(Yicai Global) Dec. 7 -- Cathay Lujiazui Life Insurance Co., the first Chinese mainland-Taiwan joint venture life insurance firm, achieved rapid business growth following the introduction of a "mega insurance" strategy, but fast expansion also led to a sharp increase in capital expenditure and payouts, making capital replenishment an urgent need.
China Insurance Regulatory Commission (CIRC) has approved the company's plan to increase its capital to CNY3 billion (USD453.2 million), almost doubling the original amount (CNY1.6 billion), Yicai Global learned.
The injection of capital will be equally contributed by the firm's two shareholders, keeping their shareholdings even, the company said.
The new capital injection is a testament to shareholders' optimism about future development prospects of Cathay Lujiazui Life Insurance, it said, adding the two shareholders agreed to provide full support for the firm to further improve its competitiveness.
After the deal, the total assets at the company will rise to nearly CNY6.5 billion, and its solvency level will also be significantly enhanced, it noted. It will adhere to the "mega insurance" strategy and pursue a "tech insurance" development path focusing on artificial intelligence (AI), Big Data and cloud computing.
Formerly known as Cathay Life, the company was established jointly by its former shareholder HNA Group Co. and Cathay Life Insurance from Taiwan, each holding a 50 percent stake.
In 2014, HNA Group sold its shareholding to Shanghai Lujiazui Financial Development Co., and the firm was renamed Cathay Lujiazui Life Insurance.
The new board of directors, inaugurated in 2014, introduced the mega insurance strategy, giving priority to personal client acquisition through insurance agents, brokers and worksite marketing. The aim is to concentrate resources on the development of high value long-term risk protection services oriented toward individual customers. The company went through a series of rapid business expansions since then.
Its original gross premium income (OGPI) rose by 6.81 percent in 2013 and slipped by 0.66 percent in the following year, CIRC data show. However, after the change of shareholders, OGPI growth at the company soared to 28.63 percent and 47.49 percent in 2015 and 2016, respectively, and hit a staggering 89.26 percent during the first 10 months of this year.