Photo/Zhang Xiaoqing (NBD)

May 6 (NBD) -- HSBC Insurance Asia announced Monday that it agreed to acquire the remaining 50 percent stake in its joint venture HSBC Life China from its local partner. Upon completion, the JV will be a fully-owned subsidiary of the insurance unit of HSBC Holdings.

The decision comes four months after China eased access to its financial market for foreign investors by totally scrapping ownership limit in their Chinese JVs in early January of this year.

"The Chinese market is not only a major makeup of our business in Asia, but also an important portal for us to serve our global customers. We hope the deal will help expand our footprint in the Chinese mainland market," says Peter Wong, a Group Managing Director and member of the HSBC Group Executive Committee to media in an interview.

It's noticed that China is the world's second-largest insurance market. Encouraged by the policy, the country is seeing a handful of foreign insurance companies upping stakes in the Chinese market.

In January of 2020, leading global insurance provider Allianz officially opened its fully-owned insurance holding company in China, the first completely foreign-owned one of its type in the market. Besides, US insurance company CHUBB also increased its stake in Huatai Insurance.

According to a report issued by the central bank of China that as of the end of 2018, the insurance density and penetration in China are 2,724 yuan (385.8 U.S. dollars) and 4.22 percent. But it is still far away from the world average of 682 U.S. dollars and 6.09 percent during the same period of time, which represents a huge market potential.

In regard to competition, the market landscape will not make big changes in the short term although foreign participation keeps increasing. Local life insurance companies are more advantageous as they have better brand-awareness and distribution networks, according to credit rating company FitchRatings.


Email: gaohan@nbd.com.cn

Editor: Gao Han