On September 28th, Caijing News (Reporter Xia Shuyuan) reported that Aixin Life has been approved for a third capital increase. According to Caijing News, as per the latest news from the official WeChat account of New Journey Health, the Beijing Regulatory Bureau has approved Aixin Life to increase its capital by 0.24439 billion shares. Its major shareholder, Beijing New Journey Health Industry Group Co., Ltd. (referred to as 'New Journey Health' hereinafter), fully subscribed to this round of capital increase. After this round of capital increase, Aixin Life's registered capital has increased from 2.07561 billion yuan to 2.32 billion yuan.

It is reported that since 2022, Aixin Life has received shareholding from its major shareholder, New Journey Health, three times continuously. After this increase in registered capital, New Journey's shareholding in Aixin Life has reached 26.72%, and the equity proportion of the remaining 11 shareholders has further diluted to below 9%.

In recent years, due to factors such as the downward trend in macroeconomic growth, the decrease in profitability of small and medium-sized insurance companies, and the stricter industry regulatory policies, the insurance industry as a whole is facing a difficult situation in terms of capital increase and share expansion. Against this industry backdrop, why has New Journey Health made three investments in Aixin Life, and what type of company is Aixin Life?

Aixin Life's solvency remains tight, and its endogenous hematopoietic capacity needs to be improved continuously.

As a 'new generation' life insurance company, Aixin Life was established in June 2017 and currently operates in Beijing, Tianjin, Hebei, Jiangsu, and Guangdong.

It is reported that the founding team members of the company mainly come from Sunshine Insurance, with Chairman Zhang Yanling previously serving as Vice President of Sunshine Insurance Group, and General Manager Pan Huagang previously responsible for the Training Department of Sunshine Insurance Group.

In the first six years after its establishment, Aixin Life's business has been steadily growing, but it has been consistently incurring losses.

The data shows that from 2017 to 2022, Aixin Life achieved insurance business revenue of 0.044 billion yuan, 0.303 billion yuan, 0.772 billion yuan, 3.313 billion yuan, 4.557 billion yuan, 5.693 billion yuan; net profit was -0.182 billion yuan, -0.187 billion yuan, -0.314 billion yuan, -0.244 billion yuan, -0.177 billion yuan, -0.354 billion yuan respectively, accumulating a total loss of 1.458 billion yuan over 6 years.

It is worth noting that with the rapid development of business leading to the rapid consumption of capital, coupled with the insufficient endogenous 'hematopoiesis' ability in the early stages of the company's establishment, Aixin Life's solvency adequacy ratio has been declining year by year.

At the end of the fourth quarter of 2022, Aixin Life's core and comprehensive solvency adequacy ratios decreased from 2767.72% and 2767.72% respectively at the end of the third quarter of 2017 to 67.94% and 135.89%. Compared to the minimum requirements of the regulatory authorities for solvency, which are 50% for the core adequacy ratio and 100% for the comprehensive adequacy ratio, Aixin Life's solvency has become tight.

To ease the pressure on solvency and enable business development, Aixin Life introduced new shareholders for the first time after 5 years of establishment.

In October 2022, the company announced its plans to issue 0.32 billion shares, all of which would be subscribed by the new shareholder New Journey Health. In January 2023, the Beijing Regulatory Bureau approved Aixin Life's registered capital to increase from 1.7 billion yuan to 2.02 billion yuan. Since then, New Journey Health has become the largest strategic shareholder of Aixin Life, holding a 15.84% stake.

However, the initial capital increase did not relieve Aixin Life's solvency pressures. By the end of the second quarter of 2023, Aixin Life's core and comprehensive solvency adequacy ratios had only risen to 78.75% and 157.49%; by the end of the fourth quarter of 2023, they had dropped to 71.04% and 142.08% respectively.

In May 2023, facing solvency challenges once again, Aixin Life, after 5 months of New Journey Health's acquisition, initiated a second round of capital increase, planning to add 0.3 billion yuan in registered capital, all of which would be contributed by New Journey Health, without introducing new shareholders.

