Life insurance JV sets up in Beijing

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Last updated at: (Beijing Time) Thursday, January 08, 2004

Life insurance JV sets up in Beijing

The Skandia-BSAM Life Insurance Company was launched yesterday in Beijing, making it the first joint venture life insurance company headquartered in the capital city.

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The Skandia-BSAM Life Insurance Company was launched yesterday in Beijing, making it the first joint venture life insurance company headquartered in the capital city.

The move also made it the first local presence for the North Europe-based life insurer in China.

The life insurance firm was jointly established between the Skandia Insurance Company Ltd, one of the leading insurance companies in Europe, and the Beijing State-owned Assets Management Co (BSAM), one of Beijing's largest business conglomerates. Both companies own a 50-50 stake.

The firm, with a registered capital of 200 million yuan (US$24.2 million), will introduce long-term saving products and unit-linked products. These are backed by its parent Skandia and were developed in other markets into the local market, said Dora Zeng, general manager of the firm.

Unit-linked products were welcomed by the market two years ago when they were kicked off by domestic insurer Ping An as many insurers also launched similar products, but investors then gave the product the cold shoulder when the stock market turned gloomy more than one year ago. Today, most domestic insurers no longer offer the product.

But the company will not distribute its products through numerous agents -- a prevailing business model undertaken by most insurers -- but via insurance brokerage firms and other agent firms, such as commercial banks.

"Currently, we have already inked deals with a number of insurance agent firms, and talks with commercial banks are also underway and coming to an end," said Zeng.

But she declined to unveil the name of those would-be partner banks.

However, Li Aiqing, chairman of BSAM and also of the joint venture, said that the Chinese partner could provide more support to the joint venture by lining-up Skandia-BSAM with other financial subsidiaries under its management.

This is believed to be a sign that Skandia-BSAM will choose companies like the Beijing City Commercial Bank -- a local bank with a controlling stake taken by BSAM -- as one of its agent firms.

Founded in 1992, BSAM today manages a total of 250 billion yuan(US$30.19 billion) in assets and more than one third are in financial sectors, including commercial bank, fund management companies, security houses, venture capital firms, trust and property trading houses.

And the Skandia-BSAM will not copy other players' model to set up a large investment management department, rather it will entrust its premiums generated from the local market to local fund management companies.

Although the number of good fund management firms remains small and the product lines are still narrow, Skandia-BSAM has found a number of partners for them to manage the firm's funds, said Alan Wilson, SKandia's vice-president.

Despite being the country's capital, Beijing lags behind other major cities in opening-up to foreign insurance sectors.

At this point, Shanghai is home to most foreign-invested insurance joint ventures and Guangzhou, capital of South China's Guangdong Province, is the base for three foreign-funded insurance companies.

China has seen acceleration in opening-up its fragile insurance business following its entry into the World Trade Organization. As it stands, 37 foreign insurance firms -- including 21 life underwriters, 14 property underwriters and two reinsurance companies -- have opened 57 branches in the market.

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