Property insurer Huatai Insurance Co Ltd said Wednesday it had taken a step closer to its target of restructuring into a group company after its asset management subsidiary won regulatory approval to commence business.

The Huatai Asset Management Company is so far the third asset management company set up by Chinese insurers, and the first after rules governing insurance asset management firms came into effect last June.

The China Insurance Regulatory Commission (CIRC), the industry's watchdog, promulgated the rules last April, laying the legal framework for insurers to set up specialized subsidiaries to manage their growing indemnity funds.

Before the promulgation of the rules, the authorities approved the establishment of such subsidiaries by the People's Insurance Company of China, the predecessor of PICC Holdings, and China Life, the nation's largest non-life and life insurer.

China Reinsurance Group also reportedly won regulatory approval late last year to establish an asset management firm.

Huatai Insurance said it had attached equal importance to asset management with underwriting operations since its establishment eight years ago.

Its annual investment yield averaged at an impressive 8.68 percent over the eight years, bringing the insurer a total of 1.26 billion yuan (US$152 million) in returns, it said.

"The approval for Huatai Asset Management Company to commence business marks an important step in Huatai's transition into a professional, internationalized and high-quality financial services group," the company said.

Huatai Insurance Chairman Wang Zimu told CIRC's annual conference last Saturday that the company is on the way to becoming an insurance group.

The company has won approval to set up a life insurance subsidiary. The life insurer, Huatai Insurance and the new asset management firm will lay the basis of Huatai Insurance Group, which Wang said will be established "when conditions are ripe."

Huatai Insurance reported substantial improvement last year, following a few years of business readjustments. Underwriting profit rose considerably last year, with its combined ratio, or losses and expenses divided by premiums, standing at a robust 91 percent, Wang said.

(China Daily January 13, 2005)