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Global reinsurance giant Munich Reinsurance Company opened its first Chinese branch in Beijing on Friday, blazing the trail for foreign reinsures in tapping one of the world's most promising insurance markets.
In June Munich Re became the first foreign reinsurer to be granted a nationwide composite branch licence in China. Other reinsurance heavyweights like Swiss Re are reportedly waiting for approval from the China Insurance Regulatory Commission.
Munich Re can trace its involvement in the Chinese market back to 1956, mostly dealing in foreign currency-denominated reinsurance for Chinese primary insurers.
Now the company expects to continue to grow with the Chinese market "at the same speed as in the past, if not faster," said Hans-Jurgen Schinzler, chairman of Munich Re.
"In line with the rapid growth of the overall economy, the People's Republic of China's insurance market is developing at an extraordinary rate and surely the time is now right for the international reinsurance market to play its part in managing the risks and controlling the accumulation being generated," he said during a ceremony on Friday.
China's total payments in insurance premiums have been growing at double-digit rates in recent years and Munich Re expects China to be one of the top 10 insurance markets in the world as early as 2010.
Besides tapping the growth potential of the Chinese market, Schinzler said his firm is also committed to helping the local insurance industry grow with Munich Re's global reinsurance resources.
"Certainly this marks a very important landmark for Munich Re, but I would argue that it represents a highly significant step for the whole insurance industry in the People's Republic of China," he said.
Although the Beijing branch is limited to only 300 million yuan (US$36 million) in working capital, the company's entire financial strength is behind it, the chairman said.
"The meaning of opening a branch company is that you make available the whole capacity of Munich Re to that market," Schinzler said. He said Munich Re's shareholders' equity now stands at nearly 20 billion euros.
"Our vast international insurance and reinsurance experience will help the Chinese market learn from the mistakes made elsewhere in the world but also allow the market to benefit from risk assessment and management techniques which have been developed over many decades," he continued.
Knowledge transfer, the chairman said, is one of Munich Re's key responsibilities in China.
"We take that very seriously," he said. "As a partner, we want to be predictable and we want to be reliable on a long-term basis."
The state-owned China Reinsurance Company is currently China's only reinsurer, which Schinzler said his firm is co-operating with in sharing risks.
(China Daily October 25, 2003)
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