Chinese regulators say foreign companies will be allowed to hold stakes of up to 50 per cent in life assurance joint ventures in China. “Foreign life insurance companies can apply to set up life insurance joint ventures with Chinese counterparts or other enterprises,” the China Insurance Regulatory Commission announced on Friday. “But foreign companies must not hold more than 50 percent of the venture’s total share capital.”
When China joined the World Trade Organisation (WTO) at the end of 2001, it promised to allow foreign insurers “effective management control” of life assurance ventures while capping foreign stakes at 50 per cent. AIG, the first and largest foreign insurance company to enter the Chinese market, is exempt: it can own 100 per cent of its businesses.
The European Union has argued for equal treatment for around 30 other foreign insurers operating in China, where official data suggests the market had premium income of Yuan 212.6 billion yuan ($25.7 billion) in the first half of this year. Foreign companies are allowed to hold 51 percent stakes in non-life insurance firms for two years following the accession of China to the WTO, after which all ownership restrictions will be lifted.