Bermuda-based insurer ACE has taken a 22 per cent, US$150 million stake in a mainland insurer, in the first foreign purchase of a domestic insurance company since China joined the World Trade Organisation.
ACE, a leading casualty insurance and reinsurance group, yesterday signed the deal in Beijing to take the stake in Huatai Insurance, China's fourth-largest property and casualty insurer.
ACE will become the biggest single shareholder of Huatai, which is based in Beijing but has a presence in eight mainland cities. Huatai was formed in 1996.
Under the agreement, the pair will form a strategic partnership aimed at jointly developing new products and services across China and establishing a framework for expansion into other key financial services areas.
The deal is the latest in a string of similar deals that allow greater foreign exposure in the Chinese market.
Before China joined the WTO, foreign companies needed special permission from Beijing to take a stake in mainland insurers.
The highest stake granted to a foreign insurer in a Chinese firm is capped at 25 per cent. Belgian financial services giant Fortis Group and a group of foreign investors led by Switzerland's Zurich Insurance acquired a 24.9 per cent stake in Shanghai-based Tai Ping Life Insurance and Beijing-based New China Life Insurance, respectively.