German insurance giant Allianz has announced that it has received approval from the China Banking and Insurance Regulatory Commission to begin the work to create China’s first fully foreign-owned insurance company.
The landmark move, announced on Sunday will see a new company – Allianz (China) Insurance Holding Company Limited, based in Shanghai – become China’s first wholly-owned insurance holding company by a foreign underwriter.
Regulatory approval follows Chinese government’s change of policy in recent years to boost its financial markets. President Xi Jinping made a pledge at this year’s Boao Forum for Asia that the country will expand the access of foreign players in the market and further open up the financial sector, particularly in insurance.
Previously the Chinese state had to own at least 51% of any foreign-owned insurance and financial services companies. But with this landmark change it is expected that a rush of foreign insurance companies will emerge in Chinese territories.
Allianz said that it expects the holding company to be established in 2019, and will work on the necessary preparatory work under the guidance and assistance of the regulatory authorities.
Oliver Bate, chairman and CEO of the Allianz Group said that the move marked a significant milestone for them to expand their presence here and that they are proud to be the first foreign insurer to commence the establishment of a holding company in China.
Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told news outlet The Global Times on Sunday that “the move is in line with the country’s broad efforts to open up its fast-growing insurance sector, after a series of measures announced since the beginning of the year.”
“China’s banking and insurance sector, with its great potential and vast market, is quite attractive to foreign investors, and many of them have applied to set up local subsidiaries since China relaxed restrictions in the sector,” Wang said.
“More permits will be issued to foreign companies in the future,” Wang said.
According to a statement on the official website of the China Banking and Insurance Regulatory Commission (CBIRC), the regulator has recently given approval to 10 financial institutions, including Taiwan’s Fubon Bank, ICBC-AXA Assurance Co, and the Korean Reinsurance Co, to set up local subsidiaries.
Hong Kong’s Chiyu Bank also received approval for a branch in Shenzhen, South China’s Guangdong Province on Sunday, the statement said.