Beiya Industrial Group Co Ltd, the fifth-largest shareholder of New China Life Insurance (NCL), plans to transfer its entire stake in NCL before the insurer's capital expansion and listing.

According to Beijing Equity Exchange, the price of Beiya's equity transfer is expected to hit 947 million yuan (US$141 million), with the unit price of 13.82 yuan per share.

"Given Beiya's current financial status, it is almost impossible for them to take part in NCL's capital expansion plan. So cashing in at the moment is not a bad choice for them," said an industry analyst who declined to be named.

The board of NCL approved a plan in mid-October to boost the insurer's registered capital from 1.2 billion yuan to 14 billion yuan, a move aimed at improving the insurer's solvency capacity. The insurer's chairman, Kang Dian, said earlier that the company hopes to finish the capital expansion at the end of the year.

Beiya currently holds 68.49 million shares in NCL, accounting for 5.71 percent of the shares of the country's third-largest life insurer.

China Investment Corp (CIC), the country's sovereign wealth fund, is now the largest shareholder of NCL, with a 38.82 percent stake in it. The second-largest shareholder is Zurich Financial (20 percent) and the third-largest shareholder is Baosteel Group Corp (17.27 percent).

Established in 1996, NCL has been strengthening its efforts for the listing, especially after CIC became the insurer's controlling stakeholder at the end of last year.

The National Social Security Fund in 2007 paid 5.99 yuan each share to acquire a 38.82 percent in NCL and transferred these to CIC in December of 2009, at a price of 8.7 yuan per share.

Besides the capital injection, business consultancies McKinsey and Accenture are helping NCL to reshuffle its business process.

Industry sources said the company has set up a special team to prepare for the listing and the board is now evaluating the plan. It has not been decided whether the insurer will float A+H shares simultaneously, or H shares first and A shares afterwards.

Analysts estimated that NCL's listing will be staged within two years, given the current process.

Latest statistics show that NCL's premium income hit 75 billion yuan by the third quarter, ranking third in the country's life insurance industry. By the end of last year, NCL's assets totaled 206.6 billion yuan, with its net profit reaching 2.65 billion yuan.

Despite the growth, NCL's internal management is considered a major challenge for the company.

"The relationship among NCL's shareholders, the board and the management team was in chaos," Century Weekly cited a member of the top management of the insurer as saying.

From February to August, more than 700 insurance agents in NCL's 15 branches reportedly left the company. Agents are usually regarded as the core business channel for insurance companies' business expansion. By the end of 2009, NCL had 34 branches and 300,000 staff members.

(China Daily October 26, 2010)