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AXA-Minmetals Assurance Co, the first Sino-French joint venture life insurer, is planning a number of moves in 2005 to expand its presence in China and prepare for the full opening of the country's booming insurance market.
These efforts include a fund injection to further cement its capital base, the opening of more branches, the introduction of further product lines and the development of sound distribution channels.
The Shanghai-based life insurer announced the opening of its Beijing branch yesterday, its second on the mainland. The company opened its first branch in Guangzhou, capital of South China's Guangdong Province, in 2003.
"The launch of our Beijing branch will help us build a framework for a national life insurance company," said Allan L. Lam, president and chief executive officer of the firm, a 51-49 joint venture set up in 1999 by French insurance giant AXA and Chinese metal flagship Minmetals.
To further enhance the joint venture's financial strength, the two partners signed an agreement to double their investment in the firm from the current 500 million yuan (US$60.38 million) to 1 billion yuan (US$120.7 million) by 2008, a financial prerequisite for its expansion.
Lam said the firm will further penetrate the neighbouring regions of its three existing bases, with a target of becoming one of the country's top foreign-funded life insurers in three to five years.
This is a lofty goal for Lam, an industry veteran whose firm generated just 175 million yuan (US$21.16 million) in premiums in 2004 in a market that reaped 431.81 billion yuan (US$52.21 billion) in premiums last year alone.
In Shanghai and Beijing, two of China's most vibrant insurance markets, income from premiums hit 30.7 billion yuan (US$3.71 billion) and 28.4 billion yuan (US$3.43 billion) respectively.
Beijing's market shows greater growth potential than other developed markets, including Shanghai, Lam said.
He revealed the Sino-French life insurer, the first of its kind to do business in the capital, will introduce 30 new insurance products to Beijing that are currently available in Shanghai, and adjust them to meet local needs.
And the company will develop a multi-lane distribution channel, which will include agents, banking insurance and brokerage firms to boost sales, according to Lam.
"Our past experience (in China's market) is encouraging, and we are planning to open more branches in the near future," he said.
According to senior officials from the firm, AXA-Minmetals is to develop several branches in coastal areas, with a focus on East China.
With regulator's approval, the firm will open another one to two branches this year, said Lam, adding that the company is looking into a base for its expansion into western China.
"Our projected growth in 2005 will be more than 40 per cent, boosted by business in new markets like Beijing and stable growth in Shanghai," said Lam.
Earlier media reports said that the company is planning to open a branch in Foshan, a boomtown in South China's Guangdong Province. But Lam did not clarify the matter.
The group insurance business is seen by the firm as another target area as China lifted the market's restrictions on foreign firms late last year.
The group insurance market could generate tens of billions of yuan annually, a fact not missed by foreign insurers. AVIVA-COFCO became the first joint-venture life insurer to expand into the field with the signing of group insurance contracts with three Chinese partners in January.
"We are speeding up our preparations for that business, and it certainly represents one of our primary targets," said Lam.
(China Daily March 4, 2005)
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