Yong ‘an Property & Casualty welcomes equity change, and three companies in Fuxing seek to quit.

Our (chinatimes.net.cn) reporter Wu Min reports from Beijing.

Yongan Property & Casualty, once known in the industry because of shareholder infighting, will usher in equity change.

On September 8th, Yongan Property Insurance issued two equity change announcements in official website. According to the contents of the announcements, part of the equity of Yongan Property Insurance held by four subsidiaries of "Fuxing Galaxy" was transferred to Shaanxi Caijin Investment Management Co., Ltd. (hereinafter referred to as "Shaanxi Caitou") and Shaanxi Credit Enhancement Co., Ltd. (hereinafter referred to as "Shaanxi Zengxin").

After the transfer is completed, three subsidiaries of "Fuxing System" will withdraw from the ranks of shareholders of Yongan Property Insurance, and only one subsidiary will continue to hold 14.68% equity of Yongan Property Insurance. Yongan Property Insurance said in the announcement that the above shareholder changes will take effect after being approved by Shaanxi Banking Insurance Regulatory Bureau.

The reporter of China Times contacted the relevant person in charge of Shanghai Fosun Group to interview the reasons for the above-mentioned equity change and what actions will be taken in the insurance sector. However, the other party only told the reporter of China Times that the project belongs to the normal business behavior of the company and is still under regulatory approval. Please refer to the company announcement for details.

Three companies in Fuxing system will quit.

Yong ‘an Property Insurance was established in 1996 and registered in Xi ‘an, Shaanxi Province. At present, the company has 18 shareholders, and state-owned shareholders such as Shaanxi Yanchang Petroleum hold a total of 52.49% equity of Yong ‘an Property Insurance.

Shanghai Fosun Group holds 40.68% equity of Yongan Property Insurance through its four subsidiaries, namely Yadong Shankong Venture Capital Co., Ltd. (hereinafter referred to as Shankong Investment), Shanghai Fosun Industrial Technology Development Co., Ltd. (hereinafter referred to as Fosun Industrial), Shanghai Fosun Industrial Investment Co., Ltd. (hereinafter referred to as Fosun Industrial) and Yadong Yihang Venture Capital Co., Ltd. (hereinafter referred to as Yihang Venture Capital).

Judging from the information on equity transfer disclosed by Yongan Property Insurance, Shankong Investment, Fosun Industry and Yihang Venture Capital respectively transferred 19.83%, 1.25% and 0.92% of their shares to Shaanxi Finance Investment; Fosun Industry and Fosun Industry respectively transferred their 2.5% and 1.4932% shares to Shaanxi Zengxin.

After the transfer is completed, Shaanxi Caitou and Shaanxi Zengxin, as new shareholders, will hold 22% and 4% equity of Yongan Property Insurance respectively. The three subsidiaries of "Fuxing Galaxy", Shankong Investment, Fosun Industry and Yihang Venture Capital, will withdraw from the ranks of shareholders of Yongan Property Insurance, and only one subsidiary of Yu Fosun Industry will continue to hold 14.68% equity of Yongan Property Insurance.

Li Wenzhong, deputy director of the Insurance Department of Capital University of Economics and Business, said in an interview with China Times: "A large number of equity transfers mean that the company’s structure needs to be adjusted, which may involve the company’s operation in the short term, but it may not have a significant impact on the company’s big development direction, because after all, the Shaanxi Provincial State-owned Assets Supervision and Administration Commission realized the actual control of the company."

It is worth mentioning that in addition to the above equity changes, there is also a small shareholder who has been seeking to withdraw from Yongan Property Insurance. On September 5, Xi ‘an Aircraft Industry (Group) Co., Ltd. (hereinafter referred to as "Xifei Group"), which holds 0.38% equity of Yongan Property Insurance, intends to publicly list and transfer on Beijiao Internet, the application platform of "online auction of physical assets" of Beijing Stock Exchange, and now it is publicized on the platform to find the intended transferee. The deadline for disclosure is September 5, 2022 to May 19, 2023.

As far as the transferee’s shareholder qualification requirements are concerned, Xifei Group holds less than 5% of the equity of Yongan Property Insurance, which belongs to financial Class I shareholders. The transferee’s shareholder qualification must meet the relevant provisions of the Measures for the Administration of Equity in Insurance Companies, and the final shareholder qualification must be reported to Shaanxi Banking Insurance Regulatory Bureau, otherwise it cannot handle industrial and commercial changes.

The reporter of China Times noticed that Xifei Group had twice listed and transferred its equity in Yongan Property Insurance as early as 2018, but no one cared. In Li Wenzhong’s view, the 0.38% equity transfer held by Xifei Group will not have a substantial impact on the governance structure of Yongan Property Insurance Company, and it is only a financial investment for buyers. Therefore, whether the transfer can be successful in the end mainly depends on the satisfaction of both parties with the transaction price. In the current relatively depressed insurance industry, investors may be more cautious.

Shaanxi state-owned assets have absolute control.

