China Guodian Corp expands interests in financial sector

BEIJING - China Guodian Corporation, one of the largest State-owned power generation groups, is expanding its range of interests in the financial sector.

"Financial business will be one of our strategic focuses in the future," said Shao Guoyong, general manager of Guodian Capital Holding.

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Shao is also president of Old Mutual-Guodian Life Insurance, a Sino-UK joint insurance venture.

In February, Guodian acquired the stake that Beijing State-owned Asset Management Co Ltd had in the 50:50 joint life insurer with London-based Old Mutual Plc for 330 million yuan ($49.2 million). The joint venture was previously called Skandia BSAM Life Insurance Co.

After the acquisition, the two shareholders injected a total of 100 million yuan into the new company in September, boosting its registered capital from 520 million yuan to 620 million yuan.

Guodian's stake purchase in the joint life insurer, however, is not its first attempt to work in the financial sector.

In 2007, the company set up Guodian Insurance Brokerage Co Ltd.

Meanwhile it is also considering initiating a property and casualty insurance company in which Guodian will take a controlling stake.

Prior to that, the company had purchased a stake in All Trust Insurance, a non-life insurance company.

Besides active participation in the insurance sector, Guodian Group has set up Guodian Capital Holding, serving as the company's financial platform.

It also set up an asset management company with Citic Trust.

Meanwhile, Guodian Group has a controlling stake in Shijiazhuang City Commercial Bank.

A source close to Guodian Group said the company plans to build a financial platform which will include all the major financial sectors.

However, Guodian still lacks a license for securities and trust business.

"How to maximize the synergy between the power sector and the financial sector will be a big challenge for us," said Shao.

"Old Mutual-Guodian will be an important subsidiary to boost our financial sector's profit contribution," Shao added.

According to the China Insurance Regulatory Commission, Old Mutual-Guodian had a premium income of 665.5 million yuan during the first nine months this year, up 35.6 percent year-on-year.

Zhang Guohou, chief accounting officer of Guodian Group, said earlier that the company is quite optimistic about the insurance sector, due to the country's huge aging population.

But for Zheng Wei, an insurance professor with Peking University, State-owned enterprises (SOEs) have to be patient in the insurance business.

"As the State-owned Assets Supervision and Administration Commission (the watchdog for China's largest SOEs) tightened the performance evaluations of the top management of those SOEs, they could hardly be patient with the business development of their joint life insurance ventures, which usually lose money in the first seven to eight years," said Zheng.