Chinese life and property and casualty insurance provider Fanhua has struck a definitive agreement to buy a majority stake in Zhongji Shi’An Insurance Agency (Zhongji).
The deal will see Fanhua buying a 51% equity stake in Zhongji with a stock consideration of up to 683,036 American Depositary Shares.
Zhongji is claimed to be China’s Jilin province’s largest insurance company, which generated more than RMB100m ($14.73m) in gross written premiums (GWP) in 2022.
In 2025, Zhongji is anticipated to generate a net income of RMB15m and GWP of around RMB208m, representing a compound annual growth rate of approximately 16% and 44%, respectively.
Fanhua chairman and CEO Yinan Hu said: “We are glad to welcome Zhongji to join us. The acquisition allows us to rapidly expand our market presence into Jilin province. It also marks another important step forward towards Fanhua’s dedication to accelerating our Open Platform strategy.
“We look forward to connecting with more small and medium-sized independent insurance intermediary companies through mergers and acquisitions and the MGA, or managing general agency, model, and to empowering various stakeholders in the insurance industry with Fanhua’s technology-driven digital platform, to drive high-quality development of the insurance intermediary sector as a whole.”
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The stock consideration is subject to a three-year lock-up period and will be released in two tranches after 2025.
It is adjustable based on Zhongji’s achievement of specific performance targets over the next three years.
Zhongji chairman and general manager Qinying Zhang said: “We are excited to be part of Fanhua. Our sales team will benefit significantly from the various resources that Fanhua’s technology-driven digital platform offers.
“We believe the partnership will help strengthen our competitive edge and enhance our operating efficiency, leading to stronger growth in our business scale and profit in the years to come.”
In November 2022, Fanhua agreed to buy a majority stake in Zhongrong Smart Finance Information Technology.