AIG General Insurance Co China Ltd yesterday launched the first merger and acquisition warranty insurance on China's mainland to ride on an expected M&A boom.

The company, the non-life arm of United States insurer AIG in China, is bullish on M&A activities on the Chinese mainland.

The China Banking Regulatory Commission in December allowed banks to issue credit for M&A transactions, the first time the leverage has been extended to M&A activities on the mainland.

Industry watchers expect the move to boost the M&A activities and the global financial crisis also offers some Chinese companies opportunities to invest with relatively lower valuations.

The company is riding this trend and will target existing clients this year and expand its market share further.

The company will also make use of its global network and choose clients carefully controlling risks.

This insurance indemnifies the buyer for losses caused by breaches of warranties given by the seller in the M&A transaction. The policies enable the buyer to claim directly from the insurer without first approaching the seller.

(Shanghai Daily January 8, 2009)