China’s Bank of Communications to Launch Mainland P/C Unit

Reports from a number of sources (Bloomberg, Asia Pulse) indicate that China’s Bank of Communications Ltd. (BC) is planning to form a partnership to enter the P/C business on the mainland.

BC, China’s fifth largest commercial bank, formed a wholly-owned insurance subsidiary, China Communications Insurance Co., registered in Hong Kong in 2002. The reports indicate that discussions with potential mainland Chinese partners are well advanced, and that the company may soon submit a license application to the China Insurance Regulatory Commission (CIRC).

Bloomberg’s report notes that “China’s insurance market tripled in the past five years to $52 billion, about 5 percent of the premiums collected in the U.S., which has a quarter of the population. The bank, in which HSBC Holdings Plc owns a 20 percent stake, will face greater lending competition in 2007 when overseas banks can start to provide local-currency loans to Chinese individuals.”

While foreign insurers and financial services companies have mainly targeted China’s life sector for investment, P/C insurance is also a growing market in the country. Total premiums increased last year by 16 percent to around $8.4 billion.