Insurer jumps on Fosun move

A booth of New China Life Insurance Company Ltd at a finance expo in Beijing, Nov 3, 2011. [PHOTO PROVIDED TO CHINA DAILY]

New China Life shares increase on Fosun stake purchase

The share price of Shanghai-listed New China Life Insurance Company Ltd jumped 4.27 percent on Thursday, after the insurer announced that five companies controlled by Fosun Group had acquired a combined 5.01 percent stake in the insurer.

The insurer's Hong Kong-listed shares also gained 3.16 percent the same day and the news helped push the overall financial sector index up 1.2 percent in the A-share market and 0.7 percent in the H-share market.

NCL's Shanghai-listed price rocketed 9 percent during the day to a seven-month intraday high on Thursday.

Analysts said that Fosun has been increasing its stakes in a number of insurers. The Shanghai-based conglomerate has included insurance as one of its business engines.

At the end of 2015, the total assets under the insurance segment of Fosun reached 180.6 billion yuan ($27.21 billion), accounting for 44.6 percent of the group's total assets, up from 32.9 percent at the end of 2014, according to data from the group.

The insurance segment of the group has been growing rapidly, but, more importantly, the segment will have profound impact by bringing an insurance-oriented integrated financial gene to the group's overall operations and profit model.

In 2015, Fosun bought US insurer Ironshore Inc for $1.84 billion. It also acquired 52.31 percent of the issued and outstanding share capital of the Israeli insurer and financial services company Phoenix Holdings Ltd.

The group's previous investments in the insurance sector included those in the Portugal's largest insurance group Fidelidade-Companhia de Seguros SA, Yong An Insurance Co and Pramerica Fosun Life Insurance Co, Peak Reinsurance Co and Ironshore, constituting a comprehensive insurance platform covering property and casualty, reinsurance, specialty and general insurance.

According to Liu Yunlong, an analyst with Guorong Securities Co, Fosun's purchase of 550,000 H shares of NCL to increase its stake in the insurer from 4.99 percent to 5.01 percent is a measure to adjust its portfolio, deploying more assets to life insurance and reaching out to more individual clients.

Previously, Fosun's stake in the insurance sector mainly focused on reinsurance or property insurance, which mainly target corporate clients.

Fosun has also received formal approval from the China Insurance Regulatory Commission to prepare to establish Fosun United Health Insurance Company Ltd.

Reuters contributed to this story.