Chinese regulatory authorities further opened the insurance market to foreign companies, announcing that John Hancock had received the go ahead for its planned joint venture with Tainan Insurance Co., and permitting Swiss based Winterhur to acquire a stake in Tai Kang Life.
John Hancock Financial Services and Tainan had received earlier approvals from the China insurance regulatory commission, and today’s approval is the last step before operations can begin.
The two companies plan to invest an initial 200 million yuan ($24.2 million) to build a life company based in Shanghai, which they hope to expand after China joins the World Trade Organization.
Winterhur Life, a unit of Credit Suisse First Boston, becomes one of the first foreign companies to acquire a direct equity stake in a Chinese insurer, but isn’t going to directly enter the market.
According to the Financial Times Winterhur has made a cash investment of an undisclosed amount, has agreed to advise Tai Kang, and will be represented on its Board of Directors, but won’t offer its products to Tai Kang’s 400,000 customers, nor over its On-line site, which is China’s fastest growing Internet insurance portal.
It hopes to cash in on the expected growth in the Chinese insurance market over the next decade, profiting eventually from its investment, if Tai Kang’s shares are offered to the public, and gaining access for its financial products.
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