China Life plans share offering for expansion

China Life Insurance, the mainland's largest life insurer, plans to sell up to 5.3 per cent of its enlarged share capital in a domestic share offering to support business growth.

The board of the Hong Kong and New York-listed company on Monday approved a plan to sell no more than 1.5 billion A shares to replenish its capital.

The offering, which may be the first domestic share sale by an insurer, could raise HK$16.7 billion based on a possible 20 per cent initial public offering discount to the HK$13.88 closing price of China Life's Hong Kong-quoted shares.

'We hope to launch the share sale as soon as possible,' said vice-president Liu Jiade. The precise timing of the issue would depend on domestic stock market conditions and regulatory approvals, he said.

Bolstered by a 72.2 per cent jump in first-half net profit to 8.97 billion yuan, China Life had a 65.24 billion yuan actual solvency margin - an indicator of insurers' capital adequacy - at the end of June, 2.53 times the regulatory requirement.

Even so, a Shanghai listing would lay a solid capital foundation for the company's future business growth, chairman Yang Chao said.

'Besides, the more than 20 listed insurers worldwide are without exceptions quoted on their home markets,' he added.

Mainland regulators have recently been encouraging domestic blue-chips to list locally, in the hope of reviving the stock markets.

Bank of China completed a 20 billion yuan listing in Shanghai last month, the largest domestic public share sale to date.

China Life recorded a 28.1 per cent increase in premium revenue to 54.58 billion yuan in the first half compared with a year earlier.

Investments were also needed to improve the mix and quality of its business as well as the quality of staff, Mr Yang said.

China Life completed its first successful strategic investment in non-insurance business in the first half. It acquired an 11.89 per cent stake in Citic Securities for 3.25 billion yuan.

'We also envision banking to become part of our core business over the coming years,' Mr Yang said. 'We are interested in any business that is profitable and conducive to the development of our core business.'

China Life has joined a Citigroup-led consortium to bid for 80 per cent of national lender Guangdong Development Bank for about US$3 billion.

Mr Yang yesterday declined to elaborate on whether China Life or its mainland parent - which he also leads and bought additional shares in Citic Securities - would make the investment.

However, future acquisition decisions would be taken with the interests of minority shareholders of the listing vehicle in mind, he said.

China Life's Hong Kong-listed shares gained 2.96 per cent yesterday to close at HK$13.88.