CIRC to lift stake in insurer to 30pc
The country's insurance regulator is to increase its stake in New China Life Insurance to more than 30 per cent as it continues to cover funds misused by the company's former chairman.
The China Insurance Regulatory Commission will pay 576.7 million yuan for the 8.024 per cent stake still held by Oriental Group, one of the original shareholders of New China, the nation's fifth-largest life insurer in terms of premiums.
New China Life has been under investigation for 13 billion yuan in funds misused by Guo Guanglian, its chairman between 1998 and 2006.
Oriental Group said yesterday that its board and shareholders had approved its complete divestment in New China Life.
This is the second time the CIRC used the country's eight billion yuan in insurance protection fund to buy stakes in New China Life. In May, it bought 22.5 per cent from three companies, including Oriental Group.
'The CIRC will not hold the stakes for too long and eventually it will transfer the shares to a third party,' said Tong Chengdun, a Ping An Securities analyst.
Speculation that PICC Property and Casualty, the nation's No 1 non-life insurer with a fledgling life insurance sister company, would buy the stakes from the CIRC drove up its shares as much as 14 per cent on Wednesday.
They fell 8.85 per cent yesterday after PICC Property issued a statement dismissing the speculation.
New China Life sold 12.3 billion yuan in premiums in the first five months of this year, 1.5 per cent higher than a year ago, CIRC data showed.