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Cathay Life Insurance Co became the first Taiwan insurer to get the green light from Chinese insurance regulatory body to set up shop selling policies on the Chinese mainland.
Cathay Life, the largest life insurer in Taiwan, won the license from the China Insurance Regulatory Commission Tuesday. It is teaming up with China Eastern Airlines Group, the third-largest air carrier on China's mainland to establish a joint-venture life insurance company in Shanghai.
With registered capital of 800 million yuan (US$96.39 million), the 50-50 joint venture is expected to start selling policies by the end of this year, said China Eastern officials yesterday.
"The new company will take full advantage of China Eastern's nationwide sales channels and customer resources, and Cathay Life's rich experience in the industry and technologies as well," said Li Wenxin, vice president of China Eastern.
Ye Yigan, president of Shanghai-based China Eastern Airlines, said the company is expected to carry more than 25 million passengers this year. During the first quarter, the carrier transported about 6.3 million people, a year-on-year 23.05 percent increase.
In addition to the life insurance venture, China Eastern is also interested in tapping into sectors like property insurance and it "will give Cathay Life priority when it chooses partners," said Cao Jianxiong, vice president of the airlines group.
The group, which focuses on airline as its core business, is trying to diversify its business into investing sectors like property, finance and hotels.
Under the current insurance regulations, Taiwan insurers are treated as overseas insurance companies, which means that a Taiwan insurer has to find a mainland partner to form a joint venture life insurance company.
Overseas financial institutions can hold up to 50 percent of stakes in these companies.
However, only those Taiwan insurers that have assets totaling more than US$5 billion, 30 year-plus industry experience and have set up a representative office on China's mainland for more than two years qualify to apply to the CIRC for licenses to sell life insurance policies on the mainland.
"Based on this requirement, only Cathay Life and Shin-Kong Life Insurance Co are qualified to penetrate into the mainland life insurance market," said Cathay Life official who declined to be identified.
"The mainland's fast-growing insurance market offers huge opportunities for overseas insurers," said the Cathay Life official.
(eastday.com April 28, 2004)
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