News eDaily24 Aug 2017

China:Sino-Korea Life to double capital

| 24 Aug 2017

Hangzhou-headquartered Sino-Korea Life has received CIRC approval to double its registered capital to CNY1 billion (US$150 million), the company's first capital increase since it was formed in 2012.

It is expected that following the capital injection, the life insurer will improve its core solvency ratio to 350%-400%, compared to 133% at the end of June 2017 and 112% at the end of last year.

Sino-Korea Life has been making losses since its establishment in November 2012. Its financial losses have been growing, totalling CNY56.4 million for 2013, CNY73.6 million for 2014, CNY92.7 million for 2015 and CNY133.7 million last year. Further pressure was exerted on its solvency position with the implementation of the China Risk Oriented Solvency System (C-ROSS) last year. Its 1H2017 losses stood at CNY40 million.

According to insurance industry research, a new life insurer in general takes seven to eight years to break even, and 10 years for accumulated earnings to turn positive. However, a foreign life insurance venture would take about nine years to begin to post profits.

The insurer's gross premiums increased by 29% to CNY469.8 million in 2016 from CNY364.2 million in 2015. Its gross premiums for the first half of this year stood at CNY246.8 million. Sino-Korea Life operates mainly in Zhejiang Province. It started its first operations outside the province in January 2017 when it opened a branch in neighbouring Jiangsu Province.

Sino-Korea Life is currently owned 50% by Shanghai-listed garment and textile exporter, Zhejiang Orient Holdings and 50% by South Korea's Hanwha Life Insurance. Zhejiang Orient acquired its stake from the original Chinese partner Zhejiang International Business Group in May 2017. Zhejiang International Business Group is the controlling shareholder of Zhejiang Orient. The Zhejiang Provincial People's Government State-owned Assets Supervision and Administration Commission holds 100% of Zhejiang International Business Group.

It is reported that the change of local shareholders in Sino-Korea Life was part of a reorganisation of the province's state-owned sector that would make Zhejiang Orient a financial services holding company.


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