|
Citigroup targets life insurance joint venture
By Sun Min (China Daily)
Updated: 2004-06-05 09:04
US-based Citigroup will make another substantial move to expand its business in China, with the expected launch of a joint venture life insurance company in Shanghai early next year.
The China Insurance Regulatory Commission (CIRC) has granted permission to the Travelers Insurance Company, a subsidiary of Citigroup, and Shanghai Alliance Investment Ltd to launch a 50/50 joint venture life insurance firm in Shanghai.
The two sides will begin preparations to build the venture, which hopes to open for business early in 2005, according to a statement issued by Citigroup on Friday.
"The venture is still to get a final approval from CIRC to start operation, but we will try to get everything ready according to relevant laws and regulations as soon as possible," said Wang Li,spokeswoman for Citigroup in China.
Michael Froman, president and CEO of CitiInsurance, Citigroup's international insurance business, said the firm's expansion into life insurance in China is part of broader efforts since 2000 to develop its insurance underwriting and distribution business in Asia. It will also enrich its product range in China.
Citigroup already has been doing corporate, investment and consumer banking with branches in five key Chinese cities, including Beijing and Shanghai.
Its subsidiaries also acquired qualified foreign institutional investor (QFII) and QFII custodian licences.
In February, Citibank and Shanghai Pudong Development Bank announced a joint effort to develop a credit card business in China.
Shanghai Alliance Investment Ltd, founded in 1994, is a professional investment company funded by the Shanghai branch of the State-owned Assets Supervision and Administration Commission.
Travelers Insurance Company is Citigroup's international insurance arm, with representative offices in Beijing and Shanghai.
According to existing regulations, foreign companies can set up life insurance joint ventures in China with a maximum stake of 50 per cent.
Compared to developed markets, life insurance is still a rather new business in China, but has a huge growth potential, based on the country's vast population and strong economic momentum.
The entry of some pilot insurance joint ventures since the 1990s, including AIA and Manulife-Sinochem Life, has increased competition in the market.
China has promised to lift the geographical restrictions for foreign insurance companies in December. It is hoped that new licence approvals on foreign insurers or joint ventures will move faster.
By the end of May, 38 foreign insurance companies launched 68 operational institutions in China.
Though their market share is still limited at around 5 per cent nationwide, in some major cities, foreign insurers and their joint ventures are developing business rapidly.
In Shanghai, one of the pilot cities to open up the insurance market, foreign insurance companies have already taken up more than 10 per cent of the market share.
Meanwhile, China is to implement the detailed rules on implementation of the regulation on foreign insurance companies on June 15.
It is expected to provide foreign companies national treatment by lowering their minimum registration capital.
According to CIRC statistics, foreign insurers reported a 56 per cent growth in premium sales in the first four months of the year to 2.9 billion yuan (US$350.2 million).
|
