China will remove foreign ownership caps for life insurers and the foreign shareholding can reach 100 per cent in the sector from 1 January 2020.
Earlier, China had said it would remove foreign ownership caps for life insurers, securities firms and funding houses by 2020, a year earlier than scheduled, the top financial watchdog had said in July 2019.
According to the new regulations, relevant parties may submit applications to the China Banking and Insurance Regulatory Commission (CBIRC)in accordance with the Regulations on Foreign-funded Insurance Companies and the Implementation Rules of the Regulations on Foreign-funded Insurance Companies. The CBIRC will review and approve the applications in accordance with relevant laws and regulations.The CBIRC will start the revision of the provision of “foreign ownership shall not exceed 51% of the company’s total equity capital” in the existing implementation rules on foreign-funded insurers, which will be reissued after revision.
“We hope that existing foreign banks and insurance companies in China can make full use of the new development space brought about by further opening up, and continuously improve the operating vitality and management capabilities of foreign institutions. At the same time, on the basis of equality and mutual benefit, we welcome more foreign financial entities to set up institutions and conduct business in China. We will continue to steadfastly fulfil our commitments to opening up, and work hard to create an environment that is conducive to fair competition and the development of the insurance market by both Chinese and foreign investors,.” said a CBIRC spokesman.
Last week, the regulator raised the ceiling on direct foreign investments in life joint ventures from 50 per cent to 51 per cent.
Currently, there are at least 28 foreign owned life insurers in China, with AIA being the only company to have a 100% shareholding.The first wholly owned foreign insurance operations were granted almost a year ago, when Axa bought out its domestic joint-venture partner and within the last few weeks Allianz won initial approval to set up a wholly owned holding company. AIA also owns its China business outright, but it was grandfathered in under a licence that pre-dated the restrictions
The opening up of its financial sector is a key part of Beijing’s efforts to resolve a trade war with the United States. Washington has accused China of limiting market access for U.S. firms, forcing companies to transfer technology and providing little protection for intellectual property rights.
China’s financial stability commission said it was operating on the principle of “sooner rather than later” when it comes to relaxing restrictions on foreign institutions.