KPMG Hong Kong's monthly insurance news summary

This publication is a summary of publicly reported information, the accuracy of which has not been verified by KPMG.

Hong Kong
US-based PMI Group has set up PMI Mortgage Insurance Asia Ltd in order to provide a better platform to serve Hong Kong and other Asian markets.

New York Life Insurance reportedly registered a 17 percent year-on-year increase to USD 4.9 million in net profit in Hong Kong for the first half of the year.

China
China Life Insurance Company (China Life) is reportedly in talks to sell its 51 percent stake in the joint venture China Life CMG to Shanghai International Group to avoid potential competition. Commonwealth Bank of Australia, another shareholder of the joint venture, is also reportedly in discussions with Taiwan Life Insurance Company to dispose of its 49 percent stake in the joint venture. All the parties are reportedly close to reaching a deal.

Ping An Insurance (Group) has agreed to invest RMB 4.9 billion for a 89.24 percent stake in Shenzhen City Commercial Bank. The deal is still subject to regulatory approval.

China Life Insurance Asset Management Company reportedly plans to expand its overseas operations by setting up an asset management unit in Hong Kong. The plan is awaiting regulatory approval from Hong Kong's Securities and Futures Commission.

China's State Council has approved RMB 12 billion in investment quotas for insurance companies to invest in infrastructure projects on a trial basis. Ping An will take RMB 10 billion of the total quota, while China Life, PICC and Taikang Life Insurance will share the remaining RMB 2 billion.

Munich Re has reportedly agreed to increase its investment in PICC Asset Management Company (PICC AMC) to RMB 152 million from the current RMB 19 million. In addition, PICC Holding, PICC Property & Casualty, PICC Health Insurance, and PICC Life Insurance will raise their combined investment to RMB 648 million from the current RMB 81 million. Munich Re's stake in PICC AMC will remain unchanged at 19 percent after the transactions are completed.

Taiwan's Shin Kong Life Insurance has reportedly said that it is in advanced talks with mainland companies to set up a joint venture and Air China and China Southern Airlines are not among the potential partners.

Taiwan's Cathay Century Insurance Company, a subsidiary of Cathay Financial, has received regulatory approval in Taiwan to set up an insurance joint venture in the mainland and plans to submit an application in the mainland soon. Cathay Financial already has a life insurance joint venture in Shanghai through its subsidiary, Cathay Life Insurance.

Aviva-Cofco Life Insurance Company has received regulatory approval to set up a branch in Changsha in central China. This brings the total number of cities in which the insurer has operations to 13.

Allianz China Life Insurance Company has received regulatory approval to set up a branch in Sichuan province in south-western China.

CITIC Prudential Life Insurance Company has been approved to set up branches in Hangzhou and Jinan in eastern China. The Hangzhou branch is expected to start operation in the fourth quarter of the year.

Tokio Marine & Nichido Fire Insurance Company and Mitsui Sumitomo Insurance Company have reportedly received regulatory approval to sell car insurance policies in China.

ING Capital Life Insurance Company and Allianz China Life Insurance Company have reportedly applied to set up branches in Henan province in central China, following a survey on Henan's insurance market conducted by the two insurers in the first half of the year.

China Reinsurance (Group) Company has reportedly said that it plans to extend its asset management business to overseas markets and will probably set up an asset management company in Hong Kong.

American International Assurance Company and Allianz China Life Insurance are reportedly likely to join a pilot programme advocated by the government to launch foreign currency denominated life insurance policies in Guangdong province.

Generali China Life Insurance Company has received regulatory approval to set up a branch in Jiangsu province in eastern China, which will be its fourth branch in China.

China Insurance International Holdings Company (CIIH) has said that China Insurance Hong Kong (Holdings) Company (CIHK) has agreed to sell CIIH a 4.9 percent stake in Ming An Insurance Company (Hong Kong) for HKD 102.6 million and a 29 percent stake in Ming An to a consortium led by Cheung Kong (Holdings) Ltd. Once the deals are completed, CIHK's stake in Ming An will fall to 66.1 percent.

AXA Group has teamed up with Shanghai Pudong Development Bank and Shanghai Dragon Investment to form a joint venture fund management company. The parties are awaiting regulatory approval.

Groupama Insurance has joined forces with the Agricultural Bank of China to provide insurance for houses under mortgages and life insurance for mortgage borrowers in Chengdu through their respective branches in the city.

China Property & Casualty Reinsurance Company has reportedly signed an agreement with AIU Insurance Company to cooperate in reinsurance business.

Korea Life Insurance has reportedly said that it aims to set up an insurance joint venture in China by 2008. No further details have been disclosed.

In brief

China

• The CIRC and the China Banking Regulatory Commission have jointly issued a circular outlining requirements for agency services provided by banks. Among other requirements, insurance sales representatives in banks must hold insurance agent certificates after 31 October when selling certain insurance products such as investment-linked products. Banks and insurance companies are required to update their bancassurance co-operation agreements in accordance with requirements set out in the circular by 30 September.

• The chairman of the CIRC has said that China should speed up the development of domestic reinsurance industry and make efforts to strengthen its foothold in the international reinsurance market.

• The latest data from the CIRC shows that the insurance sector reported a 13.7 percent year-on-year increase in premium income to RMB 308 billion in the first six months of the year. Of these, premiums from property insurance reached RMB 79.1 billion, rising by 16.7 percent, while those from life insurance stood at RMB 228.9 billion, up by 12.7 percent. Total assets of the insurance sector stood at RMB 1.7 trillion at the end of June.

Sources: Insurance Day, South China Morning Post, Xinhua Economic News Services, Asia Insurance Review and various insurance websites.

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© 2005 KPMG Hong Kong, the Hong Kong member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

This publication is a summary of publicly reported information, the accuracy of which has not been verified by KPMG. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.