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China Taiping Insurance (HK) Company Limited is selling out 100% stake in the Ming An Insurance Company (China) Limited on the Tainjin Property Rights Exchange for CNY 1.541 billion, a deal which is estimated to bring at least CNY 920 million profit.
The vendor is a wholly-owned subsidiary of China Taiping Insurance Holdings Company Limited (CTIH). The stake transfer comes out of CTIH’s integration of property insurance business. In addition to Ming An Insurance, CTIH owns 50.05% stake of Taiping General Insurance Co., Ltd. So the disposal of Ming An Insurance can avoid competition against Taiping General Insurance in the same sector.
Ming An Insurance last year got CNY 1.095 billion in turnover and minus CNY 103 million in net profit. It had CNY 1.996 billion total assets and CNY 1.38 billion debts as at the end of 2009. Owners’ equity was CNY 617 million.
The insurer’s fast expansion in recent two years caused sharp increase in operating costs, which was a major reason for the loss last year. It has already set up 19 second-level outlets in Shenzhen, Hong Kong, Hainan, Guangdong, Beijing, Shanghai, Jiangsu, Sichuan and Liaoning.
To reduce the loss, it became much stricter with underwriting in 2009, which directly reduced the claim rate, and strengthened cost control as well.
Ming An Insurance’s nationwide property insurance license, especially automobile insurance license, makes its stake attractive to potential buyers. A person from the Tianjin Property Rights Exchange confirmed quite a few institutions have expressed intent to take over the stake.
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