China Taiping Insurance to Sell P&C Subsidiary

China Taiping Insurance Holdings Co. Ltd. said it expects to generate a profit of about 924.78 million yuan (US$137.7 million) from the sale of its indirect 100% owned nonlife subsidiary Ming An China.

The transaction, with an offer price of more than 1.54 billion yuan, will be conducted through a public auction on the Tianjin property rights exchange in China pursuant to the Requirements Governing the Transfer of State-owned Assets of Financial Enterprises issued by the Ministry of Finance of China, said China Taiping Insurance Holdings in a statement. The insurer said the auction process will end on Oct. 25, 2010.

China Taiping has been working on a deal with an unnamed third party for the sale of Ming An since March, but a company spokesperson said the auction is a necessary regulatory procedure to proceed with the sale under the Ministry of Finance's rules.

The estimated profit generated from this transaction is based on the offer price of the public auction and the audited net asset value of Ming An China of 616.52 million yuan as at Dec. 31, 2009, said China Taiping.

Following the auction process, China Taiping Insurance (HK), a Hong Kong-incorporated limited liability company that is wholly owned by China Taiping that is the immediate sole shareholder of Ming An China, will enter into a formal sale and purchase agreement with the qualified purchasers.

Upon completion of the disposal, China Taiping "will cease to have any interest in Ming An China," said the company.

Business Restructuring

In March 2010, China Taiping Insurance Holdings agreed to sell its 100% stake in Ming An Insurance Co. (China) Ltd. to an unnamed third party, subject to due diligence and regulatory approvals. Both parties then agreed to extend the transaction to December 2010.

China Taiping said if completed, the proposed transaction will provide immediate cash inflows to the company together with a reasonable profit, and will resolve the Chinese regulatory ban on an insurance holding company having a controlling interests in more than one insurer operating in the same business line in mainland China (BestWire, March 17, 2010).

On Nov. 4, 2009, China Taiping completed its acquisition of Ming An (Holdings) Co. Ltd., the 100% shareholder of Ming An China. Ming An (Holdings) was formerly a Hong Kong-listed nonlife insurer and was delisted on Nov. 2, 2009, after the privatization of the company became effective on Oct. 30, 2009 (BestWire, Nov. 2, 2009).

China Taiping said in March 2010 that it intended to continue property/casualty insurance operations in China through its subsidiary, Taiping General Insurance Co. Ltd., upon completion of the transaction. Taiping General Insurance would continue to focus on traditional channels of distribution, while Ming An China would focus on direct marketing, said China Taiping (BestWire, March 17, 2010).

In addition, the board of directors of China Taiping said the name of the office building housing the registered office and administrative office of the company has been changed to China Taiping Tower from Ming An Plaza, effective from Aug. 30, 2010.

In the six months ended June 30, 2010, the insurance holding company reported profit after taxes of more than HK$948 million (US$122 million), up 12.9% from HK$840 million in the correspondent period of 2009.

(By Rebecca Ng, Hong Kong news editor: [email protected])