AIG opens new subsidiary in Shanghai

American International Group Inc today opened a wholly owned non-life insurance subsidiary in the city to pave the way for rapid development.

The Shanghai-based subsidiary - AIG General Insurance Co China Ltd - is based on AIU Insurance Co, the non-life branch of AIG.

AIG gained approval from the China Insurance Regulatory Commission in late July to establish the wholly owned subsidiary.

The former AIU branches in Shanghai, Guangdong and Shenzhen, which formerly reported directly to the company's American headquarters, have been consolidated into AIG General.

The move will help AIG General expand its general insurance capabilities, achieve operational and capital efficiencies, and provide a platform to establish new branches in other areas of China over time.

"The establishment of AIG General China has ushered in a new phase of AIG's development in China," said AIG President and Chief Executive Officer Martin J. Sullivan. "Through the new subsidiary, AIG will continue to play an active role in contributing to the growth of general insurance in China."

AIG, founded in Shanghai in 1919, got a similar license to sell life insurance in China in 1992 as the only overseas player to have a wholly owned subsidiary in the country.

AIG is the biggest overseas non-life insurer in China in terms of premiums. Premiums collected through its AIU branches reach 536.7 million yuan (US$71.7 million) in the first eight months of this year, up nine percent from a year ago.

China pledged to make its insurance market more open to foreign companies when it joined the World Trade Organization in 2001.

Under the commitment, China allows overseas insurers to set up wholly owned subsidiaries in the non-life insurance sector.

China has approved four insurers including UK-based Royal & SunAlliance, America's Liberty Mutual Insurance Co and Japan's Mitsui Sumitomo Insurance to convert branches into subsidiary status.

Overseas players can hold up to half of a life insurance joint venture.