Three insurance companies will be launched later this year following a split of China Re to mark the completion of the much planned restructuring of the country's sole State-run reinsurer.
The reform of the Beijing-based reinsurer will lead to an injection of massive funds from corporate investors from both overseas and domestic markets, according to a senior official with the firm in charge of the shareholding reform, who declined to be identified.
According to the set reform plan, China Re will be reshaped into a holding financial group covering three different companies. They will be responsible for non-life, life reinsurance and direct non-life insurance business.
The companies are the China Property Reinsurance Co (CPRC), China Life Reinsurance Co (CLRC) and China Continent Property Insurance Co.
Referring to the planned China Continent Property Insurance Co, the official said over 50 per cent of the total stake will be sold to external corporate investors, with China Re taking a controlling share.
"We have already reached agreement with these investors and the new firm is set to be kicked off in late September," the official said.
With a set 1 billion yuan (US$120 million) in registered capital, China Continent will bring in over 100 million yuan (US$12 million) from overseas corporate investors.
It will be established at three of China Re's existing branches in Shanghai, Shenzhen and Chengdu.
And other stakes worth more than 400 million yuan (US$48 million) will go to domestic companies.
In relation to the business restructuring of China Re into life and non-life reinsurance units, the official said a number of strategic investors are in talks with China Re for stake takeovers.
Apart from overseas investors from Japan, Singapore and the Hong Kong Special Administrative Region, major domestic investors include large State-owned enterprises and private companies.
Each of the planned life and non-life reinsurance firms will be operating with registered funds of 800 million yuan (US$96.61 million), with foreign investors taking a ceiling 25 per cent stake in them.
Both of the firms will be officially established in November, at a time when foreign rivals are not fully ready to begin their business in China.
Last year, two of the world's largest reinsurers - Swiss Re and Munich Re - gained approval from central regulators to set up branches in China, but neither has officially debuted.
The unidentified official said: "China Re is still waiting for the green light from the central regulators for the reshaping of the group, following which the three companies can be established."
China Re, with a premium of 19.18 billion yuan (US$2.31 billion) in 2002, received the official go-ahead from the State Council late in January to start its planned reform.
It is the third State-run insurer to gain permission from the State Council, China's cabinet, for such a move.
The others, the People's Insurance Company of China and China Life - the nation's two biggest State-run insurers - are set to go for massive initial public offerings on overseas markets, most likely in Hong Kong in autumn.
(China Daily July 3, 2003)
