Some small shareholders of Dahua Insurance (UOI) proposed that the company discuss the distribution of its shares in Haw Par Corporation at the upcoming annual shareholder meeting to release shareholder value.

In response, Dahua Insurance issued a statement before the opening of the market on Monday (March 3), saying that the board of directors and management welcomed shareholders to make constructive suggestions. The company is deliberating on relevant matters and will make an announcement at the appropriate time.

According to a letter seen by Lianhe Zaobao, the proposal was proposed by a group of shareholders who hold about 2.8 million shares and account for 4.5% of the total share capital of Dahua Insurance, and was led by independent investor Wang Zhenyu.

The letter pointed out that Dahua Insurance has maintained a strong financial position since the full implementation of the new insurance capital framework in March 2020. In fiscal year 2023, the proportion of the company's shareholder funds in total assets reached 70.4%, far higher than the average 33.5% of the general insurance industry. Its capital adequacy ratio (CAR) is as high as 415%, which is 338% higher than the industry average.

The proposed shareholders believe that this reflects Dahua Insurance's ability to return excess capital to shareholders without affecting business growth or harming the rights and interests of other stakeholders.

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Dahua Insurance's net profit fell 10% to 15.6 million yuan in the second half of the year

Dahua Insurance's net profit fell 10% to 15.6 million yuan in the second half of the year

Shareholders also said that distributing Hubao Enterprise shares can reduce the risk of concentrated investment in Dahua Insurance while retaining cash to support business expansion.

As of fiscal year 2023, cash accounted for 15.4% of the company's shareholder funds, stock investment accounted for 33.7% and bond investment accounted for 56.1%. Among them, Hubao Enterprise's shares account for 9.4% of its shareholders' equity, accounting for about 6.6% of the company's total assets.

Shareholders also compared the option of paying shares with a special dividend of 67 cents per share, believing that the former has more advantages and can not only enhance shareholder value but also not affect company growth.

Dahua Insurance announced its results on February 15. Net profit in the second half of last year fell 10% year-on-year to 15.6 million yuan. The board recommends paying 8.5 cents annual dividends per share and 6.0 cents special dividends per share

The proposed shareholders also recommend that the company appoint an independent financial adviser to assist shareholders in making wise decisions on investment and release shareholder value in a timely manner when the company's financial situation is stable.

Dahua Insurance's chairman is Huang Yizong

Dahua Insurance and Tiger Leopard Enterprise are both companies controlled by UOB. According to the 2023 fiscal year annual report of Dahua Insurance, Dahua Bank owns 58% of the company's indirect interests through relevant stakeholders.

The chairman of the board of directors of Dahua Insurance is Huang Yizong, president of Dahua Bank. Hubao Business Chairman Huang Yichao and President Huang Yilin are his brothers. They are all the sons of Huang Zuyao, the local late banking master.