Insurance giant set up electric business subsidiary: "Burn Money" in the short term

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With the gradual rise of network sales, the insurance giants have "smashed the money" to set up a subsidiary of the Electric Company, behind is to win the possible long-term huge gains.

Xinhua Insurance recently issued a notice that the Board agreed to set up a wholly-owned subsidiary of Xinhua Electronic Commerce Co., Ltd. (tentative name), registered capital of 100 million yuan, provisionally registered for Beijing.

Xinhua Insurance Personage said, at present this matter just in the motion is passed the stage of the board of directors, still need CIRC approval, therefore inconvenient to comment. The announcement is nothing more, but the insurance giants ' determination to put their money into electronic commerce is clear.

Heavy investment in electronic commerce

More than a year, more than a Xinhua insurance company to set up an E-commerce subsidiary. According to China's Tai Bao official website information, January 2012, the Chinese Tai Bao (601601.sh,02601.hk) set up a wholly-owned subsidiary of Pacific Insurance Online Services Technology Co., Ltd., registered capital of 50 million yuan; July 2012, China Taiping (00966.HK) The establishment of Taiping Electronic Commerce Co., Ltd., registered capital is also 50 million yuan. According to China Taiping, its parent company, China Taiping Group, provided nearly 500 million yuan loan to China Taiping, its listed company, for 3 years, at a rate of HK interbank interest rate plus 2.1%. The money will be spent on China's peaceful business development and operating capital, including the establishment of e-commerce companies in China. In the future, it is possible for Taiping electric power to further increase its capital according to its business plan. And similarly, China Ping ' an (601318.sh,02318.hk) Alibaba, Tencent set up an online property insurance company, of which China Ping An equity ratio of 15%.

In addition, more insurance companies have set up a network marketing channel departments, set up online sales page or with Taobao, Cat, Suning easy to buy and Jingdong Mall and other electrical cooperation to participate in this "new battlefield." and similar countries in Taobao last year to create a cost-effective platform for 3 days over billion of sales, making the network platform by small and medium-sized insurance companies as the key to pry performance of the important channel.

"For insurance companies, a risk, silver and other traditional channels have been close to saturation, a risk marketing staff face increase, retention difficulties, and the bank insurance channel by the new deal continued to be suppressed, and by the rising of the ' bank ' insurance companies squeeze, can be described as ' before interception, after the pursuers '. Therefore, the demand for insurance companies to develop new channels is urgent, and the network because of its convenience and technology to become an insurance company's channel ' new favorite ' is understandable. "A senior insurance industry analyst told our correspondent.

and new channels such as net sales and electric sales are becoming more and more important in the business income ratio of insurance companies. Take the Chinese Tai Bao as an example, its 2012 annual report shows that its electricity sales, net sales and cross-selling and other new channel business revenue accounted for the property insurance business income of 18.6%, up 6.7% year-on-year.

The "deep pockets" of insurance giants seem to favour more independent subsidiaries than the small and medium sized insurers. China Taiping Group said that Taiping Electronics to the current group and the 4 subsidiaries of the website integrated into a unified China Taiping network, through the provision of professional e-commerce marketing Management Services, integrated Innovation Group of the subsidiaries of the customer resources, product strategies, sales channels. Its establishment helps to realize the resource sharing, cost control and management optimization in the group, which can avoid duplicate construction, eliminate internal resource competition and realize the maximization of benefit.

Short-term returns are not obvious

"However, in the current situation, the insurance companies in the short term is still in the" burning money "phase, the proceeds will not be too obvious. "Senior analysts at the insurance industry said. China Taiping 2012 Annual report shows that Taiping E-commerce business 2012 years of operating net loss of HK $49.61 million. "Just like ten years ago, we would not think of Taobao, Jingdong will be so successful, the insurance companies now hit the heavy investment in the electricity business Channel, which is in the ' bet ' ten years after the electricity business channel may bring huge profits." And if you look at it 10 years from now, it's probably not as big an investment as it is for earnings. To the net sale market, the whole industry is generally still more optimistic. The analyst said.

However, it is noteworthy that the Xinhua Insurance Bulletin said that in this investment E-commerce company's motion, Xinhua insurance Director Mengching abstained, the reason for "the company should be E-commerce Company's development path, upfront investment and business risk to do more in-depth research." ”