Dutch insurance company Aegon has signed an agreement with oil giant China National Offshore Oil Corp to set up a US$24 million life insurance joint venture in Shanghai.
The tie-up makes Aegon the latest foreign insurer to tap the rapidly growing mainland insurance market, where newcomers from overseas are expected to chip away at the market share of state-owned firms.
Overseas companies' share of China's insurance market is expected to rise to 25 per cent in 10 years and as much as 50 per cent in 20 years, compared with 2 per cent at present, according to research by BOC International.
After about eight months of consideration, Aegon chose China National, the parent of red-chip CNOOC, the country's third-largest oil company, for its management style and record of joint ventures with other companies, Aegon chairman Donald Shepard said yesterday.
Aegon would manage the Shanghai insurance business while China National would contribute investment and local knowledge.
The 50-50 joint venture precedes Aegon's application for permission to sell life insurance in Shanghai, one of the few cities open for foreign insurers.
About 15 million of China's 200 million potential insurance customers live in Shanghai, according to Aegon.