China’s First Mutual Insurance Association, Zhonghui Property Mutual Insurance Association, Initiate

2017-02-17

On February 15, 2017, China’s first mutual insurance association, Zhonghui Property Mutual Insurance Association (hereinafter referred to as Zhonghui), officially went into operation, with credit and surety insurance for medium-sized and small enterprises as its major business. Zhonghui was jointly initiated by JD Capital, other nine enterprises, and two natural persons. It is one of the first three pilot mutual insurance associations approved by China Insurance Regulatory Commission (CIRC) on June 22, 2016. 0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

Zhonghui is also the first of its kind approved to be established after the issuance of the "Trial Measures on Regulation of Mutual Insurance Agencies" on January 23, 2015. Its opening marks that mutual insurance, a major form of insurance with a history of nearly 200 years worldwide, officially takes root in China. 0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

Besides JD Capital, the other sponsors include Yongtai Energy, Keybridge Communications, and Qianhai Financial Holdings, etc. With loans pouring in as investment from the twelve sponsors, the initial working capital of Zhonghui has increased to one billion yuan from 200 million yuan in the preparation stage. At present, Zhonghui has 546 members, and the number will be further expanded as business grows. It is scheduled to conduct its first transaction in early March.0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

As a pioneer of mutual insurance in a brand-new technological landscape, Zhonghui sticks to its core idea of building an association “of the members, by the members, and for the members”. It is committed to creating a platform-type mutual insurance agency with advanced Internet technologies and big data-based risk management technologies, and providing full-cycle risk management services for individuals and micro, small and medium-sized enterprises engaged in specific industrial chains, so as to effectively eliminate the difficulties in accessing affordable financing, and make up for the weaknesses and gaps in the current insurance market. 0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

The starting of Zhonghui Property Mutual Insurance Association is a significant milestone for JD Capital to promote the development of its online financial businesses and break into the financial insurance industry. JD Capital plans to, by taking full advantage of its current industrial layout resources, support the development of Zhonghui’s businesses through identifying upper- and lower-stream corporate client groups and improving risk identification and management, strengthen efforts to enable integrated development of Zhonghui, and continue to implement its strategic development programs of the Internet and financial insurance.  0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业


0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

Background: history of mutual insurance0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

Mutual insurance is a mechanism in which members provide insurance for one another. Based on the principles of equality and voluntariness, members enter into contracts and build mutual insurance agencies, for the purpose of mutual help and shared risks and benefits. With the membership fees, members can establish mutual funds as cash pooling in prevention of risks. In this way, when disastrous losses occur, the fund will make up for such losses of its members.0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

Different from joint-stock insurance companies, mutual insurance companies do not have shareholders. Their members, also policyholders, jointly participate in corporate governance; the insurance businesses are only conducted among these members; and the profits secured will eventually fall into their hands.  0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

In the history of the world’s insurance industry, the birth of mutual insurance antedated that of stock insurance. Many standards employed by the current insurance industry were either born out of or derived from those of mutual insurance. In the early 20th century, mutual insurance reached its prime time and obtained legal approval in many countries. 0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

At present, mutual insurance remains a major and mature form of insurance worldwide. According to the statistics released by International Cooperative and Mutual Insurance Federation (ICMIF), as of 2014, the global revenue of mutual insurance reached 1.3 trillion dollars, holding a global market share of 27.1% and involving 920 million people.0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

However, this kind of insurance firm has just made some headways in China. In 2009, the newly revised “Insurance Law of the People’s Republic of China” specified for the first time that China’s insurance companies could be organized in three forms, including joint-stock company, limited liability company, and mutual insurance company. However, the fact that there were no shareholders in mutual insurance companies contradicted the regulations of the “Company Law of the People’s Republic of China”, so mutual insurance remained suspended for a long time after that. In 2014, Chinese government issued the “New Ten Guidelines for Insurance Industry”. Then in February 2015, CIRC issued the “Trial Measures on Regulation of Mutual Insurance Agencies”, thus offered a legal basis for the operation of pilot mutual insurance agencies. In April 2016, the Chinese government officially approved the establishment and industrial and commercial registration of pilot mutual insurance agencies, an official start of China’s mutual insurance industry. 0kw威尼斯欢乐娱人成app(600053.SH)_上交所私募股权投资领域上市企业

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