Two Foreign Insurers Approved to Prepare, Accelerating Foreign Participation in China's Insurance Market

The pace of foreign capital participation in China's insurance market is accelerating. Recently, the General Administration of Financial Supervision announced at the 2024 Financial Street Forum Annual Conference that it has officially approved the establishment of a property insurance company in Beijing by the French Paris Insurance Group and the German Volkswagen Financial Services Overseas Company—Beijing Fubon Tianxing Property Insurance Co., Ltd. (preparation), and the establishment of an insurance asset management company in Beijing by the American Prudential Insurance Company—American Prudential Insurance Asset Management Co., Ltd. (preparation). Reporters from the Shanghai Securities News learned from the industry on October 22 that the two foreign insurance institutions have officially started their preparatory work.

Wang Xiangnan, deputy director of the Insurance and Economic Development Research Center at the Chinese Academy of Social Sciences, told reporters that the simultaneous approval of the preparation of the two foreign insurance institutions, on the one hand, indicates that China's insurance industry has further deepened its opening up to the outside world, providing a more relaxed policy environment for foreign capital to increase its stake in the Chinese insurance market. On the other hand, the continuous increase of foreign capital in the Chinese insurance market shows its confidence in the future development of China's insurance industry, which will attract more foreign institutions to enter the Chinese insurance market.

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Public information shows that the American Prudential Insurance Company, founded in 1875, is one of the largest life insurance companies in the United States. The French Paris Insurance Group has various branches in more than 30 countries and regions worldwide, with assets under management reaching 255 billion euros, making it the world's largest insurance company specializing in banking insurance and borrower insurance.

At present, nearly half of the top 40 foreign insurance companies have entered China. According to Xiao Yuanqi, deputy director of the General Administration of Financial Supervision, as of the end of 2023, foreign insurance institutions have established 67 business institutions and 70 representative offices in China, with the total assets of foreign insurance companies reaching 2.4 trillion yuan, and their market share in China's insurance industry has reached 10%.

This year, foreign capital has accelerated its pace of increasing its stake in the Chinese insurance market through equity acquisitions and strategic investments.

Specifically, in May of this year, China National Petroleum Corporation Capital Co., Ltd. transferred 51% of its equity in China-Italy Property Insurance to Assicurazioni Generali, making China-Italy Property Insurance a wholly foreign-owned property insurance company; in the same month, Taiping Pension announced plans to introduce a new shareholder, Fortis Group, holding about 10%; in June of this year, Prudential International Insurance Holdings Limited won 10% of the equity in Qianhai Reinsurance; in the same month, Guomin Pension announced plans to introduce Allianz Investment Co., Ltd., a subsidiary of Allianz Group, as a strategic investor through the issuance of new shares to increase capital, holding 2%.

The frequent increase of foreign capital is expected to promote the deepening reform of China's insurance market. Zhu Junsheng, a member of the Expert Committee of the China Insurance and Social Security Research Center at Peking University, said that the frequent increase of foreign capital in the Chinese insurance market not only promotes competition in China's insurance market through innovative insurance products and services but also brings basic knowledge and management experience in international insurance operations, which is conducive to forming a consensus on reform in China's insurance industry, thereby promoting the deepening reform of China's insurance market.

Li Guochun, a second-level inspector of the International Cooperation Department of the General Administration of Financial Supervision, recently said at a press conference of the 2024 Financial Street Forum Annual Conference that the General Administration of Financial Supervision is continuously improving the system and mechanism of high-level opening up to the outside world, steadily expanding institutional opening up, and continuously expanding the breadth and depth of opening up. After the General Administration of Financial Supervision introduced 34 opening measures for the banking and insurance industries, both foreign banks and foreign insurance companies have achieved good results in terms of institutions, product supply, and participation in the depth and density of China's banking and insurance markets.

"Opening up to the outside world is a bright sign of Chinese-style modernization and an important driving force for the reform and development of the financial industry. China has always been a hot land for global investment, and the door to opening up will only open wider and wider." Li Yunze, director of the General Administration of Financial Supervision, recently said at the opening ceremony of the 2024 Financial Street Forum Annual Conference that the General Administration of Financial Supervision will focus on creating a market-oriented, rule-of-law-based, and international business environment with higher standards, greater strength, and more practical measures, and continue to promote high-level financial opening up.With the increasing penetration of foreign insurance companies into the Chinese insurance market, their prudent business philosophy will be promoted in our country. Especially their experience in the development of long-term protection business will have a more profound impact on the Chinese insurance market, thereby promoting further transformation and high-quality development of the Chinese insurance market.