In fact, as a veteran property insurance company established in 1996, the problem of shareholder infighting in Yongan Property Insurance has been concerned by the industry. The two sides of the struggle are the Shaanxi State-owned Assets Supervision and Administration Commission and the "Complex Galaxy".

Looking back, in 1997, the registered capital of Yongan Property Insurance was 680 million yuan, but the amount of shareholders’ contribution was less than 100 million yuan, far from reaching the minimum limit stipulated in the Insurance Law. Therefore, it was announced that it was taken over by the central bank of the then regulatory department. The takeover also directly led the regulatory authorities to slow down the approval of insurance licenses.

In 1998, under the leadership of Shaanxi provincial government, several state-owned enterprises reorganized Yongan Property Insurance. However, the interest disputes between the old and new shareholders have also laid a hidden danger for the future equity disputes. In 2006, the three original shareholders of Yong ‘an Property Insurance asked the former CIRC to take over Yong ‘an Property Insurance administratively on the grounds of "more than half of the shares are controversial and the company has major operational problems".

Until 2007, Yong ‘an Property Insurance introduced state-owned enterprises such as Shaanxi Yanchang Petroleum and private capital such as Shanghai Fosun Group. With the blessing of two powerful shareholders, the development of Yong ‘an Property Insurance entered the "fast lane". At the end of 2007, the first round of capital increase was completed, and the registered capital reached 1,663.2 million yuan. In 2009, it achieved profitability. In 2010, the second round of capital increase was completed, with a registered capital of 2,663.2 million yuan and a net profit of 290 million yuan. The net profit in 2011 was 284 million yuan.

In September 2012, Jiang Ming from the Galaxy became the president of Yong ‘an Property Insurance. In December 2017, Jiang Ming, the president who had not yet changed, was suddenly dismissed, and the infighting of Yong ‘an Property Insurance was pushed to the front desk. At that time, Yong ‘an Property Insurance, headquartered in Xi ‘an, held an interim meeting of the board of directors for deliberation and decided to dismiss Jiang Ming as the president. On the same day, Tao Guangqiang, the chairman of Shaanxi State-owned Assets, was also proposed to dismiss the chairman. However, the dismissal of Jiang Ming was issued in the form of red-headed documents of Yongan Property Insurance, while the dismissal of Chairman Tao Guangqiang was issued in the form of joint signatures of senior executives, and the war between the chairman and the president was imminent at that time.

The sudden "game of thrones" made people in the industry confused. Until January 2019, a ticket issued by China Banking and Insurance Regulatory Commission restored what happened on the day of the board of directors of Yongan Property Insurance. According to the content of the ticket, Yongan Property Insurance decided to hold an interim meeting of the board of directors at 9: 00 am on December 6, 2017, and planned to review the Proposal on Dismantling the President (General Manager) of Comrade Jiang Ming Company. In the end, Yongan Property Insurance was fined 500,000 yuan for refusing or obstructing supervision and inspection according to law.

Li Wenzhong told the reporter of China Times: "The phenomenon that shareholders of insurance companies compete for dominance will have a certain impact on the company’s operation. First of all, it will make the internal coordination of major decisions of the company difficult, reduce the efficiency of decision-making, and even make decisions impossible, which will affect the strategic positioning and development direction of the company. Secondly, the struggle between shareholders will also affect the enthusiasm and initiative of insurance company executives and employees, making the company perform poorly in the market. Thirdly, the struggle between the shareholders of insurance companies will also lead to the public’s concern about the company’s development, which is not conducive to the company’s financing and business development. "

However, Shaanxi Finance Investment and Shaanxi Zengxin, which took over the equity of Yongan Property Insurance held by four subsidiaries of Shanghai Fosun Group, are inextricably linked with Shaanxi SASAC. Among them, Shaanxi Finance Investment is a 100% owned subsidiary of Shaanxi Provincial Department of Finance, and the shareholders of Shaanxi Zengxin are 16 large state-owned enterprises and financial institutions such as Shaanxi Jinzi and Shaanxi Finance Investment. This means that Shaanxi State-owned Assets Supervision and Administration Commission has further strengthened its controlling stake in Yongan Property Insurance.

In the first half of this year, Chang Lei, the newly appointed chairman of Yongan Property Insurance Company, was also "born" in Shaanxi State-owned Assets. According to public information, Chang Lei had previously served as the risk director and deputy general manager in Shaanxi Financial Asset Management, and concurrently served as the chairman of Shaanxi Zengxin.

With the partial withdrawal of subsidiaries of Galaxy, the shareholding ratio of Shaanxi state-owned assets is further concentrated, which may also mean that Yongan Property Insurance will "reconcile" with the past. Li Wenzhong told the reporter of China Times that the new shareholders of Yongan Property & Casualty have already expected the current shareholding structure, which will be more conducive to the formulation and implementation of the company’s management decisions and daily management, and promote the company’s long-term stable development.

Editor in Charge: Meng Junlian Editor in Chief: Zhang Zhiwei