China Construction Bank(601939.SH) said on August 21 that it had gained approval from the board to inject about CNY 2.89 billion into Jianxin Life Insurance Co., Ltd.
According to people close to the biggest Chinese real estate and mortgage lender, it is only a part of the capital injection and the total sum will hit about CNY 6 billion. This just goes with the figure Zhao Fugao, president of the life insurer, disclosed in an interview on the day. Prior to serving as head of the insurer, Zhao mainly took charge of personal deposits and investment at CCB.
Jianxin Life was formally established in Shanghai on July 22 this year with a registered capital of CNY 800 million and CCB acts as its biggest shareholder through controlling a 51 percent stake in it. China Life Insurance Co., Ltd. (2823.TW) serves as its second biggest shareholder via holding a 19.9 percent stake. China Jianyin Investment Securities Co., Ltd. a subsidiary of CCB, acts as its third biggest shareholder through holding a 19.35 percent stake. Shanghai Jin Jiang International Investment Management Ltd. and Shanghai Sunlight Investment Co., Ltd. each has a 4.9 percent and a 4.85 percent stake in the insurer, too. CCB will inject about CNY 2.89 billion into the insurer and provided that the target's other shareholders do not want to see their stake in the insurer to be diluted, they will have to inject a total of about CNY 2.81 billion into the insurer in the meantime.
Currently, registered capital of all life insurers in the Chinese market is not more than CNY 5 billion, thus an injection of about CNY 6 billion is quite huge. In industry observers' opinion, it to some extent shows CCB's great ambition for the nation's life insurance market as the expanded registered capital will allow Jianxin Life to edge into the nation's top life insurers list.
Actually, it has become a trend for commercial banks to buy into insurers in the Chinese market as personal marketing cost rises. Notably, this is proved to have brought huge benefit to insurers. For instance, BoCommLife Insurance Co., Ltd., controlled by Bank of Communications (BoCom, SHSE: 601328 and SEHK: 1328), was established on January 28, 2010 and witnessed premium revenue reach CNY 138 million in February that year, compared to about 5.49 million a month ago. The strong momentum continued in the year and the premium revenue it booked for the whole year was up over seven times from a year ago.
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