China: Foreign interest in insurance market at highest level in years
Source: Asia Insurance Review | Jan 2019
Foreign insurers’ interest in China’s insurance market is currently at the highest levels in many years, says international law firm Clyde & Co in a commentary. The legal firm expects a number of significant and creative foreign insurer-invested transactions to emerge through 2019.
Already, Germany’s global insurer Allianz has received approval to establish a 100% owned insurance holding company in China, the first foreign insurer to be granted this green light.
Separately, France’s AXA is buying the remaining 50% of AXA Tianping P&C which it does not already own. AXA’s 100% holding of a local insurer is not new since several foreign insurers already hold 100% of their local venture. The move, though, makes AXA the first foreign insurer to own 100% of a top 20 P&C insurance company in China.
Clyde & Co notes that the CBIRC has issued a slew of new regulations, with a number of aims:
- First, to encourage foreign-insurer controlling equity interests in CBIRC-regulated carriers, brokers and managing agents.
- Second, actively and explicitly to prevent a single domestic shareholder from ever acquiring controlling equity interests in CBIRC-regulated carriers (with grandfathering exceptions remaining – tentatively – for existing circumstances).
- Third, to clean up market misconduct by CBIRC-regulated entities and set significantly higher ‘fit and proper’ criteria for existing and prospective shareholders of CBIRC-regulated entities.
- Finally, to set a new rule for CBIRC-regulated carriers: Solvency, solvency, solvency, with greatly increased fines and punishment for deliberate or careless misrepresentation of a carrier’s solvency position, by the carrier and/or its auditors/actuaries. A