group Co., Ltd. through a new merger. Its business covers four major sectors: highway and railway investment, construction and operation, related diversified industries, smart transportation, and integration of industry and finance.
Shudao Group already has an insurance brokerage license - Shudao (Sichuan) Insurance Broker*** If the equity transfer is approved, Shudao Group will win a property insurance license and expand its financial territory.
However, it remains to be verified whether the transfer will be approved by regulators. According to the Measures for the Administration of Equity of Insurance Companies, the shareholding ratio of a single shareholder shall not exceed one-third of the registered capital of an insurance company. 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.
Speaking of which, "AVIC" and AVIC Groupama Property Insurance have been holding hands for 12 years, why are they in a hurry to withdraw?
Founded in 2011, AVIC Groupama P&C Insurance is a national property insurance company jointly established by AVIC and Groupama Group, and is also the only joint venture insurance company operating policy-based agricultural insurance business in China.
In May 2021, AVIC transferred 50% of the company's equity to AVIC Investment Holdings, its financial holding platform.
In September 2021, the company decided to increase its capital in order to improve the solvency adequacy ratio of AVIC Groupama and support the continuous development of insurance business. AVIC Investment Holdings and Groupama of France each invested 1500 million yuan, increasing the registered capital of AVIC Groupama P&C Insurance from 1.1 billion yuan to 1.4 billion yuan. After the capital increase, the shareholding ratio of both parties will remain unchanged. In February 2022, the change of registered capital was approved by the regulatory authorities.
It has only been more than 2 years since AVIC Investment Holdings acquired the equity, increased capital in equal proportions and then went public.
In this regard, AVIC Investment Holdings said that the liquidation of equity is for the purpose of optimizing the financial business structure and focusing on serving the main business of aviation.
From the perspective of the industry, many insurance companies have the phenomenon of industrial capital to withdraw and **. For example, China Coal Energy Group transferred the equity of China Coal Property Insurance;State Power Investment Group transferred the equity of Yongcheng Property Insurance;PetroChina transferred 51% equity interest in Sino-Italian Property Insurance.
However, the SASAC's request to return to its main business is not a one-size-fits-all cutoff of all non-core businesses. In addition to the equity participation in the strategic holding or cultivation period, the state-owned enterprise shall withdraw from the inefficient and ineffective equity participation that has not paid dividends for more than 5 years, has long-term losses, and has been operating in a non-continuous manner, and withdraws from the equity participation investment that is seriously inconsistent with the responsibilities and positioning of the state-owned enterprise, does not have a competitive advantage, is risky, and is difficult to grasp the operating situation.
It is worth noting that during the period when AVIC Investment Holdings quickly liquidated the equity of AVIC Groupama Property Insurance, it also acquired 100% of the equity of an insurance brokerage company - Shanghai Whale Xi Insurance Brokers.
For AVIC Groupama P&C Insurance, the most direct change of shareholder formation may be the change of the company's name, and it is unknown whether the business cooperation with the original shareholder "AVIC" can be sustained, and whether its support can be as always. Moreover, subsequent equity changes are often accompanied by follow-up adjustments such as high-level personnel changes, corporate strategies, and business models.
In fact, although the "AVIC Department" holds half of the company's equity, there are few high-level personnel, and the personnel adjustment of AVIC Groupama Property Insurance has already emerged.
In February this year, the former chairman Yu Meng retired due to age, and the vice chairman Olivier Pequeux temporarily performed the duties of the chairman. It is worth noting that Chairman Yu Meng's qualifications were approved in April 2022, and it has only been more than a year since he stepped down.
Yu Meng, the former chairman of the board of directors, came from the "AVIC Department", and served as the general manager of AVIC Trust and the chairman of AVIC Capital Industrial Investment.
In the third quarter of this year, Wu Dapeng, deputy general manager and chief investment officer, who also belongs to the "AVIC Department", resigned. At present, among the five members of the board of directors of AVIC Groupama P&C Insurance, including the vice chairman, only two directors from the "AVIC Department" are Jia Hongpeng and Zhang Xiaoxu.
In other words, while planning for the exit of the shares, the withdrawal of personnel has already begun.
