China’s insurance regulator has advised domestic insurers to bring in more foreign or domestic strategic investors, according to Reuters. This will help improve their managerial structures that are already influence too much by major shareholders, Wu Xiaoping, vice chairman of China Insurance Regulatory Commission, told a conference on Saturday.
Good shareholding structures, new shareholdings that bring capital and strategic cooperation, and strategic investment in the banking industry were all cited by Wu as priorities. Reuters reports that Beijing wants to increase foreign capital and expertise into the sector, and HSBC Holdings Plc. and Goldman Sachs Group have both invested in the country’s large insurers such as China Life insurance Co. and Ping An Insurance. The insurance regulator has also told insurers they could work with foreign companies in the asset management business and set up between six and eight joint-venture asset management companies.
With these changes comes intensified supervision, said Wu. “Chinese insurance companies so far have only established frameworks for restructuring,” Wu added. “It’s too superficial and they still have a long way to go.”
Foreign insurers account for 37 of the 61 firms operating in the rapidly growing market, though Chinese insurers still have dominant market share, according to the news agency. Total foreign capital in the Chinese insurance market reached 194.8 billion yuan ($23.5 billion) in 2003, up from only 4 billion yuan in 1999, state media reported this month.