(Yicai Global) Sept. 24 -- Sino-French Life Insurance, a joint venture of France’s CNP Assurances, has run out of liquidity. It has borrowed from its shareholder Cathay Fortune three times for a cumulative CNY27 million (USD3.95 million) after piling up that amount in debt this year.

Cathay Fortune issued a loan to the company, Sino-French Life said in a Sept. 22 statement, which added the funds borrowed went mainly to deal with its liquidity risks and meet the basic needs of daily operations. The loan date is Sept. 11 and its amount is CNY11 million.

The Beijing-based Chinese-French JV insurance company formed in December 2005 with CNY200 million (USD29.3 million) in registered capital. The State Post Office of China and CNP Assurances each held half of its shares at the start. China Post sold its stake in 2015. Current shareholders include Cathay Fortune with 50 percent, France's Caisse Nationale de Prévoyance at 25 percent, and Beijing Renji Jiuding Asset Management also with one-quarter.

The firm’s capital has never been replenished since its founding, and has been exhausted with continual losses and cash outflows. Sino-French Life has suffered liquidity exhaustion since April 2017 and has relied on borrowing from Cathay Fortune for its survival.

The company borrowed nine times from Cathay Fortune in 2017, totaling CNY130.8 million. It also received nine loans from Cathay Fortune in 2018 in an aggregate CNY69.1 million (USD10.1 million). It got five loans of a cumulative CNY54 million last year.

Sino-French Life earned CNY70,631.29 (USD10,352.41) in insurance premiums with a loss of CNY27.6 million in the first half. Its comprehensive solvency-adequacy ratio and core solvency-adequacy ratio further dropped to minus-22,687.57 percent from minus-18,227.01 percent at the end of the first quarter, data the company issued on Aug. 4 show.

Editor: Ben Armour