ABC to spend $2.6 billion holding Jiahe life

The Chinese New Year has just passed, the largest in the country so far a bank to buy insurance company case fell hammer. February 11, 2011, in the 16-storey Sunshine Hall of ABC, Agricultural Bank of China Co., Ltd. (601288.　　SH/01288.HK, hereinafter referred to as ABC, held a signing ceremony for the subscription agreement with Jiahe Life Insurance Company Limited (hereinafter called Jiahe Life).　　According to the agreement, Jiahe life will be directed to the Agricultural Bank of 1.0367 billion additional shares, after the issuance of Agricultural Bank will hold 51% of the stake in Jiahe life, become the absolute holding shareholder of the Jiahe life.　　At the beginning of 2008, the State Council approved the joint report of the CBRC and CIRC on the issue of the shareholding of Commercial Bank investment insurance companies, and agreed that the bank should invest in the insurance company. Shortly thereafter, the CBRC approved the application of four banks of ICBC, CCB, Bank of Communications and Beijing Bank to take stakes in insurance companies.　　To last year, four banks have their respective gold Shengshishou, Pacific Aetna, in the Baokang, the first Aetna four insurance companies to buy to its own, and renamed to Work Bannsheng, Jianxin, Yin Kang Lian and the Sino-Dutch life.　　If the bank's acquisition of the Golden Harvest is finally approved, it will record the amount of transactions it buys from the insurer.　　According to the agreement, the additional price per share of 2.5 yuan, the Agricultural bank holding Jiahe life will be funded 2.59 billion yuan, more than the first four banks to acquire the amount of insurance companies.　　The company's business is larger than the four companies previously bought by banks and promoted to the largest banks.　　The total amount of over $2.5 billion subscribed to the "financial" reporter disclosed that the Jiahe life will be 2.5 yuan per share of the price to the Agricultural Bank of the direction of additional, after the issue, AgBank will hold a 51% stake in Jiahe life. Public information shows that the company was established in December 2005 with a registered capital of 996 million yuan, five shareholders for Beijing Zhongguancun Science City Construction Co., Ltd., Chongqing International Trust Limited, China New Era Co., Ltd., China Sigma Co., Ltd., Shanghai Ahn Shang Industrial Co., Ltd.　　Held 199.2 million shares respectively, each accounted for 20%.　　Caijing reporter learned that ABC has hired CICC as financial advisor for the deal.　　An executive of a joint venture life insurance company said that it would be good to offer more than 2.5 yuan in price, higher than the previous ICBC stake in Jinsheng Life, the original shareholder of Jiahe Life, the equivalent of six years of investment income more than one times. A Chinese-funded insurance company Actuary said that the 2.5 yuan of Jiahe life insurance issue price more reasonable.　　For any one of the heart of a Chinese life insurance company, its valuation will be much better than the foreign life insurance companies, so the acquisition price higher than Jinsheng life is also reasonable. Compared with the established insurance company in the same period, Jiahe life's operating performance is in the middle. 2010 Jiahe Life Insurance premium income of 4.52 billion yuan, ranked 17th in the Chinese Life Insurance Company, was established in February 2005 to all longevity, 2010 income is 7.72 billion yuan, and the same September 2005 intoThe Great Wall Life, 2010-year income is only 2.52 billion yuan. As of now, Jiahe life total assets of 17.6 billion yuan, has branches 268, has been in Beijing, Zhejiang, Liaoning and other locations to set up 15 provincial branches, under the jurisdiction of 71 Central branch companies, 178 marketing services.　　The number of provincial branches is lower than that of 26, more than 10 of the Great Wall life. "But the penalties that the Jiahe life suffered last year, as well as some irregularities in the operation, may reduce the price negotiations."　　Another Chinese life insurance company said.　　Established six years ago, the golden harvest Life of "national life" after the name change, registered capital changes, equity changes, as well as lawsuits and penalties, "a lot of trouble." In July 2010, the CIRC informed the case of the unit bribery of the Jiahe life Anshan Central Branch Company.　　The court sentenced Jiahe life insurance to a fine of $1.2 million, and the rest of the relevant persons were punished separately. In September 2010, the CIRC issued a further announcement that the golden Harvest had continued to violate the additional equity investments in the Four Seasons of 2008 and the first quarter of 2009.　　In accordance with the regulations, the CIRC decided to give the Jiahe life insurance a fine of $100,000 and give the general manager of the Asset Management department Shawkin warning of the administrative penalty.　　The acquisition of the golden Harvest is much faster than foreign investment, which then enters a few years of acquisitions with other banks and a shifting takeover target. According to "Caijing" reporter understands, this transaction is responsible for listing the former Agricultural Bank vice president Pan wins charge. People close to the deal told Caijing reporter that the two sides officially started contact about six months ago, and in October 2010, ABC began to conduct due diligence on Jiahe life. Since then, due diligence has only been done for one months. December, the two sides began substantive negotiations.　　To the Spring Festival about two weeks before the end of the negotiations, the transaction into Agricultural bank internal procedures. During the negotiations between AgBank and Jiahe life were smooth, the people close to the deal said that only last December, when the two sides were divided over the price of the issue, "Jiahe life was not satisfied with the price offered by ABC."　　