A significant stake in a life insurance company has failed to attract a buyer in its ninth public auction, even after the starting price was slashed to less than 10% of its original value. Information from the JD Asset Trading Platform shows that the ninth auction for a 200 million share stake in Three Gorges Life Insurance Co., Ltd. (hereafter "Three Gorges Life") held by Xinhualian Holding Co., Ltd. has concluded without a successful bid.
The stake, representing 6.59% of Three Gorges Life, was put up for auction again on July 6th. After eight previous failed attempts, the starting price has plummeted from an initial 202 million yuan to just 17.3825 million yuan. The auction closed at 10 a.m. today with no participants registering to bid, despite attracting 36 watchers and nearly 1,000 views.
When contacted by an inquiry posing as a potential buyer, a representative from the auction agency addressed questions about buyer qualifications and whether the repeated failures indicated a devaluation of insurance equity. The representative stated, "Because this 200 million share stake corresponds to a shareholding ratio exceeding 5%, relevant regulations require the interested party to have a net asset value exceeding 200 million yuan and a history of consecutive profitable years. Many enterprises currently do not meet these qualification requirements due to poor operating conditions, which is a major reason for the repeated auction failures, not that the insurance equity is worthless."
Nine Failed Auctions See Price Drop 90%
The initial auction for this stake held by Xinhualian Holding was in February 2026, with a starting price of 202 million yuan, which ended without a sale. Subsequently, the stake was listed multiple times on the JD asset platform, with the starting price successively lowered to 162 million yuan, 129 million yuan, 103 million yuan, 72.3968 million yuan, 50.6778 million yuan, 35.4744 million yuan, and 24.8321 million yuan, all failing due to a lack of bids. The latest attempt on July 6th started at 17.3825 million yuan, still resulting in no bids.
Professor Wang Guojun from the School of Insurance at the University of International Business and Economics commented, "The primary issue is the lack of attractiveness in the equity's intrinsic value; insufficient capital is only a secondary factor. Three Gorges Life has been incurring losses for years. A 6.59% stake offers no management rights and shows no immediate prospect of returns, so capital is unwilling to step in." Long Ge, co-founder and general manager of Zhongtuobang, added that private capital is uninterested because this minority stake lacks strategic synergy (no consolidation or governance voice), faces continuous losses with no dividend expectations, and is subject to strict regulatory requirements on the acquirer's net assets and equity investment ratio, with uncertain approval outcomes and timelines. Against the backdrop of state-owned enterprise regulations, private capital has largely retreated from unprofitable small and medium-sized insurer equities.
The auction is related to the debt disposal of its shareholder, Xinhualian Holding. Once a founding shareholder of Three Gorges Life, Xinhualian Holding faced a liquidity crisis starting in 2020, entered a consolidated restructuring process in 2023, and completed the restructuring plan execution in June 2025. Disposing of its financial equity holdings is a key part of its debt repayment and asset revitalization efforts.
Three Gorges Life Has Yet to Achieve Profitability Since Inception
The target of the auction, Three Gorges Life, was established in 2017 and is a life insurance company headquartered in Chongqing. Notably, the company has not been profitable since its founding. Its premium income has fluctuated significantly in recent years. Annual reports from 2018 to 2025 show insurance business revenue of 11 million yuan, 917 million yuan, 1.102 billion yuan, 624 million yuan, 559 million yuan, 406 million yuan, 333 million yuan, and 633 million yuan, respectively. Net profits for the same periods were -58 million yuan, -119 million yuan, -105 million yuan, -65 million yuan, -110 million yuan, -197 million yuan, -252 million yuan, and -197 million yuan, respectively.
The insurance industry often references a "seven-year break-even, eight-year profit" rule for new insurers. Three Gorges Life is now in its ninth year. The company has been working on restructuring its equity and governance. In 2025, it completed a second round of capital increase from shareholders, raising its registered capital from 1.537 billion yuan to 3.033 billion yuan. Its top four shareholders are now state-owned enterprises from Chongqing, collectively holding 81.88% of the shares. Data for the first quarter of this year shows insurance business revenue of 716 million yuan and a net loss of 37.1846 million yuan.
Professor Wang noted, "Changes are already visible at Three Gorges Life, such as recently hiring investment talent from the market to make breakthroughs on the asset side, which is a very positive sign. Once the company becomes profitable, its equity will naturally become valuable. That is the 'root'; everything else is secondary."
Insurance License Appeal Cools as Investors Focus on Actual Profit
The appeal of insurance licenses to investors has been cooling in recent years, particularly for small and medium-sized insurers. For instance, in February of this year, a 181.5 million share stake in Ancheng Property & Casualty Insurance failed to sell in its fifth auction on the Alibaba Asset Platform, despite repeated price reductions. Similarly, in October 2025, a 7.05 million share stake in Minsheng Life Insurance failed over ten times. According to reports, this was the 18th time Minsheng Life equity had been offered on the market since 2020.
Professor Wang analyzed that the market is no longer speculating on licenses; investment decisions are based on actual profitability, and most small and medium-sized insurers are currently unprofitable or losing money. Policy restrictions also limit many state-owned enterprises from investing in financial firms. He added that some small and medium-sized insurers may require continuous capital injections due to ongoing losses. Minority stakes offer no voice, and the return on investment is uncertain. Disposal paths include further price reductions in auctions, transfer to local state-owned assets, using the equity to offset debts, or splitting into smaller lots for listing. The best option would be to wait for the company to reduce losses before selling.
Long Ge believes the valuation anchor for insurance licenses has completely shifted from "scarcity premium for the license" back to "pricing based on profitability and embedded value (EV)." Most small and medium-sized insurers face high comprehensive cost ratios, declining investment returns, and have not yet crossed the profitability threshold, leading their equity value to approach zero when discounted. The implementation of "C-ROSS Phase II" consumes capital, requiring continuous capital increases. State-owned enterprises are strictly controlling new financial investments under relevant policies, significantly reducing the pool of potential buyers. Simultaneously, IPOs for insurers in the A-share market are largely stalled, and the New Third Board lacks liquidity, leaving financial investors with no clear exit channels. Consequently, the market is only willing to pay for equity in leading or specialized insurers that can generate sustained profits, while minority stakes in long-term loss-making, small and medium-sized insurers with no control are undergoing a painful valuation correction.