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Tahoe Life Insurance, once known as the shining pearl of the "Tahoe Group" financial empire, has now been entrusted to the trusteeship of Deloitte, a world-renowned accounting firm.

Text/Daily Financial Report Li Jia

It took Huang Qisen, the leader of Taihe Group, 14 years to grow from obscurity to listing on the A-share market. In the following 7 years, Taihe Group experienced wave after wave of highlights in the capital market, capturing a market value of hundreds of billions.

However, times have changed, and only when the tide recedes can we tell who has been swimming naked.

On July 28, 2023, Taihe Group had to delist because its daily closing price was less than RMB 1 for 20 consecutive trading days, which triggered the termination of stock listing stipulated in Article 9.2.1, Paragraph 1, Item (4) of the "Stock Listing Rules (Revised in 2023)". It was finally forced to delist. It took only six years for this former billion-dollar real estate giant to return to the dust from its peak of listing. It is really amazing.

While the group's situation was previously very good, the life insurance business that Huang Qisen had spent a huge sum of HK$10.6 billion to acquire was repeatedly affected by the group's internal debt crisis and faced operational difficulties many times, which was extremely painful.

After ups and downs and difficult crawling, the time came to July 26, 2024, when the Hong Kong Insurance Authority issued an appointment announcement, which completely put an end to the financial story of Huang Qisen and Taihe Life.

From spending huge sums of money to buy it as a treasure in the glorious past, to its current fate of being taken over, how did Huang Qisen step by step end up in the bleak situation of losing Taihe Life?

01

The first in Hong Kong, Tahoe Life Insurance is placed under full trusteeship

Tahoe Life Insurance, once known as the shining pearl of the "Tahoe Group" financial empire, has now been entrusted to the trusteeship of Deloitte, a world-renowned accounting firm.

On the evening of July 26, the Hong Kong Insurance Authority announced that, pursuant to the power conferred by section 35(2)(b) of the Insurance Ordinance (Cap. 41), it had appointed Lai Ka Yan and Gan Zhongheng of Deloitte Touche Tohmatsu, and Cheng Wenlong of Deloitte Consulting (Hong Kong) Limited as joint and several managers to take over all affairs, business and property of Tahoe Life in Hong Kong.

It is reported that this is the first life insurance company taken over by the Hong Kong Insurance Authority since the founding of Hong Kong in 1840. The impact of this news is not small.

According to the announcement, the task of the appointed manager is to maintain the normal business operations of Taihe Life and protect the interests of policyholders, and take appropriate actions to assess Taihe Life's current financial situation. This measure will not affect the terms and conditions, claims and other customer services of the company's valid policies.

It can be seen that the Hong Kong Insurance Authority's move can be regarded as a "reassurance" for policyholders. According to public reports from Hong Kong media, Tahoe Life currently has about 92,000 policies, involving policy liabilities of about 18 billion yuan, and all policies will continue to be effective and will not be affected in any way.

In fact, as an extremely important chess piece in the "Taihe" financial empire founded by Huang Qisen, every step taken by Taihe Life Insurance is deeply influenced by Taihe Group.

Although signs of industry adjustment have already appeared, it is not easy for real estate companies that rely on high leverage, high debt and high turnover models to achieve rapid expansion to adjust their direction gracefully and make a smooth transition.

Previously, under the heavy debt burden, the "Taihe Group" continued to explore the path of self-salvation. As the soul figure, Huang Qisen, despite being listed as a dishonest debtor, publicly criticized and warned by the Shenzhen Stock Exchange, and cooperating with relevant departments in investigations, he has always been closely involved in and led a series of key operational activities of Taihe Life, and has never really left the core management position.

Things took a sudden turn after Taihe Group collapsed. Huang Qisen tried to bid farewell to the development pressure brought by high leverage through a series of actions such as selling projects, equity financing, price cuts and promotions, but in the end the results were minimal and he still failed to successfully prevent the risk of derailment. The various substantial overdue debts that came one after another were like a mountain, suffocating Taihe Group.

