(Yicai Global) Dec. 27 -- As China fully liberalizes foreign shareholding in life insurance companies next year, AIA China plans to spin off its Shanghai office as a wholly-owned unit to optimize its business development, the company, which bills itself as "the largest independent publicly listed pan-Asian life insurance group," announced on its website yesterday.
AIA will rebrand the new unit AIA Life Insurance, and it will oversee all other company offices in the country if the China Banking and Insurance Regulatory Commission sets its stamp on the arrangement.
Shares [HKG:1299] of its parent, Hong Kong-based AIA Group, closed up 1.76 percent in morning trading at HKD80.75 (USD10.37) on the announcement.
AIA set up a Shanghai branch in 1992, thereby becoming not only the first but also the only foreign-owned life insurance company in the Chinese mainland.
The insurer now has offices in the cities of Shanghai, Beijing, Guangdong, Shenzhen, Tianjin and in Jiangsu and Hebei provinces. The underwriter's mainland branches now all lack an independent legal personality, however, and this greatly hampers their expansion since the existing arrangement sets up more administrative hurdles for it to clear to grow.
Once regulators approve AIA's new unit, it will have an independent legal identity and thus qualify for local treatment in China, which will ease branch expansion since this will lessen the number of regulatory hoops it will have to jump through.
China announced measures to further liberalize the financial sector on July 20, bringing forward the starting date for lifting the foreign shareholding ratio limit in life insurance firms to 100 percent next year, up from the current from 51 percent. The country will fully eliminate the limit starting Jan. 1, and companies can request an administrative permit from the CBIRC, the regulator said on Dec. 6.
AIA Group serves 18 markets in the Asia-Pacific region. It has units and branches in Hong Kong, Thailand, Singapore, Malaysia, the Chinese mainland, South Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, Cambodia, Myanmar, a 97 percent subsidiary in Sri Lank, and a 49 percent joint venture in India, according to information on its website.
AIA first formed in Shanghai in 1919. It is a market leader in the Asia-Pacific region judged by life insurance premiums, and it holds the lead in most of its markets. The firm had total assets of USD256 billion as of June 30. The company offers life insurance and accident and health insurance and savings plans. It also provides employee benefits, credit life and pension services to corporate clients.
With a network of agents, partners and employees across Asia-Pacific, AIA serves over 34 million policyholders and over 16 million participating members of group insurance plans, per the information.
Editor: Ben Armour