ChangAn Property & Liability Insurance has placed its 16.67% share in Beijing-based mutual insurer Hero Mutual Property Insurance on the block.
The auction is scheduled to take place on 23 September 2024, with a floor price of CNY74.14m ($10.40m), which is 30% less than the assessed valuation.
A court had ordered ChangAn to dispose of its assets, including its share in Hero Mutual, to raise CNY420m to settle liabilities arising from the insurer’s legacy guarantee insurance business.
To curb risks in the online loan sector, Chinese regulators began in 2016 a four-year crackdown on peer-to-peer (P2P) lending platforms. At the peak, there were more than 5,000 lending platforms that issued more than $150bn in loans from 50m lenders. The sector was marred by loan defaults and fraud.
ChangAn had provided guarantee insurance for several P2P lending deals. For the period 2017 to 2022, ChangAn posted a cumulative loss of CNY2,798bn. According to an announcement by Guohou Asset Management Co which is a shareholder of ChangAn Insurance, Changan’s net loss in 2023 was CNY766m.
The auction of the Hero Mutual share arose because of a guarantee insurance contract dispute between Hangzhou Jintou Bank Network Microfinance and ChangAn.
The court case was heard by the Intermediate People's Court of Hangzhou in Zhejiang Province in May 2023. According to the court judgment, ChangAn had failed to perform its obligations under the contract. The microfinance company was granted a compensation award. The court issued an order to execute the award totalling CNY418.m, in addition to accrued interest and execution costs.
ChangAn reported a core solvency ratio of -132.48% as of 30 September 2023.
Established in 2017, Hero Mutual focuses on the housing, construction, and engineering fields, and has been profitable for several years.