HSBC Insurance (Asia) Limited (HSBC Insurance) has received final approval from the China Insurance Regulatory Commission (CIRC) to launch a jointly held insurance company with Beijing-based National Trust Limited (National Trust).
The new company, HSBC Life Insurance Company Limited, will open for business in the third quarter of 2009. HSBC Insurance and National Trust will each hold 50 per cent and it will have a registered capital of RMB500 million, funded equally by both shareholders.
David Fried, Chairman and Chief Executive Officer of HSBC Insurance for Asia-Pacific, said: “This investment will allow us to further broaden our insurance offering in China where the GDP growth is estimated to be 7.8 per cent this year and the growing personal wealth base will drive the use of insurance products.”
The percentage of insurance penetration shown by premiums as a percentage of the GDP is extremely low in China at only 3.3 per cent, compared to more mature markets like the UK where it is 18 per cent.
Dennis Chan, Chairman of National Trust, added: “The new insurance company will enable both National Trust and HSBC to participate in the considerable growth potential of the insurance market in China. We are delighted to bring our franchise, our trusted platform and our local market knowledge to this partnership. In business vision, management philosophy and corporate governance, we share the same goals and diligence as our partner HSBC. These synergies, together with HSBC Insurance’s franchise and proven track record, augur well for a good future for HSBC Life Insurance Company Limited.”
HSBC Life Insurance Company Limited will offer a comprehensive range of life, pensions and medical insurance. It will employ both an agency sales force and bancassurance partnerships as channels for distributing its products.
The application to form the jointly held insurance company with National Trust was made under the terms of the Mainland China – Hong Kong SAR Closer Economic Partnership Arrangement (CEPA), which made certain trade and investment terms available to Hong Kong residents and enterprises, including banks wishing to enter or invest in certain mainland China economic sectors such as insurance.