PICC PROPERTY AND CASUALTY COMPANY LIMITED 
By Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 2328)
CONNECTED TRANSACTION SHARE CAPITAL INCREASE IN PICC LIFE
On 28 January 2013, the Company entered into the Capital Increase Agreement, pursuant to which the Company agreed to increase the share capital in PICC Life with an amount of approximately RMB485 million. Upon completion of the Capital Increase of PICC Life, the proportion of shareholding held by the Company will remain unchanged, representing
8.615% of the enlarged issued share capital of PICC Life.
Pursuant to the relevant provisions of the Listing Rules, the Transaction constitutes a connected transaction of the Company. As none of the applicable percentage ratios exceeds the 5% threshold under Rule 14A.32 of the Listing Rules, the Transaction is only subject to the reporting and announcement requirements and is exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
The Company injected an amount of RMB812 million into the share capital of PICC Life for the first time in 2007 and held 28% of its then issued share capital. The Company had not participated in the two capital increase exercises of PICC Life in 2009, and as a result the Company's shareholding has been diluted to 8.615% of the issued share capital of PICC Life after these two exercises. The Company participated in the two capital increase exercises of PICC Life in 2011 and injected an aggregate amount of approximately RMB976 million, and the shareholding remains at 8.615% of its enlarged issued share capital. On 28 January 2013, the Company entered into the Capital Increase Agreement to participate in the Capital Increase, pursuant to which the Company agreed to subscribe for shares with an amount of approximately RMB485 million. The proportion of the Company's shareholding in PICC Life will remain unchanged upon completion of the Capital Increase.
THE CAPITAL INCREASE AGREEMENT Date28 January 2013
Parties
(1) the Company;
(2) PICC Group; (3) PICC AMC;
(4) Sumitomo Life;
(5) Asia Financial Group; (6) Bangkok Bank; and
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(7) PICC Life.
The Company is principally engaged in property insurance, accidental injury insurance, short-term health insurance and the related reinsurance business in the PRC, and the business of investment and fund application.
PICC Group is principally engaged in the investment and the holding of shares of listed corporations, insurance institutions and other financial institutions, the supervision and management of various domestic and overseas businesses of its controlled enterprises and the policy-guided insurance business that is authorised or appointed by the State.
PICC AMC is principally engaged in the provision of asset management and asset management advisory services in the PRC.
Sumitomo Life is principally engaged in life insurance, investment and other insurance business.
Asia Financial Group is principally engaged in investment holding. Its subsidiaries are principally engaged in the provision of underwriting of general and life insurance.
Bangkok Bank is principally engaged in commercial banking business and bank-related business.
Pursuant to the Listing Rules, PICC Group, PICC AMC and PICC Life are connected persons of the Company. To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, Sumitomo Life, Asia Financial Group and Bangkok Bank and their respective ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.
PICC Life is a joint stock limited company established in the PRC and started its business in November 2005. It is principally engaged in life insurance, health insurance, accidental injury insurance and related reinsurance business in the PRC, and the business of insurance fund application. In 2012, the direct premium income of PICC Life achieved RMB64.03 billion, and it had a market share of 6.43% in the PRC life insurance industry and ranked No. 5 among the PRC life insurance companies.
As at the date of this announcement, the total number of issued shares of PICC Life is approximately 20.133 billion, which are held as to 71.077% by PICC Group, 8.615% by the Company, 0.308% by PICC AMC, 10% by Sumitomo Life, and 5% by each of Asia Financial Group and Bangkok Bank.
According to the audited financial statements of PICC Life prepared in accordance with the PRC Accounting Standards for Business Enterprises, the total asset value and the net asset value of PICC Life as at 31 December 2011 were approximately RMB273.094 billion and RMB12.439 billion respectively, and the profits before and after tax for the years 2010 and
2011 were as follows:
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Year ended Year ended 31 December 2010 31 December 2011(RMB million)
Profit before tax | 907 | 516 |
Profit after tax | 737 | 551 |
Pursuant to the Agreement, based on the existing total number of shares in issue, PICC Life
offers to place new shares to all of its existing shareholders in the ratio of approximately
0.2795 new share for every 1 existing share, and the total number of new shares to be placed shall be approximately 5.628 billion. The subscription price for each new share is RMB1, equivalent to the par value of each share. Immediately upon completion of the placing, the total number of shares in issue of PICC Life will increase to approximately 25.761 billion, and its registered capital will increase from approximately RMB20.133 billion to approximately RMB25.761 billion.