One of the reasons is that AVIC Groupama P&C Insurance has become an outcast, or its performance has not met expectations. Although it is escorted by AVIC, a large state-owned enterprise with strong strength, and Groupama, a foreign-funded company with rich insurance experience, its net profit level is not high, and even its annual profit has not exceeded 100 million yuan.
From 2012 to 2022, the company's net profit was 28010,000 yuan, 04.5 billion yuan, -11.8 billion yuan, 01.5 billion yuan, 02 billion yuan, 04.7 billion yuan, 03.5 billion yuan, 01.7 billion yuan, -13.4 billion yuan, 01 billion yuan, 0$1.8 billion. The company's profitability is not high and fluctuates. The two losses exceeded 100 million yuan, and the overall net profit in the past 10 years was a small loss.
In the first three quarters of 2023, the company achieved insurance business revenue of 259.3 billion yuan, net profit 00.5 billion yuan. In terms of quarters, the net profit in the first two quarters was in the red, and it was not until the third quarter that the loss turned into a profit.
At the same time, the scale of the company's insurance business income is not high, and it will not exceed 3 billion yuan until 2022. In the first three quarters of 2023, the year-on-year growth rate of the company's scale premiums was .07%, obviously the premium growth rate is insufficient.
From the perspective of the industry, the insurance companies that also take agricultural insurance as their main business, Guoyuan Agricultural Insurance, which has developed rapidly, has broken into the ranks of tens of billions of premiums, and the income level of Zhongyuan Agricultural Insurance, which was approved for capital increase in November and has similar profitability, has also reached 4 billion yuan.
In the first three quarters of this year, AVIC Groupama P&C Insurance achieved a total of 249.5 billion yuan. From the perspective of channels, the direct sales channel accounted for 7499%。From the perspective of insurance types, the top five types of non-auto insurance accounted for 4605%。The premium of car insurance accounted for 1635% is only 40.8 billion yuan.
As the only joint venture insurance company operating policy-based agricultural insurance business in China, agricultural insurance is naturally the fulcrum of its insurance business.
Taking 2022 as an example, agricultural insurance accounted for 7% of the premium income recorded in the company's underwriting business, accounting for 217.6 billion yuan. followed by motor vehicle insurance, which accounted for less than 2 percent, 57.1 billion yuan.
From the perspective of benefit indicators, as of the third quarter, the company's comprehensive cost ratio was as high as 9907%, which will break through the 100% profit and loss line. Among them, the comprehensive expense ratio is 1605%, with a comprehensive loss ratio of 8302%。Generally speaking, it is normal for the insurance liability of the project or the insurance product operated by the policy agricultural insurance to be extensive, the probability of loss of the insurance subject is large, and the loss ratio is high.
However, compared with the same industry, although the comprehensive cost ratio of Zhongyuan Agricultural Insurance and Guoyuan Agricultural Insurance is also high, it is more than 9%, which is 9540% and 9528%。It can be seen that the comprehensive cost ratio control of AVIC Groupama property insurance is more urgent, and there is a possibility of underwriting losses at any time.
From the perspective of solvency, the company is relatively sufficient. In the third quarter, the company's core solvency adequacy ratio and comprehensive solvency adequacy ratio were consistent at 26993%, up 3336 percentage points.
In the first three quarters, the company's investment performance was still far from the average level of previous years. The company's average investment return in the past three years is 306%；The average comprehensive investment return in the past three years is 253%。
In the first three quarters, AVIC Groupama P&C Insurance achieved a cumulative return on net assets of 042%, return on total assets 013%, return on investment 207%, comprehensive investment return 210%。
In addition, the internal control of AVIC Groupama property insurance is also worthy of attention.
In the first half of the year, several subsidiaries of the company were fined, and the reasons for the violations included false expenses, using insurance business to seek improper benefits for other institutions or individuals, and preparing false underwriting and claim materials.
Secondly, in the first half of the year, three responsible persons of the company received business ban penalties. Li Hailong and He Yanbo were banned for life for their main and direct responsibility for the illegal act of "inadequate internal control and management of agricultural insurance business, fictitious insurance subject matter, and false claims" of the Yan'an Central Branch of AVIC GroupamaBai Xinrong was directly responsible and was banned from business for 1 year.
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