China said to be considering easing stake restrictions for foreign life insurers
Regulator may allow wholly owned subsidiaries by foreign insurers, in biggest shakeup of the domestic industry in almost two decades
China is considering easing the 50 per cent ownership cap by overseas life insurers on domestic companies, in the biggest shakeup of the industry almost two decades since joining the World Trade Organisation.
The government is considering letting foreigners own more than 51 per cent of life insurers, to the extent of allowing them to be wholly foreign-owned, Bloomberg reported earlier, citing unidentified people familiar with the matter.
If put into practise, the moves could boost the market shares of international insurance players that have operations in China, most of which are run under a joint venture structure, while some companies already some have self-owned branches.
Dayton Wang, an analyst with Guotai Junan International, said he could see the potential moves being made as China is keen to introduce foreign capital inflow by loosening shareholding structures, and introducing more overseas practises and experience to the sector.
“However, it could still be hard for a foreign player to adapt to the Chinese financial environment, even if allowed to control a higher stake holding, as we have seen from what happened in the banking and brokerage sectors,” he added.
China has allowed foreign life companies to own up to 50 per cent in a joint venture in China since it entered the World Trade Organisation in 2000. But foreign players have complained that in some cases the shareholding structure deters the full development of operations.