Prudential, the life and health insurer, has announced a significant capital infusion in its joint venture (JV) with CITIC Financial Holdings. A media release said the joint venture, CITIC-Prudential Life Insurance Company (CPL), is set to increase its registered capital by RMB2.5 billion (US$351 million) following the approval from CPL’s shareholders.
This capital increase, shared equally between Prudential Corporation Holdings (PCHL), a wholly-owned subsidiary of Prudential, and CITIC, will boost CPL's registered capital from RMB2.36 billion to RMB4.86 billion (US$331 million to US$682 million). Both shareholders will maintain their equal equity stakes at 50/50 in the joint venture. This move is pending relevant regulatory approvals.
The capital injection, said the release, aims to strengthen CPL's financial standing under the China Risk-Oriented Solvency System (C-ROSS). Post-completion of this increase, as of September 30, 2023, CPL's core and comprehensive solvency ratios are estimated to be 121% and 215% respectively, exceeding the regulatory requirements.
This increase in capital, said the release, reflects both shareholders' confidence in the life insurance market in the Chinese Mainland and their commitment to CPL. Prudential plans to fund its share of the capital increase from its reported free surplus of US$8.3 billion (as of June 30, 2023). The group intends to utilise these funds to explore further growth opportunities.
Anil Wadhwani, chief executive officer of Prudential, remarked on the strategic significance of CPL in Prudential's growth plan. In the release he said the company is focused on building a sustainable growth platform through investments in key growth markets, with CPL being central to this strategy.
“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,” said Wadhwani. “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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