China has rejected an application by American International
Group Inc to turn its Shanghai life insurance branch into a wholly
owned subsidiary, the top insurance regulator said yesterday.
AIG's American International Assurance unit has applied to
transform its Shanghai branch into a subsidiary, which "actually"
equals setting up a wholly owned life insurer and is against
Chinese regulations, the China Insurance Regulatory Commission said
yesterday on its Website.
The attempt by the world's biggest insurer contravenes China's
World Trade Organization agreements - overseas life insurers can
only set up joint-venture life insurance business in China and can
own no more than 50 percent.
The plan has "legal barriers" and won't be approved, the
regulator said.
AIA was not available for immediate comment yesterday.
AIA is one of the first overseas life insurers to tap the
Chinese market. Its premiums topped 7.02 billion yuan (US$949
million) at the end of October as the biggest overseas life insurer
in China.
China allows overseas insurers to set up a wholly owned
subsidiary only in the non-life insurance area.
AIU Insurance Co, the non-life affiliate of AIG, won approval to
grant the branch subsidiary status earlier this year.
The Shanghai-based subsidiary, named AIG General Insurance Co
China Ltd, opened operations in late October. AIU branches in
Shanghai, Guangdong and Shenzhen, which formerly directly reported
to its US headquarters, are now consolidated into AIG General.
(Shanghai Daily December 11, 2007)
