HSBC Becomes Wholly-Owned Insurer in China
In this article (5)
HSBC agreed to buy out the other 50 percent of shares from its life insurance joint venture in mainland China in yet another milestone for foreign entry into finance on the mainland.
HSBC will become the sole owner of HSBC Life China after acquiring the shares from its Beijing-based partner National Trust for an undisclosed sum, subject to regulatory approvals including from the China Banking and Insurance Regulatory Commission.
The HSBC Life China JV was formed in 2009 and currently has a presence in nine mainland cities including Beijing, Guangzhou, Shanghai and Shenzhen. As of December 31 last year, the insurer had 1.03 billion yuan ($146 million) in registered capital.
According to Swiss Re, China’s insurance market ranks third behind the U.S. and Japan at an estimated $318 billion in premiums. But despite the sizeable scale and the relatively long presence of some foreign players, insurers from abroad hold less than 10 percent market share due to ownership restrictions and limited geographical presence.
With the recent reforms, which also included lifted ownership caps in the securities, futures and asset management industry, HSBC joins the likes of AXA and Allianz as foreign wholly-owned insurers in mainland China.
«Despite the current difficult environment engendered by the Covid-19 pandemic, we continue to take steps to implement our growth strategy,» said HSBC chief executive Noel Quinn in a statement. «This transaction supports our ambition to accelerate growth within our Asian franchise, particularly in the dynamic and fast-growing Greater Bay Area, where we fully intend to expand in all lines of businesses.»
Questions & Answers
Q.Which regulatory body needs to approve HSBC's acquisition of the remaining shares?
Which regulatory body needs to approve HSBC's acquisition of the remaining shares?
The acquisition is subject to regulatory approvals, including from the China Banking and Insurance Regulatory Commission. This is a crucial step before HSBC becomes the sole owner.
Q.Who was HSBC's partner in the life insurance joint venture in China?
Who was HSBC's partner in the life insurance joint venture in China?
HSBC's partner in the life insurance joint venture was National Trust, a Beijing-based entity. HSBC is buying out their 50 percent share to gain full ownership.
Q.What is the estimated value of China's insurance market?
What is the estimated value of China's insurance market?
China's insurance market is estimated to be worth $318 billion in premiums, according to Swiss Re. This ranks it as the third largest globally, behind the U.S. And Japan.
Q.Why have foreign insurers struggled to gain a larger market share in China?
Why have foreign insurers struggled to gain a larger market share in China?
Foreign insurers have held less than 10 percent market share due to previous ownership restrictions and limited geographical presence. Recent reforms are aimed at addressing these limitations.
Reader pulse
What does HSBC's full ownership of its China insurance venture signify?
20,492 votes so far