Photo/Shetuwang

Nov. 27 (NBD) -- French multinational insurer AXA announced Tuesday (Beijing time) that it had entered into an agreement with the current five domestic shareholders of AXA Tianping Property & Casualty Insurance Company Ltd ("AXA Tianping") to acquire the remaining 50 percent stake in the joint venture.

The transaction reflects the will of both foreign and domestic shareholders, Shanghai-based billionaire investor Liu Yiqian, Chairman of the Board at Hubei Biocause Pharmaceutical Co Ltd, said to financial news outlet quanshangcn. Hubei Biocause is one of AXA Tianping's shareholders. 

Total consideration for the deal will amount to 4.6 billion yuan (662.2 million U.S. dollars). Of that, 1.5 billion yuan (215.9 million U.S. dollars) should be financed through a capital reduction of AXA Tianping to buy back shares from the current domestic shareholders, according to AXA's statement.

Both the stake acquisition and capital reduction are subject to the approval of the China Banking and Insurance Regulatory Commission. 

Thomas Buberl, Chief Executive Officer of AXA, said in the announcement AXA Tianping represents a unique platform for AXA to capture fully the significant growth potential of the property, casualty and health markets in China.

Data from the Chinese insurance regulator shows that total premium income for China's property and casualty insurance industry rose 13.76 percent year over year to roughly 1.1 trillion yuan (158.4 billion U.S. dollars) in 2017, marking the first time to cross the 1-trillion-yuan (144.0 billion U.S. dollars) milestone. The sector is projected to maintain a growth rate of around 10 percent this year. 

China's healthcare insurance market gained strong momentum for growth in recent years. Last year, the industry pocketed premium income of approximately 438.9 billion yuan (63.2 billion U.S. dollars), representing a year-over-year increase of 8.58 percent. 

According to a whitepaper on China's commercial healthcare insurance co-released by Ernst & Young and CPIC Allianz Health Insurance Co Ltd, with the aging population and growing health awareness, the Chinese commercial healthcare industry market will reach 1.3 trillion yuan (187.1 billion U.S. dollars) by 2020. 

In the eyes of Liu Yiqian, a full takeover by AXA would do good to the long-term development of AXA Tianping, as the joint venture's 50-50 shareholding structure indeed caused some problems when it came to decision-making. 

Hubei Biocause is expected to reap around 623.3 million yuan (89.7 million U.S. dollars) from the sale of its shareholding in AXA Tianping. 

Liu made much of his fortune on the mainland stock market, and invested in a wide range of industries including real estate and artworks. His interest in the insurance sector began in 2004. In addition to the investment in AXA Tianping, Hubei Biocause owns a stake in Guohua Life Insurance Co Ltd. 

Thanks to the remarkable performance in recent years, Guohua Life Insurance has recorded 4.98 billion yuan (716.9 million U.S. dollars) in unappropriated profits as of the end of last year. Given this, Hubei Biocause plans to increase its investment in the life insurance company. 

Email: lansuying@nbd.com.cn