But this capital increase plan changed by the year-end. On December 25, 2023, Aixin Life announced its plan to increase the registered capital by 57.64 million yuan. Compared to the previous plan, the capital increase amount was significantly reduced, from 0.3 billion yuan to 57.64 million yuan, a 80% decrease.

It is worth noting that, with the support of major shareholders, Love Life achieved profitability in 2023.

Data shows that in 2023, Love Life achieved insurance business income of 7.493 billion yuan, with a net income of 0.051 billion yuan. Regarding the return to profit in 2023, Love Life stated in the financial report that the company is promoting the integration of medical care, health, and insurance, maintaining stable business development, and achieving annual profit targets.

However, in the first half of 2024, Love Life achieved insurance business income of 5.33 billion yuan, with a net income of -0.018 billion yuan, still in the loss state. As of the end of the second quarter of 2024, the company's core and comprehensive solvency adequacy ratios were 70.13% and 140.27% respectively, far below the industry average level.

It is reported that after three rounds of increasing registered capital, New Journey's shareholding in Love Life reached 26.72%, while the shareholding of the remaining 11 shareholders was further diluted to below 9%.

New Journey Health Technology Group still has plans for further capital contribution in the future. Will this help Love Life break through in the medical health race?

With the successful approval of the third capital increase, how will the support from New Journey Health Technology Group deeply impact Love Life's operational development?

It is reported that New Journey Health Technology Group is a wholly-owned subsidiary of China New Journey International Health Industry Group Co., Ltd., with business covering medical services, retirement services, pharmaceutical manufacturing, and other fields. The group owns professional platforms such as listed company New Journey (002219), New Journey Medical Group, New Journey Health Group, and Du Yimei Pharmaceutical Group.

According to the official website information, the company holds and manages nearly 40 secondary and above hospitals and 200 primary medical institutions in nearly 20 provinces and cities nationwide.

Regarding the continuous losses of Aixin Life, Lin Yanglin, Chairman of New Journey Health, previously revealed: "Insurance companies follow the industry rule of seven losses and eight gains, just like hospitals. It's difficult to be profitable in the first few years. Once you pass that critical point, the development becomes smoother."

It is reported that New Journey Health still plans to further invest in Aixin Life in the future. Lin Yanglin stated: "We plan to invest another few billion to support the transformation and upgrade of Aixin Life's business." After the future capital increase is completed, New Journey Health will hold 1/3 of the shares, reaching the upper limit of the single shareholder shareholding ratio required by regulatory authorities for insurance companies.

Looking at Aixin Life's development strategy. At the beginning of its establishment, Aixin Life set up a wholly-owned community medical institution called 'Aixiaoxin Clinic.' In 2021, Aixin Life expanded into community retirement institutions.

Since the completion of the initial capital increase in early 2023, followed by the introduction of a new shareholder, New Journey Health, Aixin Life's layout in the health and wellness industry has been accelerating. Aixin Life stated that in the future, the company will focus on the 'medical + insurance' and 'healthcare + insurance' models, promoting the deep integration of the new medical and health system with insurance, mutually supporting and developing with New Journey Health.

Industry insiders believe that with the smooth progress of the capital increase, Aixin Life's capital will be further supplemented, and it is also expected to leverage New Journey Health's ecological resources in the medical and retirement fields to better promote the 'medical care + insurance' service model.

However, some industry insiders believe that for small and medium-sized insurance companies, maintaining a stable profitabiIity is not easy. "Whether transitioning from medical to insurance or from insurance to medical, although they ultimately converge, each faces barriers and challenges. New Journey Health's heavy investment in Aixin Life for the third time undoubtedly adds another eye-catching carp in front of the dragon gate. But can it really cross over? How far away is the Chinese version of UnitedHealth, the Caesar model? Everything still needs a longer period to verify the results."