Foreign insurers exit market
By Zhang Fengming |
December 1, 2011, Thursday
|
Print Edition
Print Edition
THE recent withdrawals by some foreign insurers from China suggest that the country is losing its appeal despite the expanding domestic insurance market Moody's said in a report yesterday.
"As a whole, foreign firms have made little headway in the Chinese insurance market and to this day still suffer from small market share and low profitability despite significant growth opportunities," says Sally Yim, a Moody's senior credit officer.
"One key question raised by these recent withdrawals is whether they mark the beginning of a broader retreat by foreign insurers," Yim said.
Since last year foreign insurers, including AXA, New York Life and Sun Life, have cut or dispose of their stakes in Chinese joint ventures. Foreign insurers are allowed to set up wholly owned subsidiaries in the non-life insurance sector in China and can only own up to 50 percent in a life insurance venture.
As of September, foreign life insurers captured an insignificant market share of 3.7 percent, while property and casualty insurers's share was even lower at 1.1 percent. Out of the 46 foreign insurers operating in China in 2010, only 11 were profitable and their profit contributed negligibly to their global profits, the report said.
The sluggish performance by foreign insurers came amid strong overall growth in the market, according to Moody's.
In July 2010, Canada-based Sun Life cut its stake in Sunlife Everbright Life from 50 percent to 24.99 percent.
In October 2010, the Industrial and Commercial Bank of China said it would buy a 60 percent stake in the AXA-MinMetals. AXA's stake in the venture will fall to 27.5 percent from its previous 51 percent after the deal.
In 2011, United States-based New York Life fully diposed its 50 percent stake in Haier New York Life.
"As a whole, foreign firms have made little headway in the Chinese insurance market and to this day still suffer from small market share and low profitability despite significant growth opportunities," says Sally Yim, a Moody's senior credit officer.
"One key question raised by these recent withdrawals is whether they mark the beginning of a broader retreat by foreign insurers," Yim said.
Since last year foreign insurers, including AXA, New York Life and Sun Life, have cut or dispose of their stakes in Chinese joint ventures. Foreign insurers are allowed to set up wholly owned subsidiaries in the non-life insurance sector in China and can only own up to 50 percent in a life insurance venture.
As of September, foreign life insurers captured an insignificant market share of 3.7 percent, while property and casualty insurers's share was even lower at 1.1 percent. Out of the 46 foreign insurers operating in China in 2010, only 11 were profitable and their profit contributed negligibly to their global profits, the report said.
The sluggish performance by foreign insurers came amid strong overall growth in the market, according to Moody's.
In July 2010, Canada-based Sun Life cut its stake in Sunlife Everbright Life from 50 percent to 24.99 percent.
In October 2010, the Industrial and Commercial Bank of China said it would buy a 60 percent stake in the AXA-MinMetals. AXA's stake in the venture will fall to 27.5 percent from its previous 51 percent after the deal.
In 2011, United States-based New York Life fully diposed its 50 percent stake in Haier New York Life.
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