Sino Life Insurance Mulls An Insurance Group

Sino life insurance Co. is expecting to grow into an insurance group that will operates property insurance, pension insurance and insurance sales units in addition to life insurance before launching an overall listing.

Sino Life Insurance, incorporated in March 2003, had CNY 56.6 billion total assets and CNY 50.679 billion liabilities as at November 30, 2011. It obtained CNY 22.21 billion premiums in the first 11 months of 2011, representing a year-on-year increase of 59.6%. Meanwhile, net profit totaled CNY 302 million.

The Shenzhen-headquartered life insurer takes it the top priority to build an insurance group, modeling on Ping An Insurance (Group) Company of China Limited, said a source. It will boost the development of existing life insurance and asset management business and will prepare for other business units, which are pending regulatory approval. Zhang Jun, chairman of Sino Life Insurance, said last September when Sino Life Asset Management Co. was opened, that Sino Life Insurance has applied to set up a property insurance company and an insurance marketing company, and that it was growing toward a financial conglomerate. The insurer also plans to set up a pension insurance company and a Hong Kong subsidiary of Sino Life Asset Management Co.

Yu Longhua, head of China Insurance Regulatory Commission Shenzhen Bureau, comments that Sino Life Insurance will probably become another version of Ping An Insurance (Group) Company of China Limited in coming 30 years.

As building an insurance group will take a long time, that means Sino Life Insurance will not be able to go public within one or two years as planned. One of its major shareholders Shougang Group in early 2012 put up its 552 million shares in Sino Life Insurance for minimum CNY 1.765 billion, which it bought at a consideration of CNY 180 million.

The vendor set February 1 deadline for applying to bid for the shares and asks that a buyer should subscribe for 551.712 million new shares in the life insurer at a price of CNY 1 per share. Shougang Group expects to take more efforts to boost its core steel production business, which is the major reason for the share sale. Chinese steel industry will be under huge pressure arising from high output, high stockpiles, high costs and less demands in 2012, forecast Zhu Jimin, chairman of Shougang Group. Thus steel makers will be exposed to more risks of thin profit or loss.

If Shougang Group can sell these shares at CNY 1.765 billion, the return on investment will be equal to 80% of its profit in 2011. The steel giant got CNY 246 billion operating revenue and CNY 1.89 billion profit last year.