Asian News - China: At least 3 registered local reinsurers now in growing market
Source: Asia Insurance Review | Apr 2016
The Chinese reinsurance market has been astir in recent months with CIRC approving the third licence for a local reinsurer.
The People’s Insurance Company (Group) Of China and PICC Property and Casualty Company have received approval from the insurance regulator to jointly establish a reinsurance company, called PICC Re. The new reinsurer, based in Beijing, will have a registered capital of CNY1 billion (US$153 million).
In November 2015, Taiping Reinsurance received approval from CIRC to convert its Beijing branch into a subsidiary, Taiping Re (China) which is the country’s second licenced local reinsurer. The first local reinsurer is China Re, which has its roots in PICC. China Re went public last year to strengthen its capital base ahead of increased competition.
In addition, recent media reports say that CIRC had approved the establishment of Qianhai Re in Shenzhen by several non-insurance companies. Qianhai Re will have a registered capital of CNY3 billion.
Separating existing RI business from insurers’ business
A reinsurance source said that the series of CIRC approvals for new reinsurers should not be described as liberalisation of the reinsurance market. “Rather, for many years, no local entity had wished to apply for a reinsurance licence. One reason is that major foreign reinsurers entered the Chinese market early. Another reason is that some Chinese insurance companies had internal reinsurance departments. The reinsurance business was of a scale adequate for a department to handle. Now, with the growth of the insurance market and the increased capacities of insurers, several insurance companies feel that it is an appropriate time to establish reinsurance companies to facilitate expansion.”
Another source said new reinsurers like PICC Re and Taiping Re (China) are simply segregating their reinsurance and insurance business.