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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 
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