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Agricultural Bank of China Actions Share Issue For Control Of Jiahe Life

Posted on Feb 14, 2011 by Sergio Ulloa ()

The Agricultural Bank of China Ltd, China's third largest bank, has announced that it plans to acquire new shares to enable it to take a controlling 51 percent stake in the Jiahe Life Insurance Company Ltd. The subscription for new shares will amount to approximately 2.59 billion yuan (US$393.2 million). The Agricultural Bank of China's Board of Directors approved the bid for the Beijing based Jiahe Life Insurance Co. Ltd as it embarks on strengthening its position in the substantial Chinese insurance market. The bank released a statement via the Hong Kong Stock Exchange stating that it plans to subscribe to 1.04 billion new shares to be issued by the Jiahe Life Insurance Company, which will provide the Agricultural Bank of China with a sufficient stake to enable it to take a controlling interest in the established Chinese insurance company. Following the banks acquisition of the 51 percent majority shareholding, the existing five shareholders in Jiahe Life - Beijing Zhong Guan Cun Science City Construction Holding, Chongqing International Trust, China New Era, China Sigma, and Shanghai An Shang Industrial - will each hold a 9.8 percent stake in the life insurer. Jiahe Life Insurance was created by a group of Chinese companies in 2005 and since its inception has established a network across 15 Chinese cities. The Beijing based insurer offers life, health and medical, and accident insurance products to consumers in China. The insurers total assets reached 17.6 billion yuan (US$2.6 billion) by the end of last year and its premiums amounted to 4.52 billion yuan (US$685 million) in 2010. The Agricultural Bank of China's board voted unanimously to proceed with the proposed purchase of new shares to enable the takeover of Jiahe Life Insurance to proceed. The deal is still subject to formal approval from China's financial service regulator - the China Insurance Regulatory Commission (CIRC). The Chinese insurance market has become a pivotal sector for insurers looking to gain premium growth, linked to the prodigious expansion in the Chinese economy. The Agricultural Bank of China floated on the Hong Kong and Shanghai Stock Exchanges in 2010 for an initial public offering (IPO) of US$19.2 billion; this made it the world's largest first-time share sale. The action by the bank enabled it to cement its presence as a global financial institution as world financial markets returned to stability after the 2007-2008 global financial crises. The Agricultural Bank of China's acquisition of a 51percent stake in Jiahe Life Assurance follows similar deals completed in 2010 with ICBC's (Industrial and Commercial Bank of China) - China's biggest bank - purchase of a 60 percent stake in the French/Chinese JV - AXA Minmetals, the Bank of Beijing's acquisition of a stake in ING Capital Life and the Bank of China's action to obtain a 25 percent share in Heng An Standard Life. These developments followed the Chinese government's easing of restrictions and regulations in September 2009 affecting banking sector involvement in the insurance business in China. Companies Mentioned: Agricultural Bank of China Agricultural Bank of ChinaThe Agricultural Bank of China Limited is engaged in offering services in the areas of international banking, personal banking, corporate banking, treasury operations and e-banking. The bank offers financing and other financial services including commercial banking, deposits, loans, wealth management, cards, and foreign exchange services to customers across China. Jiahe Life Insurance Company Jiahe Life Insurance CoJiahe Life Insurance Company Ltd was founded in China in 2005 and offers life, health, medical, and accident insurance products. The company has 15 subsidiaries nationwide.
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