China's first national shareholding property insurer said on Monday it will take strong measures to cement its position in the fledgling but very promising domestic insurance market.
Wang Zimu, chairman of Huatai Insurance, said such measures included a public flotation, selling part of its stake to foreign insurance firms and the establishment of a joint venture life insurance company.
"The company is scheduled to enter the coaching period very soon," said Wang at the celebration ceremony Monday to mark its fifth anniversary.
The coaching period refers to a period of time - usually six months to one year - required by the Chinese Securities Regulatory Commission (CSRC) as pre-requisites for applicant listed companies to improve their corporate governance with the help of CSRC underwriters.
Duan Shengwu, assistant president of the company, said the coaching period for Huatai would have to be one year before it could get the greenlight for a public listing.
The move is a sign that more domestic insurance enterprises are queuing up for public flotations in a move to improve their competitiveness in the market.
Earlier this year, the Shanghai-based Dazhong Life Insurance Company announced that it had already completed a six-month-long coaching period and was ready to file documents to the authorities for a public flotation.
And a number of other domestic insurance giants, including China Pacific Insurance Co, the New China Life Co and Ping An Insurance Co, are also reported to be targeting the stock market.
Huatai is even planning to sell less than 25 percent of its total stakes, which stand currently at 1.3 billion yuan (US$ 157.1 million), to a number of foreign companies.
Although reluctant to reveal the names of these foreign companies, Duan said all were world insurance giants. He added that the stake transaction will be publicized ahead of its public listing.
"So far, we have nearly completed the negotiations with a number of foreign companies, and we are preparing to file documents to the regulatory authorities to get the green light," said Duan.
The company is also laying the foundations for further business success by establishing a joint venture life insurance firm with foreign counterparts.
This would make it the first domestic property insurer to launch a life insurance business following the split of life and non-life businesses of the People's Insurance Company of China and China Pacific Insurance Co in recent years.
Founded in 1996, Huatai has already turned into one of the most profitable property insurers in the China market. Its total revenue had hit 1.38 billion yuan (US$166.67 million) by the end of 2000.
As the fourth largest property insurer, the company has founded a national network based in coastal areas, including Beijing, Shanghai, Tianjin, Nanjing, Shenzhen, Qingdao, Guangzhou and Dalian.
Insurance Market: Fierce Competition, Huge Potential
Socially and politically stable and for a fast-growing economy, with a huge population, and welfare reforms being carried out, these have made China's insurance market quite attractive to investors both in China and abroad, says Meng Zhaoyi, vice director of the International Department of China Insurance Regulatory Commission (CIRC). China began to have its first insurer in 1949, but all businesses related were practically called to a halt in 1960. When resumed in 1980, the nation's insurance premium was only 640m yuan. While last year the figure reached 159.6bn yuan, showing a yearly average growth of 26 percent within 20 years.
(People's Daily 09/25/2001)
