(Yicai Global) June 25 -- China Pacific Life Insurance will invest around CNY1.6 billion (USD246 million) to buy equity in Ant Financial Service Group, information from the Insurance Association of China reveals, as China Fund News reported yesterday.
Pacific Life is a unit of insurance giant China Pacific Insurance (Group) (CPI). Pacific Life will use its claims reserves to make a one-time capital contribution to Ant Financial of around CNY1.6 billion which comprises CNY480 million and CNY1.12 billion from the traditional insurance account and dividend insurance account respectively, the announcement indicates.
The disposable balance in the traditional insurance account was CNY313.47 billion by March 31, whereas the disposable balance in the dividend insurance account was CNY536 billion. The investment involves no external financing, the company also stated. Pacific Life is contributing the capital directly to Ant Financial.
Pacific Life has disclosed the investment in Ant Financial when the two parties signed an agreement on June 11. Pacific Life invested about CNY900 million to acquire equity in Ant Financial for the first time in March 2015 and another CNY1 billion to expand its equity exposure in April 2016, the announcement shows.
With the CNY1.6 billion in this round, Pacific Life has now invested CNY3.5 billion in Ant Financial.
Pacific Life's extravagant investment may link with their previous cooperation in tax-deferred pension insurance. It signed a cooperation agreement with Ant Financial’s insurance platform on June 15, which specifies they will jointly inaugurate a series of tax-deferred pension insurance products and services.
The parties have started researching tax-deferred pension insurance products and services on Alipay, Pacific Life said. Those in pilot areas (Shanghai, Fujian province, Suzhou Industrial Park) can buy CPI's tax-deferred pension insurance products through Alipay from the third quarter, projections hold.
Ant Financial will give chain-wide support for the development of tax-deferred pension insurance in the areas of user connection, convenient claim settlement and fraud prevention. Ant Financial will provide more convenient insurance experience for tax-deferred pension insurance in future, including online and intelligent insurance and simplification of the tax credit process, it said.
Editor: Ben Armour