French insurer Axa SA said Thursday that the world’s biggest bank, ICBC of China, will take a 60 percent stake in its Chinese insurance unit Axa-Minmetals Assurance.
Axa said the entry of Industrial and Commercial Bank of China (ICBC), ranked the world’s largest by market value, will not affect daily management at the business which will come under an Axa official.
Axa-Minmetals Assurance specialises in life insurance and was set up in 1999 as a joint venture with China Minmetals corporation, a statement said. Premiums totalled 830 million yuan (90 million euros, 125 million dollars) in the first nine months of the year, up 54 percent from the same period in 2009.
“This tie-up with ICBC is ideal to allow us to significantly increase our presence in the Chinese insurance market,” Axa chief executive Henri de Castries said.
“The three of us will be much stronger than if we stayed separate.”
Axa held 51 percent in the company but this will fall to 27.5 percent after ICBC takes its stake. Minmetals will in turn hold 12.5 percent.
“It’s better to have 27.5 percent of a larger and growing plate than 51 percent of a smaller plate,” de Castries said.
Once the deal is completed, the company will be renamed ICBC-Axa Life Insurance.
ICBC will pay 1.2 billion yuan for the 60 percent stake in the new entity, Yang Kaishen, ICBC executive president said.
“We will settle the payment as soon as we have the final approval from the regulator,” Yang said.
Insurance premiums in China’s market grew by 34 percent in the first half of 2010 compared with the same period last year, with foreign insurers collecting only four percent of this, compared to nine percent in 2005, DowJones Newswires said.
Due to the dominance of Chinese players and a lack of predictability in securing regulatory approvals for new products and outlets, some foreign insurers have been scaling back their businesses in China, Dow Jones said.
“The Chinese insurance market is still an emerging market” with good potential for growth, said Jiang Jianqing, ICBC chairman.
The just announced deal is ICBC’s only major investment in an insurance company, he said.
Beijing, China, Oct 28, 2010 (AFP)
