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Minsheng Life gets nod for capital injection

By Hu Yuanyuan (China Daily)
Updated: 2007-04-20 08:42

Minsheng Life Insurance Co has received shareholder approval to boost its registered capital from 873 million yuan to 3 billion yuan, a source told China Daily yesterday.

The capital injection, which was backed by 99.3 percent of Minsheng's shareholders, will strengthen the insurer's solvency, quicken its geographic expansion and pave the way for its listing.

The company will issue 1.83 billion shares to current shareholders soon, the source said. A plan to offer 80 million shares to key staff was also approved at the general meeting, the source said.

He said Minsheng Life plans to set up three new branches this year, in addition to its 10 existing ones. "We'll look at areas that haven't been exploited by our rivals," the source said.

Minsheng Life was set up in 2002. Around 80 percent of its 21 shareholders are from the private sector. Its largest shareholders include New Hope Group (15.5 percent), Wanxiang Group (13.7 percent) and Fanhai Group (13.7 percent).

Shareholders had been debating about whether to increase the capital base and bring in foreign strategic investors since early last year.

Boosting capital has been at the top of Minsheng Life's agenda as its business grows.

Some shareholders were unwilling to pour in more money, not confident of areturn on investment. And many didn't want their shares diluted through the issue of more shares.

But the insurer's improved performance, the insider said, has prompted a turnaround in attitude by shareholders.

Minsheng Life's premium at the end of December was 1.14 billion yuan, a jump of 75 percent on the previous year, according to statistics from theChina Insurance Regulatory Commission.

And in the first quarter, Minsheng's premiums tripled on a yearly basis, hitting 610 million yuan at the end of March.

This capital injection will bring a temporary halt to Minsheng's plans to pursue foreign strategic investors, according to experts.

International Finance Corporation(IFC) officials held meetings with Minsheng's chairman and president last September and October. After several rounds of negotiation with the IFC, Minsheng's top management sent a document to its major shareholders in November seeking approval to bring the IFC in as a foreign strategic investor.

But opinion was divided and the plan didn't go through.

(China Daily 04/20/2007 page14)