According to Caixin News on December 18 (Reporter Zou Juntao), after years of enduring losses from investments affecting solvency, Fubon Property Insurance has finally decided to sever ties with Tencent Weiche mother company.

On the evening of December 17, Fubon Property Insurance Co., Ltd. (referred to as "Fubon Property Insurance") announced on the website of the China Insurance Industry Association that the company, along with subsidiaries of Fubon Financial Holding Co., Ltd. (referred to as "Fubon Financial Holding"), Beifu Silver Venture Capital Co., Ltd. (referred to as "Fubon Silver Venture"), and Fubon Financial Holding Venture Capital Co., Ltd. (referred to as "Fubon Venture") (collectively referred to as "Fubon"), would sell their equity in Shenzhen Tengfubo Investment Co., Ltd. (referred to as "Tengfubo") to the original shareholders of Tengfubo, Beijing Yima Shentong Information Technology Co., Ltd. (referred to as "Yima Shentong").

It is noteworthy that after this transfer, Fubon will no longer hold equity in Tengfubo. According to Tianyancha data, Yima Shentong currently holds 73.3333% equity in Tengfubo, and after the acquisition, its shareholding will exceed 90%.

It is understood that Tengfubo is the mother company of Weimin Insurance Agency Co., Ltd. (hereinafter referred to as "Tencent Weiche"), which is a well-known domestic insurance intermediary platform. Yima Shentong is a 100% holding company of Shenzhen Tencent Computer Systems Co., Ltd. (hereinafter referred to as "Tencent").

Caixin News reporters noted that Fubon Property Insurance began disclosing significant investment project loss announcements involving Tengfubo multiple times since 2018, with total disclosed investment losses reaching 0.13 billion yuan by the end of the fourth quarter of 2020. In September 2021, Fubon Property Insurance attempted to transfer part of its equity in Tengfubo to affiliated companies under Fubon Financial Holding to alleviate the impact of investment losses on its solvency.

Fubon liquidated its equity in Tengfubo, with the transaction price not disclosed.

According to Fubon Property Insurance's announcement, this related transaction involves Fubon transferring its total holding of 16.667% equity in Tengfubo, corresponding to its registered capital of 0.1244 billion yuan, to Yima Shentong; among which, Fubon Property Insurance sells 8.167% equity in Tengfubo, Fubon Silver Venture sells 5% equity in Tengfubo, and Fubon Venture sells 3.5% equity in Tengfubo.

Fubon Property and Casualty Insurance stated in the announcement that after the completion of this Transaction, the company and Fubon Silver Creation and Fubon Financial Creation will no longer Hold shares in Tengfu Bo.

According to the information, Fubon Property and Casualty Insurance is from Taiwan, China, and is the first Taiwanese-funded insurance company to obtain a business permit in the mainland after the implementation of the Cross-Strait Economic Cooperation Framework Agreement (ECFA), established on October 8, 2010, in Xiamen.

Tianyancha information shows that in September 2016, Tengfu Bo was established by Yima Shentong, a subsidiary of Tencent, and Fubon Property and Casualty Insurance. Yima Shentong invested 0.1156 billion yuan, holding 57.8%; Fubon Property and Casualty Insurance invested 62.2 million yuan, holding 31.1%; Guokai Boyu Phase II (Shanghai) Private Equity Partnership (Limited Partnership) invested 22.2 million yuan, holding 11.1%.

In October 2016, Tengfu Bo initiated the establishment of 'Micro Min Insurance Agency Co., Ltd.', also known as Tencent Insurance, with a registered capital of 0.2 billion yuan. The business scope includes agency sales of insurance products and collecting insurance premiums on behalf of others. At that time, outsiders believed that leveraging Tencent's power to develop Internet Plus-Related insurance channels was Fubon Property and Casualty Insurance's only opportunity to succeed in expanding its market in the mainland.

