A joint-venture sales firm between The People's Insurance Company (Group) of China Ltd. (PICC and SEHK: 1339) and US insurance giant AIG has begun recruiting talents.
PICC Life, the life insurance unit of PICC, said in its official microblog recently that PICC had reached an agreement with AIG on applying to establish a joint-venture sales firm in a bid to provide premium life insurance, property insurance and wealth management services to consumers in the Chinese mainland. And so far, the newborn had entered a preparation & investigation period, looking for talents that showed enthusiasm on the industry.
Actually, either PICC or AIG has gained approval from the China Insurance Regulatory Commission (CIRC), the top Chinese insurance regulator, for the application.
AIG said on November 22, 2012 that it had inked a contract to subscribe USD 500 million worth H shares of PICC and the shares would account for about 13.9 percent of the total capital. In addition, it had signed an agreement with life insurance unit of the Chinese insurer over establishing a joint venture. It promised not to sell more than 25 percent of the shares within five years starting from December 7, 2012 , on which PICC formally debuted on the Stock Exchange of Hong Kong. And it would be allowed to sell out the shares provided that the agreement signed with PICC Life over the joint venture failed to be put into force before May 2013.
An analyst pointed out that the contract with conditions indicated that AIG was in urgent need to enter the Chinese market. However, it would not be an easy job for the agreement signed with PICC Life to win a nod from the CIRC, due to problems including peer competition. It should know the uncertainties well, thus skirted related risk with the conditions. Notably, Sino-foreign life insurers performed not well in the market and even if it gained approval for the agreement, it would meet a list of difficulties in establishing a foothold there.
A report PwC made on foreign insurers in the Chinese market shows that foreign life insurers there are expected to enjoy a growth of 30 percent over the following three years, with market share rising about five percent. The growth of foreign property and incident insurers was expected to hit 20 percent during the period, with market share maintaining at one to two percent. Data from the CIRC shows that premium revenue of insurers in the market reached about CNY 1.55 trillion in 2012, up 8.01 percent from a year ago.