As of July 18 this year, Taihe Group has been receiving legal documents from multiple courts regarding loan disputes and bill disputes. For example, as of now, Taihe Group's subsidiaries have not yet repaid the principal of 2.4 billion yuan of loans from Bohai Trust and 3.14 billion yuan of loans from Changan Trust.

Today, the Hong Kong Insurance Authority's decision to appoint Deloitte to take over Tahoe Life is also a true reflection of the series of adverse chain reactions caused by the Tahoe Group's involvement in multiple legal proceedings for debt collection.

It should be noted that before this, the Hong Kong Insurance Authority had found that Tahoe Life Insurance was suspected of violating regulatory requirements and conducting some connected transactions. Specifically, from the end of 2019 to the beginning of 2020, Tahoe Life Insurance purchased structured notes and investment funds linked to bonds of Tahoe Group, a related company operating real estate business in the Mainland, for approximately HK$2.2 billion. However, since July 2020, the bonds issued by Tahoe Group have defaulted, and the situation has continued to this day. The value of this investment has plummeted to date.

Fortunately, after the Hong Kong Insurance Authority exposed the risky investment, it immediately imposed control measures on Taihe Life to safeguard the legitimate rights and interests of policyholders, including: protecting Taihe Life’s bank deposits and assets in Hong Kong; strengthening monitoring to prevent Taihe Life from conducting related transactions in violation of regulatory requirements; and restricting Taihe Life’s investments.

Affected by this, Taihe Life Insurance had to stop accepting new policies from February 2021.

However, the crisis has not been completely resolved. In 2023, the Hong Kong Insurance Authority once again upgraded its control over Tahoe Life Insurance and appointed Alyssa Chia and Peter Greaves of PricewaterhouseCoopers as consultants to provide support to Tahoe Life Insurance in several specific areas including asset and property management, investment strategies and distribution of dividends to policyholders.

However, Tahoe Life has yet to submit audited financial statements for 2022 and 2023, nor has it fulfilled its promise to introduce new strategic investors. Its corporate governance issues also need to be improved. In addition, the company's major shareholders are involved in multiple legal proceedings for debt recovery, so the decision to take over Tahoe Life was made last weekend.

The Hong Kong Insurance Authority believes that it is necessary to appoint a manager at this time to verify Taihe Life’s latest financial status and solvency as soon as possible, in the best interests of policyholders, safeguard the company’s assets, and seek the best company recovery plan.

The story has entered its final chapter. Tahoe Life has become the first life insurance company to be taken over by the Insurance Authority of Hong Kong, and Huang Qisen has since waved goodbye to Tahoe Life.

02‍

Lamenting the past, Huang Qisen's "financial dream" fell

In fact, the original intention of establishing Taihe Life Insurance was the most direct reflection of Huang Qisen’s ambition to create a “full financial license” to expand his business territory.

Back to June 19, 2017, Huang Qisen, the controller of Tahoe Investment, and Wang Zuxing, vice chairman of Dah Sing Bank, attended the signing ceremony together, officially announcing that Tahoe had completed the acquisition of the life insurance business of Hong Kong Dah Sing Financial Group for HK$10.6 billion, and signed a 15-year exclusive bancassurance agreement with its subsidiary Dah Sing Bank.

As the dust on the acquisition was settled, Dah Sing Life was officially renamed "Tahoe Life" on November 24, 2017, marking a major step forward for Huang Qisen in the financial field after obtaining the insurance license, completing the construction of a "big finance" map covering multiple fields such as insurance, banking, securities, and third-party payments.

Of course, the input must be proportional to the output in order to justify the positive feedback effect of the huge investment. At that time, Tahoe Life Insurance was also strong enough, and its performance lived up to expectations and ushered in good growth. Public data shows that in the first half of 2018 alone, Tahoe Life Insurance's performance increased five times compared with the same period in 2017. As of 2019, Tahoe Life Insurance's annualized premiums rose by 509% in three years, and the value of new business increased by nearly 140% in two years.

