The Taipei-based Shin Kong Life Insurance Company (新光人壽) is ready to make inroads into China’s vast potential insurance market by partnering with Hainan Airlines (海航集團), company president Pan Po-cheng (潘柏錚) said yesterday.
The Beijing-based Shin Kong-Hainan Airlines (新光海航人壽保險公司) joint venture was approved by the China Insurance Regulatory Commission late last year and is expected to become operational in September or October, said Pan, who is visiting Beijing for a board meeting of the new firm.
The joint venture is expected to show growth in premium revenues ranging from 15 percent to 20 percent annually, with revenues and costs breaking even in the fifth year, he said, adding that the revenues of the Beijing operation were expected to surpass those of its Taiwanese parent firm in 10 years.
Shin Kong, which holds a 50 percent stake in the joint venture, will send more than 40 top officials and sales representatives from Taiwan to back up the Beijing operations, Pan said.
Shin Kong is among the top three life insurers in Taiwan, with a market share of 10.9 percent in 2006 in terms of total premiums.
Taiwanese insurers are eyeing the Chinese market because the home market is already saturated. Additionally, an estimated 1 million Taiwanese live and work in China, and Taiwanese investments there are estimated at US$150 billion.
Taiwanese insurers have also become increasingly restless over the slow growth rates in the domestic insurance market in recent years.
In contrast, China’s insurance market expanded rapidly in the first half of the decade, with life insurance premiums of 413.2 billion yuan (US$60.3 billion) recorded at the end of 2006, 2.9 times higher than in 2000, and property and casualty insurance premiums of 150.9 billion yuan, 2.2 times higher than in 2000.
The Chinese government’s estimates suggest that this growth would continue and even accelerate in the second half of the decade.
Gaining a foothold in China’s closed market, however, could be a major challenge for Taiwanese insurers, as China’s life insurance market is still dominated by domestic players, with foreign operators having only a 6 percent market share.
Taiwan’s share of that segment of the market is minimal. Taipei-based Cathay Life Insurance (國泰人壽), the nation’s biggest life insurer, had only 1.37 percent of the foreign share of China’s life insurance market at the end of 2006, a report by the Taipei-based brokerage firm IBT Securities (台灣工銀證券) said.
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