Sept. 23 (NBD) – Chinese delivery firm STO Express Co Ltd (002468.SZ) and Beijing Micro-Dream Network Technology Co. (Micro-Dream), operator of social platform Sina Weibo, plan to set up a life insurance joint venture (JV) with four other companies, disclosed an announcement of STO Express published on Friday.

The new firm, with a registered capital of 1.5 billion yuan (212.1 million U.S. dollars), will offer life, health, and accident injury insurances, among others.

Photo/Shetuwang

Micro-Dream is to acquire 30 percent of holdings in the insurance company for 450 million yuan, becoming the JV's largest shareholder, and STO Express will invest 180 million yuan to buy a 12 percent stake in the new firm.

Establishing an insurance JV helps STO Express diversify its business models, and expand its presence in the financial sector, so as to enhance the comprehensive competitiveness and create greater value for shareholders, STO Express said.

National Business Daily (NBD) noticed that both backed by e-commerce conglomerate Alibaba Group, Sina Weibo and STO Express have been seeking deployment in the insurance market for months.

In October 2017, STO Express teamed up with counterparts such as YTO Express and Shanghai Yunda Express to found a logistics insurance company, which, however, hasn't been approved by Chinese authorities so far.

Sina Weibo partnered with its subsidiary Xingmin Insurance Broker in early 2018 to make foray into the internet insurance field, and set foot in Hong Kong's insurance market by participating in the acquisition deal of insurer MassMutual Asia Ltd.

Some held the new insurance JV is to further expand the Alibaba Group's presence in the insurance sector, but it is still uncertain whether the JV can gain nod from Chinese authorities.

It is noted that the regulations on the establishment of new insurance company remains strict over the past several months. According to incomplete statistics from NBD, only three licenses have been granted since the China Insurance Regulatory Commission was formed last March.

If the new insurance company can't create specialized and differentiated products, it won't obtain operation license from the authority, an industry insiders told NBD.

"For STO Express, it is difficult to combine life insurance business with its courier business," noted Shen Meng, executive director of Chanson Capital, adding that there is no synergy effect between the two segments in sales channels or product portfolios.

As a popular social networking app, Sina Weibo boasts a large amount of traffic and users, but how to transform its online users into commercial insurance users is a problem it is facing", Shen analyzed.


Email: gaohan@nbd.com.cn

Editor: Zhang Lingxiao