"For the additional price, AgBank's major shareholder Treasury has also" had the opinion ", that" the price is high ", but still after the Spring Festival agreed to the subscription. AgBank's stake was only the first step, and another person close to the deal revealed that shortly after ABC announced its stake in Jiahe, the introduction of foreign strategic shareholder deals would start within a week.　　Several foreign insurers, including BNP Paribas Insurance, will subsequently take stakes in the new company as strategic investors, gain board seats and co-operate with the new company in business. At present "Jiahe Life's several old shareholders are grabs, which foreign capital opens the high price to whom, and these old shareholder's price is very tall."　　"The shares will be higher than the price of the bank's merger," the person said. But the reality is that these foreign companies are almost at the same time as ABC's at the bargaining table of Jiahe life. "The foreign investment has already been negotiated by the end of last December," people familiar with the matter saidThe specific contact time may be earlier.　　The reason why after the Agricultural Bank of China, a large Chinese-funded insurance company Deputy Manager analysis, so the design of trading steps, is obviously learned from the ICBC acquisition of the failure of the experience of Taiping Insurance, simplifying the acquisition process, the first to ensure that AgBank's holding acquisition, better through approval.　　As early as May 2008, Zhou Yanli, vice chairman of China Insurance Regulatory Commission, revealed at the Shanghai Lujiazui Forum that ICBC and Taiping Insurance "will have some real action in the near future", but the deal was eventually too complex to be released by the regulators. ICBC and China Insurance International (Taiping Insurance Group formerly known), Fortis Group trading arrangements, relative to the other three banks, the most complex investment plans. According to the trading arrangement, China Insurance International and Fortis Group first set up a joint venture company, wholly owned by the current Sino-Insurance International Holdings of Taiping Life, Taiping Insurance, Taiping Endowment and Taiping Assets management four companies.　　ICBC to the joint venture capital investment, and eventually ICBC and the international accounting for 43.5%, Fortis Group shareholding 13%. This time, the AgBank acquisition of Jiahe life, although already delineated foreign investment, but is divided into two steps.　　People familiar with the matter said the bid for foreign shareholders would be done in a week.　　The bank's insurance forces, though failed to become a pilot bank for the insurer in 2008, have long had the idea of insurance.　　Sources close to the bank told Caijing that the bank had already started to prepare its own insurance company, but was not allowed to operate in a mixed operation and had not been approved. AgBank has a big advantage over other banks in terms of consignment insurance. Agricultural Bank of China 2010 years reported that as of the end of June 2010, Agricultural Bank has more than 23,000 branches, "covering 100% of the provincial, 100% of the prefecture-level cities and 99.5% of the county district, is the only physical network to fully cover all large and medium-sized cities and counties market large-scale commercial banks."　　"Compared to the number of outlets, AgBank has more outlets than any other bank," he said. AgBank's ability to sell insurance is not to be overlooked. Agricultural Bank of China in 2010 years reported that the first half of 2010 ABC agency new single premium 65.9 billion yuan, agent premium business income of 2.667 billion yuan.　　Over the same period, ICBC Deputy personal insurance sales 51.4 billion yuan. Although from the current situation, the bank is the combination of insurance companies are big banks, small insurance, but the vast scale of the network is almost the bank of insurance companies with inherent advantages.　　This will cause pressure on the original agent business model of the insurance industry, but also help to change the bad ecology of the current bank-insurance cooperation. The sources close to the bank said that some of AgBank's outlets could act as a proxy for any insurer's products, but the banks had many problems in the sales of agency insurance because of exaggerated and overly publicized insurance companies and the communication between insurance companies and banks. "In the future, there should be a lot less problem with the company's products." "A Chinese insurer with a close relationship with ABC businessShigao said that AgBank's holding of Jiahe life, "may have a greater impact on our company, ABC is now our main proxy bank, the future of AgBank's own insurance companies to grow, our business will inevitably be affected." "Because most insurance companies and banks are not related to each other, in the multiple-agent model, banks to the insurance companies to request fees, or to seek additional rebate is widespread." This to a certain extent caused the sale of silver insurance once large area loss, market order confusion. In view of this, the CIRC and the CBRC have repeatedly made the rules.　　At present, the two sides are planning to introduce silver insurance business guidelines, rectification and management of the bank insurance market. Shueri, senior vice president of Swiss Reinsurance Asia, said in an interview with Caijing, "in the long run, banks and insurance companies" exclusive "or" semi exclusive "mode of cooperation will become a trend, the beginning of last year, several banks have been established insurance companies.　　More in-depth banking and insurance companies will bring more suitable products and better service to customers, so it is a good thing for insurance consumers. For the banks and insurers involved, the synergy in the financial sector has already been presented.　　In a short span of one year after the bank's shares were made, the premium income of the bank was increased from 2009 to 712 million yuan in 2010, and the premium income increased by more than 7 times times. (Our correspondent Maggie also contributed to this article)