China intends to curb insurance JVs

China may forbid foreign insurance companies from buying into more than one Chinese insurance company, in a bid to avoid any conflict of interest in the sector, according to the announcement of China Insurance Regulatory Commission (CIRC), the top industry regulator.

The draft rules, which was prepared in August, is aimed to prevent foreign insurers from gaining more market share by taking over Chinese rivals, according to Hao Yansu, an insurance professor with the Central University of Finance and Economics. He also noted that more details will be given in the final rule.

At present, several foreign insurance companies owned more than one joint-venture operation in China, such as ING's CPIC-ING Life Insurance Co based in Shanghai and ING-Capital Insurance headquartered in Dalian, and Metlife's two joint-venture life insurers based in Beijing and Shanghai respectively.

The revised draft will also soften requirements for investors who buy equity in insurers via the stock market. The investors do not need to meet the asset and profit standards demanded for off-market stake acquisitions, but they must have total assets of at least US$2 billion and gained profits for at least three consecutive years.