On November 20, 2018, Fubon Property and Casualty Insurance participated in Tengfu Bo's 0.2 billion yuan capital increase plan, investing 62.2 million yuan. In August 2020, Tengfu Bo conducted another round of premium capital increase, but this time, Fubon Property and Casualty Insurance waived its preferential subscription rights; therefore, Fubon Property and Casualty Insurance's shareholding in Tengfu Bo decreased to 16.667%.

Just one year later, Fubon Property and Casualty Insurance transferred its shares to an affiliate. In September 2021, Fubon Property and Casualty Insurance announced its intention to transfer 8.5% of its shares in Tengfu Bo to two affiliated companies under Fubon Financial Holdings (which refer to the previously mentioned Fubon Property and Casualty Insurance and Fubon Financial Creation). After the transfer, Fubon Property and Casualty Insurance's shareholding in Tengfu Bo was adjusted from 16.667% to 8.2%.

It is worth mentioning that at the time of this equity transfer, the transaction price was set at 2.61 yuan per share, with a total consideration for the transfer of 8.5% equity in Tengfu Bo amounting to 165,588,840 yuan.

In this instance, Fubon transferred a total of 16.667% equity in Tengfu Bo to Yima Shentong, but did not disclose the transaction price. The announcement only stated that 'the pricing of this connected transaction is mainly determined by the parties through the engagement of an asset appraisal company to provide an asset appraisal report, and Fubon itself based on the appraisal results, and that was determined through fair negotiation between the buying and selling parties, ensuring the pricing policy is reasonable, and the transaction price is fair.'

Investment losses affect solvency, the latest risk comprehensive rating is BB category.

Public information shows that Fubon Insurance is eager to transfer its equity in Tengfubo, primarily due to long-term investment losses in Tengfubo affecting the company's solvency.

According to a previous announcement, during the equity transfer disclosed in September 2021, Fubon Insurance publicly stated that it 'would increase our net assets, improve solvency adequacy ratio, and subsequently improve financial and operational conditions.' Moreover, Fubon Insurance had disclosed up to 6 announcements regarding significant investment losses, continually mentioning the negative impact of investment losses in Tengfubo on the company's solvency adequacy ratio.

In October 2018, Fubon Insurance first disclosed that the loss amount from investing in Tengfubo was 14.3 million yuan, stating that the loss occurred because 'Tengfubo is still in the startup stage, and operational-related costs and expenses exceed operating income, remaining in a loss phase.' The investment loss for that quarter would decrease the company's solvency adequacy ratio by 8.5%.

By January 2021, Fubon Insurance's last disclosure regarding the losses from investing in Tengfubo reported that the loss amount for the fourth quarter of 2020 was 37.88 million yuan, with the loss attributed to 'Tengfubo being in a rapid growth stage, with a significant increase in operational scale, as well as increased investment in R&D and service costs.' The investment loss for that quarter would decrease the company's solvency adequacy ratio by 22.2%.

Recently, Fubon Insurance disclosed its solvency report for the third quarter of 2024, stating that by the end of September this year, the company's core solvency adequacy ratio and comprehensive solvency adequacy ratio were both 182.82%. In the risk comprehensive rating evaluation for the second quarter of 2024, the company was rated as BB category, whereas it was rated B category in the first quarter of this year. According to relevant regulations, risk comprehensive ratings below BB category indicate insurance institutions that do not meet solvency standards.

Fubon Insurance stated in the report that the risk comprehensive rating result is still within the tolerance range, but the changes in risk warning indicators should continue to be monitored, and risk control should be implemented.

The reporter from Financial Community noted that the solvency risk management improvement measures mentioned in Fubon Insurance's report include 'According to the relevant provisions of the "Procedures for Acquiring or Disposing of Assets by Fubon Property Insurance Co., Ltd." and the "Related Party Transaction Management Measures of Fubon Property Insurance Co., Ltd.", revise the "Procedures for Acquiring or Disposing of Assets by Fubon Property Insurance Co., Ltd." and announce its implementation.' This measure had not been present in previous quarters' solvency reports.