All of the shareholders agreed to fully subscribe for the new shares respectively placed to them, and the proportion of shareholding held by each shareholder will remain unchanged after completion of the placing. In this arrangement, the Company will fully subscribe for approximately 485 million new shares being placed with a subscription amount of approximately RMB485 million, and its shareholding in PICC Life will remain at 8.615% of the issued share capital as enlarged by the placing. The subscription amount will be funded from the Company's internal resources. The subscription amount shall be paid in cash and the payment date will be determined by the parties to the Agreement.
The proceeds raised by PICC Life from the capital increase will be primarily used to replenish the capital of PICC Life and raise its solvency margin. The proposal for capital increase by way of share subscription will become effective subject to the approvals of China Insurance Regulatory Commission and the relevant authorities.
The Company considers that the Capital Increase is beneficial to the business development of PICC Life, and entering into the Agreement enables the Company to maintain its shareholding in PICC Life at the existing level. The Board, including the independent non-executive Directors, is of the view that the Transaction is on normal commercial terms, the terms of the Transaction are fair and reasonable and in the interests of the Company and its shareholders as a whole.
LISTING RULES IMPLICATIONSPICC Group is the controlling shareholder of the Company, holding 69% of the issued share capital of the Company. PICC Life and PICC AMC are non-wholly owned subsidiaries of PICC Group. PICC Group directly holds 71.077% and 81% of the issued share capital of PICC Life and PICC AMC, respectively. Pursuant to the Listing Rules, PICC Group, PICC AMC and PICC Life are connected persons of the Company. Accordingly, the Transaction constitutes a connected transaction of the Company. Mr. Wu Yan, a Director of the Company, holds a position in PICC Group, PICC Life and PICC AMC and Mr. Wang Yincheng, Mr. Zhou Shurui, Ms. Yu Xiaoping and Mr. Li Tao, Directors of the Company, hold positions in PICC Group, therefore they have abstained from voting on the board resolution for considering and approving the Agreement. As none of the applicable percentage ratios
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exceeds the 5% threshold under Rule 14A.32 of the Listing Rules, the Transaction is only subject to the reporting and announcement requirements and is exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
DEFINITIONSIn this announcement, the following expressions shall have the following meanings unless the context otherwise requires:
"Agreement" or "Capital Increase Agreement" | the Agreement on Capital Increase by way of Share Subscription of PICC Life Insurance Company Limited dated 28 January 2013 entered into among the Company, PICC Group, PICC AMC, Sumitomo Life, Asia Financial Group, Bangkok Bank and PICC Life |
"Asia Financial Group" | Asia Financial Holdings Ltd., a company incorporated in Bermuda with limited liability, whose shares are listed on The Stock Exchange of Hong Kong Limited |
"Bangkok Bank" | Bangkok Bank Public Company Limited, a public company incorporated in Thailand with limited liability |
"Board" | the board of directors of the Company |
"Capital Increase" | the capital increase of PICC Life pursuant to the Agreement, in which the Company agreed to inject an amount of approximately RMB485 million by subscription of shares |
"Company" | PICC Property and Casualty Company Limited, a joint stock limited company incorporated in the PRC with limited liability, whose H shares are listed on The Stock Exchange of Hong Kong Limited |
"connected persons" | has the meaning as defined in the Listing Rules |
"Director(s)" | Director(s) of the Company |
"Hong Kong" | the Hong Kong Special Administrative Region of the People's Republic of China |
"Listing Rules" | the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
"PICC AMC" | PICC Asset Management Company Limited, a joint stock company established in the PRC with limited liability |
"PICC Group" | The People's Insurance Company (Group) of China Limited, a joint stock limited company incorporated in the PRC with limited liability, whose H shares are listed on The Stock Exchange of Hong Kong Limited |
"PICC Life" | PICC Life Insurance Company Limited, a joint stock company |
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established in the PRC with limited liability
"PRC" the People's Republic of China
"RMB" Renminbi, the lawful currency of the PRC
"Sumitomo Life" Sumitomo Life Insurance Company, a mutual insurance company incorporated in Japan
"Transaction" the subscription of shares by the Company to increase the share capital of PICC Life under the Agreement
Beijing, the PRC, 28 January 2013
By Order of the Board Zhang Xiaoli Secretary of the Board
On the date of this announcement, the Chairman of the Board is Mr. Wu Yan (executive director), the Vice Chairman is Mr. Wang Yincheng (executive director), Mr. Guo Shengchen and Mr. Wang He are executive directors, the non-executive directors are Mr. Zhou Shurui, Ms. Yu Xiaoping, Mr. Li Tao and Mr. Tse Sze-Wing, Edmund, and the independent non-executive directors are Mr. Luk Kin Yu, Peter, Mr. Ding Ningning and Mr. Liao Li.
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