"It is further evidence of China's commitment to open its financial services industry." Sy Sternberg said.
FIVE foreign insurers got the green light to set up life insurance business in China last Tuesday, the day the country became a World Trade Organization member.
Manulife-Sinochem Life Insurance, New York Life Insurance, Nippon Life Insurance, Metropolitan Life Insurance and Tokio Marine & Fire Insurance confirmed that the China Insurance Regulatory Commission (CIRC) had informed them that they can move forward to establish insurance operations.
Almost at the same time, CIRC also gave three domestic players - Taikang Life Insurance, New China Life Insurance and Huatai Insurance - permission to open a total of 43 new branches and 265 sub-branches throughout the country.
The authorities maintained a low profile about the licences and refused to confirm or make any comments on the issue.
Manulife-Sinochem has been granted approval to proceed with preparations for a branch in Guangzhou.
"The approval to open a branch in Guangzhou is the first step in implementing our strategy of becoming a national insurer in China," said Manulife-Sinochem's Deputy General Manager Wang Yuzhong.
The Sino-Canadian insurer has been operating in Shanghai for five years, with more than 3,200 agents serving over 100,000 customers.
The company's insurance premiums had reached 150 million yuan ($18 million) at the end of 2000. For the first nine months of 2001, new business sales increased by 66 percent over the same period last year. Total premiums and deposits grew by 87.5 percent.
Three other insurers were permitted to set up a joint venture life insurance company in China.
"It is further evidence of China's commitment to open its financial services industry," said New York Life Chairman Sy Sternberg.
It is also said that China has given American International Group (AIG), the only foreign-controlled insurer in China who already has eight branches in the country, four new licences to set up and run insurance operations in Beijing, Suzhou, Dongguan and Jiangmen in Guangdong Province.
China will allow foreign insurers to set up joint ventures now that the country has entered the World Trade Organization. Life and non-life insurers can take at most a 50 and 51 percent stake respectively.
China will phase out geographical restrictions in three years, allow foreign insurers into group, health and pensions over five years, and permit wholly owned non-life subsidiaries in two years.
Feng Xiaozeng, vice-chairman of the CIRC, said the overall opening of China's insurance industry will bring about new market opportunities and development scope.
"It will force local insurance companies to speed up their pace of restructuring and turn to the modern corporate mechanism," Feng said at the Shanghai International Insurance Forum last week.
Currently, China has 26 foreign insurance companies from 12 countries. But they only enjoy a 1 percent market share.
A total of 198 representative offices have been opened by insurers from 19 countries, lining up to get the licence to operate or expand their business in China's fledging insurance market.
Shanghai's insurance premiums reached 16.2 billion yuan ($2 billion) between January and November this year, up 42 percent on the same period last year.
(China Daily December 20, 2001)
