Global financial services provider ING Group NV and Beijing Capital Group said yesterday they had received regulatory approval to establish a Beijing branch for a life insurance joint venture.
The Beijing Branch of ING Capital Life Insurance Company (ICLIC), a 50-50 joint venture by the two firms, is expected to be launched in the first quarter of next year with an initial force of 300 agents selling a mix of traditional life and personal accident products, the companies said.
"It is a major step for us because it will create an ING operation in the heart of the capital of China, and we believe that with our partners - Capital Group - and their specialized knowledge of the Beijing market, we will be able to provide a compelling choice for consumers," said ING Group Chairman Michel Tilmant.
Patrick Poon, chief executive officer of Greater China, ING Insurance Asia Pacific, said: "We are delighted with the success of ING Capital Life, and we view the approval to establish a branch in Beijing as a significant development in the growth and expansion of our joint venture."
"As deregulation in the industry continues and the product mix expands, we look forward to leveraging ING's expertise to launch new, innovative products into the marketplace."
The Beijing branch of ICLIC will expand ING's presence in China to four cities. ICLIC was established in December 2002 in Dalian, Northeast China's Liaoning Province.
In Shanghai, China's financial hub, ING has another joint venture with China Pacific Insurance - Pacific Antai Life Insurance Company (PALIC), which set up a branch in Guangzhou, South China's Guangdong Province earlier this year.
The subsidiaries are all enjoying rapid growth, the executives said. The two joint ventures saw a 24 per cent growth in premium income in the first half of this year. And PALIC has appointed 500 agents and earned over 4 million yuan (US$480,000) in premium income since February.
"With the addition of Beijing next year, we have high hopes for the company," said Tilmant.
He said ICLIC plans to employ up to 1,000 agents by the end of next year in Beijing, and will look at other forms of distribution, particularly bancassurance.
The company, which came to the competitive Beijing market relatively late compared to other foreign players, faces stiff competition.
Many foreign insurance firms have entered the Beijing market, and many others see the Chinese capital as their first choice when opening new branches because of its huge potential, analysts said.
The city's life insurance premiums totalled 22 billion yuan (US$2.7 billion) last year, accounting for 3.6 per cent of bank savings by local residents, which compares to the European Union's 20 per cent ratio of life insurance premiums to household financial assets.
"If we can have 5 per cent (of the Beijing market) at the end of six to seven years, we'll be very happy," Poon said.
Next year, ICLIC plans to apply to open branches in Shenyang, the capital of Liaoning, and one city in East China's Shandong Province - either Qingdao or Jinan, according to Barry Tsai, chief executive officer of ICLIC.
Poon said ING's China insurance business is projected to grow by 25-30 per cent this year, and 25 per cent next year.