In addition, between 2018 and 2020, Taihe Life Insurance also developed a "hot" financial insurance product "Tai Zunbao". This product became a highly popular star product during the peak period when mainland tourists went to Hong Kong to buy insurance due to its 5-year short-term savings products, US dollar assets, and a guaranteed annual return rate of 4%.

However, the good times did not last long. We are all familiar with what happened afterwards. A series of risk events followed. In 2019, Taihe Group began to sell assets to recover. In 2020, the group defaulted on its debt for the first time. On July 28, 2023, Taihe Group was delisted by the Shenzhen Stock Exchange...

It can be seen that from 2019 to 2022, over the past four years, Taihe Group has gone through a very difficult period and has been stuck in a quagmire and unable to protect itself. The pressure is contagious and has been directly passed on to Taihe Life Insurance, whose own operating conditions have also begun to deteriorate and become difficult.

However, when Huang Qisen initially had to sell the asset to resolve the debt crisis, he had no intention of transferring this precious insurance license.

On April 28, 2020, Tahoe Group announced a suspension of trading and would reorganize and acquire Tahoe Life Insurance, a subsidiary of its major shareholder. The explanation given in the announcement at that time was that Tahoe Life Insurance was engaged in insurance business, and this acquisition would help the company give full play to its synergy advantages and meet the needs of customers at different levels.

Obviously, if the acquisition of Taihe Life Insurance is successful, it will send a positive signal to the market for Taihe Group, which was affected by news about funds and defaulting debtors at the time, and will be conducive to the development of subsequent financing channels for the group.

However, on May 1 of that year, Tahoe Life Insurance suddenly issued a statement saying that the parent company had stopped studying the feasibility of the asset restructuring and decided to terminate the acquisition plan involved in the restructuring. A few trading days later, Tahoe Group had to disclose again, announcing that it had decided to terminate the restructuring due to the company being listed as a debtor by the court and having overdue debts.

As the restructuring and acquisition failed to materialize, Taihe Group is facing increasingly severe debt crisis challenges. Its most urgent need is to accelerate capital inflows to ease financial pressure.

As the projects in his hands were put on the table for "clearance sale" one by one, Huang Qisen spent tens of billions of yuan to recruit Taihe Life Insurance under his command, which was considered an important part of solving the debt crisis of the "Taihe Group". Even if Huang Qisen was helpless, it had to become a rare commodity.

As early as November 2020, there were rumors that insurance giants such as Ping An of China and Sunshine Insurance had come with "earnest money" and intended to bid for Taihe Life's equity with a valuation of more than US$1 billion.

It is foreseeable that if Taihe Life Insurance, as the most valuable and influential financial asset of Taihe Group, is successfully sold, it will surely provide the group with sufficient "blood recovery" funds to temporarily alleviate its urgent needs.

However, according to market rumors at the time, the acquisition plan was eventually shelved because the bid was lower than expected, and there has been no further news since then.

At this moment, with the issuance of a new appointment letter from the Hong Kong Insurance Authority, it has officially been announced that the financial insurance story involving Taihe Life and Huang Qisen has come to an end.

Next, as Taihe Life Insurance broke the 180-year record of zero takeovers in Hong Kong insurance industry, it is obviously not an easy task for the Hong Kong Insurance Authority to smoothly resolve its risks in the absence of relevant experience to refer to. The pressure it faces is evident.

But in any case, now that it has come to this, we also expect the Hong Kong Insurance Authority to provide more solutions to allow Taihe Life to be reborn and become the first benchmark case in Hong Kong to successfully complete risk resolution.

Meicai.com Statement: This article is based on public information. The information or opinions expressed do not constitute investment advice to anyone and are for reference only. The picture material comes from the Internet. Please delete if it infringes.

2024

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