First fully foreign-owned insurance company gets the green light
November 19, 2019 Category China News Round-up, Weekly
The China Banking and Insurance Regulatory Commission (CBIRC) has approved the establishment of Allianz (China) Insurance Holding Co, the first fully foreign-owned insurance holding company, marking a major step toward the liberalization of domestic financial markets. Based in Shanghai, the company received authorization to begin operations. The approval follows a series of measures announced by the government to further open up the country’s financial markets and encourage investment by foreign financial institutions. In July, the Financial Stability and Development Committee announced the removal of foreign ownership caps for futures companies, securities firms and fund houses by 2020, a year earlier than scheduled.
The acceleration of the opening up of China’s financial markets will bring multiple benefits to foreign investors and the financial sector, analysts said. Wang Guojun, Finance Professor at the University of International Business and Economics (UIBE), said that “by setting up a fully foreign-owned insurance holding company in China, foreign insurers can explore more business opportunities in research, investment, product design and customer service and compete with domestic insurance groups.” Solmaz Altin, CEO of the new insurance company, said: “With the new holding structure in place, we are able to better serve an expanding middle class with our range of financial solutions.”
So far, a total of 12 domestic insurance groups account for more than 70% of premium income in China’s insurance sector. “We need more market participants in different types of ownership. A larger number of fully foreign-owned insurance holding companies, and joint ventures will encourage learning from one another through competition, Professor Wang said. Zhou Jin, PwC China financial services consulting partner, said that as foreign stakeholders can now have a controlling interest in financial institutions and set their strategic direction, they will be more willing to increase their investments”, the China Daily reports.
Global financial service providers are placing also more weight on environmental, social and governance (ESG) elements in their development strategies in China. Moody’s Corp announced in late October that it would acquire “a minority stake” in SynTao Green Finance, a leading provider of ESG data and analytics based in and serving China. The Beijing-based SynTao Green Finance also provides ESG ratings and green bond verification to financial institutions and corporations. As Chinese A shares have been included in the MSCI benchmark indexes, the ESG criteria have become more important to evaluate Chinese listed companies.
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