American International Assurance Friday announced the opening of its Beijing branch, making it the first foreign insurer to offer life-insurance services in the Chinese capital.
The firm is a subsidiary of the American International Group, the world's largest insurer. The move marks the insurer's latest aggressive campaign in developing business lines in China, following the opening of branches in Shanghai and in Guangzhou, Foshan and Shenzhen of South China's Guangdong Province in the 1990s.
Simpson Hsu -- the business head of the firm's wholly owned Beijing branch -- said the branch will offer all-round life-insurance products to local customers. He said the firm anticipates making 25 million yuan (US$3 million) in premiums by the end of the year.
At the branch opening ceremony, Maurice Greenberg -- American International Group chairman and chief executive -- said: "China is one of the markets that experience the most rapid growth in the world. We expect that our premium will see a 25 percent growth in China this year."
American International Assurance got the go-ahead in 1991 to set up its branch in Shanghai, making it the first foreign company to be allowed to offer insurance services to Chinese customers. The firm is one of the most successful foreign insurers in China.
Its annual premium income in China was about US$200 million last year, mostly coming from its life-insurance business in Shanghai.
When China joined the World Trade Organization last December, it promised to open its life-insurance market immediately to foreign insurers in four cities -- Dalian in Northeast China, Foshan, Guangzhou, Shanghai and Shenzhen.
The door will open further to 10 other big cities within two years of China's WTO accession, including Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Tianjin and Wuhan.
But other foreign firms will have to form joint ventures with Chinese counterparts, rather than following American International Assurance's suit and launching wholly owned branches.
Although the eight foreign firms on the Chinese mainland now account for only 2 percent of the market, some analysts say that foreign players will grab 50 percent of the local market within the next 20 years.
Life insurance is believed to be the key battlefield in China's insurance market as it has enjoyed the most rapid growth, with an annual increase of more than 10 percent.
China's insurance premium income came to about US$20 billion out of a global total of US$2.4 trillion in 2000, a proportion of 0.8 percent.
( June 10, 2002)
