Prudential targets growth for China life insurance joint-venture

Prudential plc, an international insurance giant, has approved a capital increase for its business in Mainland China to drive growth.

CITIC-Prudential Life (CPL), a 50/50 joint venture with China’s CITIC Bank, is said to be increasing its registered capital by RMB2.5 billion (US$351 million), with each shareholder contributing an equal amount in cash.

Under the terms of the capital increase, each of CPL’s shareholders, Prudential Corporation Holdings Limited (PCHL) and CITIC – will contribute approximately RMB1.25 billion (US$176 million) in cash.

Therefore, the registered capital of CPL will then increase from RMB2.36 billion to RMB4.86 billion (US$331 million to US$682 million), while the equity stakes of the shareholders remain unchanged at 50/50.

The capital increase is subject to relevant regulatory approvals.

PCHL is an indirect wholly-owned subsidiary of Prudential.

Moreover, upon completion of the capital increase, the proforma China Risk-Oriented Solvency System (C-ROSS) core and comprehensive solvency ratios as at September 30, 2023 are estimated to have been 121% and 215% respectively, which is well above regulatory requirements.

Importantly, the capital increase clearly demonstrates the common belief of both shareholders in the attractive long-term prospects of life insurance business in the Chinese Mainland, and their strong ongoing commitment to CPL.

At the same time, Prudential’s share of the capital increase will be funded out of its reported free surplus of US$8.3 billion (as at 30 June 2023) which the organisation will likely look to further deploy for future growth opportunities.

Anil Wadhwani, Chief Executive Officer, commented: “As disclosed in our strategic update in August 2023, we are building a sustainable growth platform through targeted investment in structural growth markets. CPL plays a pivotal role in our overall strategy and growth, and we will continue to focus on delivering our customer-led and multi-channel distribution strategy in the Chinese Mainland. This includes the development of whole life protection products and retirement solutions to address customers’ needs at different life stages, as well as further enhancing our professional high-quality agency force and expanding the bancassurance network.

“We are confident that the continued focus on quality establishes a good foundation for future growth, and we remain excited about the significant potential of the business.”

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