Foreign insurance giants have cast eye on the Chinese vehicle insurance market in succession.
Hubei Biocause Pharmaceutical Co., Ltd. (SZSE: 000627), a shareholder of Tianping Auto Insurance Co., Ltd., said in a statement on September 3 that AXA SA had initially gained approval from the China Insurance Regulatory Commission (CIRC), the top Chinese insurance regulator, to acquire a 24.4 percent stake in the Shanghai-based vehicle insurance provider at the end of August this year. And after the deal, the French insurance giant would see stake in the Chinese insurer rise to 50 percent in total.
Available information shows that AXA signed an agreement with Tianping Auto Insurance over the deal about four months ago and under terms of the agreement, it will acquire a 24.4 percent stake in the latter from current shareholders of the latter for CNY 1.9 billion. And after wining a nod for the deal, it and current shareholders of the latter will jointly manage the latter. In addition, its property insurance operation in the market will be merged into a newly-established joint venture.
Foreign insurers were allowed to take a minority stake in a Chinese insurer in the past, thus it was a great breakthrough for AXA to make this time. And in line with industry observers, an increasing number of foreign insurers will buy into Chinese property insurers as a strategic investor in the future.
People in the circle pointed out that it was fast growth as well as rebounded underwriting profit of the Chinese vehicle insurance market that directly caused foreign insurers to cast eye on property insurers in the market in succession. And for instance, Zurich Insurance Group quit New China Life Insurance Co., Ltd. this July due to recession in the Chinese life insurance market and by then, it had invested in the leading Chinese insurer for 13 years. And during the period, it injected about USD 551 million into the Chinese life insurance market.
In line with Zurich Insurance, the proceeds will be used for investment in Asia again. Actually, it is busy in fighting against US-based Liberty Mutual Insurance Group and both of them want to buy into Sinosafe General Insurance Co., Ltd., a Shenzhen-based property insurance provider.
China is the biggest auto market in the world and vehicle insurance business contributes to about 70 percent of the property insurance market. The share foreign insurers seize in the market is very low and that is to say the potential for them to embrace a sharply share rise there in the future.
