PICC Holding Co, which owns China's largest property insurer PICC Property and Casualty Co, is moving closer to its goal of becoming a financial group operating both life and property insurance businesses.

The company's life insurance joint venture, which is still being developed, will soon start recruiting senior managers, sources said yesterday.

The joint venture, which will be 51 per cent owned by PICC Holding, won regulatory approval earlier this year, and investors have held a meeting to mark the firm's establishment.

The life insurer will be 29 per cent owned by Sumitomo Life Insurance Co, Japan's fourth-largest life insurer, while Hong Kong's Asia Financial Holdings Ltd and Bangkok Bank Public Co, Thailand's biggest bank, will each hold 10 per cent, according to a Bloomberg News report yesterday.

The new company, which will have initial capital of 1 billion yuan (US$121 million), will be the first foreign venture to receive a nationwide licence, which means it does not need further regulatory approval to open branches, Philip Ho, Asia Financial's spokesman in Hong Kong, was quoted by Bloomberg News as saying.

The establishment of the life insurer will be a key step forward in PICC Holding's "comprehensive operations" plan with the ultimate goal of forming a financial conglomerate.

PICC Holding unveiled its health insurance subsidiary last week, which is 51 per cent owned by the company and 19 per cent held by German health insurance giant DKV.

"The establishment of PICC Health Insurance is a reflection of PICC's strategy of comprehensive operations," Tang said at a ceremony marking the inauguration of the health insurer.

Besides PICC Property and Casualty, which holds around two thirds of China's property insurance market, PICC Holding now also owns an asset management firm in Shanghai.

Chinese insurers are not allowed to conduct both life and property insurance concurrently. But many are branching out into other business arenas, largely by restructuring into group companies, to enhance their competitiveness in the face of growing foreign rivalry.

Among others, Huatai Insurance Co Ltd, a major property insurer, launched its life insurance arm last week.

Chinese insurers are expecting much more fierce foreign competition in the domestic market. The government lifted nearly all restrictions on foreign insurers near the end of last year, allowing them to set up shop anywhere in the country.

China's insurance markets have grown by an average of more than 30 per cent during the past two decades. The life insurance sector, which has huge potential given the staggering 1.3 trillion yuan (US$156 billion) in personal savings in the country, is particularly attractive to foreign insurers.

Despite worries about foreign competition, Chinese regulators have been encouraging local insurers to team up with foreign counterparts in order to improve their management and expertise.

Source: China Daily