Zurich Financial Services Group announced it reduced its 20% stake in New China Life Insurance Co., Ltd. (NCI) to 15%. Zurich has agreed to sell 5% to undisclosed buyers. As announced with Zurich’s annual results reporting on February 10, 2011, Zurich’s 20% stake in NCI had been revalued up by approximately USD 1 billion as of December 31, 2010. The sale price for the 5% stake in NCI is slightly above the respective book value at year-end. Following the sale, Zurich will retain a 15% ownership stake in NCI.
With gross written premiums of US$13.8bn in 2010 and a compound annual USD premium growth rate of 40% from 2005 to 2010, NCI had an 8.9% share of the Chinese life insurance market as of December 2010, as reported by the China Insurance Regulatory Commission (CIRC). Zurich first invested in NCI, which is unlisted, in 2000. Zurich’s investment in NCI was US$131mn as of June 30, 2010. In addition and as part of NCI’s recently announced capital increase program, Zurich on October 27, 2010 announced its commitment to purchase up to 280 million new NCI shares at a fixed price of RMB 10 per share, or a total of approximately USD 420 million.
Martin Senn, Zurich’s CEO, said: “Our decision to sell 5 percent points of our stake in NCI reflects a desire to manage our financial exposure to a business we do not control while retaining our belief that China’s fast-growing insurance sector represents a highly attractive investment opportunity for Zurich. The Chinese government has expressed a clear intent to further develop the country’s insurance market and NCI is well-positioned in the life market. In addition to our investment in NCI, we continue to focus on building our own insurance business in this important growth market.”
Subject to the approval of the relevant regulatory authorities, the sale is expected to close in the second quarter of 2011.
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