Trade Resources Industry Views China Eastern Airlines Group Plans to Quit Cathay Life Insurance Co., Ltd.

China Eastern Airlines Group Plans to Quit Cathay Life Insurance Co., Ltd.

Tags: Service

China Eastern Airlines Group, parent of leading Chinese airline China Eastern Airlines Corp. Ltd. (SHSE: 600115 and SEHK: 0670), plans to quit Cathay Life Insurance Co., Ltd.

It put a 50 percent stake in the 50-50 joint venture with Taiwan-based Cathay Life Insurance up for sale on the Shanghai United Assets and Equity Exchange on September 9 and the tag was CNY 850 million. And provided that it succeeds in transferring the stake this time, it will quit the venture thoroughly.

People close to the deal disclosed in an interview recently that insurance was not a major business of it and in order to shift focus on major business, it had had a plan to quit other businesses for a period of time. In addition, the life insurer performed not well and reported a loss of CNY 161 million for the fiscal year 2011 and CNY 121 million for the fiscal year 2012. It began making money this year and the net profit reached CNY 22 million as at July 31.

He reiterated that the threshold it set for the buyer was not low this time and firstly, the buyer should be legally established in the market. Secondly, it should have experience in investing in, actually controlling and operating firms with a financial license. Thirdly, it should own a registered capital of not less than CNY 3.5 billion and embrace a profit-making operation for at lest three consecutive years. In order to ensure operation of the target, it should work out a planning for further development of the former and submitted the planning to the exchange when showing intention to take the stake.

He added that actually, it was not the first time for it to sell non-core business and prior to this, it put a 51 percent stake in a wholly-owned media subsidiary up for sale publicly. Ana according to financial results Eastern Airlines released for the first half of this year, the net profit attributable to shareholders was CNY 763 million, down 23.29 percent from a year ago. The solvency of Cathay Life hit 116 percent as at June 30, compared to the minimum of 100 percent.

Cathay Life was established by Eastern Airlines and Cathay Life Insurance in 2004 with a registered capital of CNY 1.2 billion and in it, the two shareholders each controls a 50 percent stake. And so far, it has had a branch in Shanghai, Beijing, Tianjin, Jiangsu Province, Fujian Province, Shandong Province, Guangdong Province and Liaoning Province.

Source: http://www.sinocast.com/readbeatarticle.do?id=99323
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Eastern Airlines Plans to Quit Cathay Life
Topics: Service