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Insurer studies JV plan

ERGO plans to set up a life insurance joint venture in China to tap rising demand among Chinese for financial protection despite the financial crisis, its senior executives said.

The German insurer, a Munich Re Group subsidiary, has been in talks with potential Chinese partners over the past 18 months to set up the joint venture, Jochen Messemer, chairman of ERGO International AG, told Shanghai Daily.

"China is one of priorities in our international expansion," Messemer said. "The timing is right for us to step into the market as the financial crisis makes more people realize the need to have reliable and simple products especially when the market is volatile."

He also listed the criteria ERGO is looking for in its potential joint venture partner such as "a distribution network, good reputation, long-term commitment, and financial strength."

Andreas Kleiner, a member of the board of ERGO International who covers the Asian markets, said he has a plan to break even in about six to nine years in China.

Beijing office

The No. 1 player in Europe's health and legal expenses insurance segments set up a representative office in Beijing in 2007 to pave the way for the set-up of the joint venture. The China Insurance Regulatory Commission requires overseas insurers to have a representative office in China for at least two years before they can set up an insurance company.

Messemer said the financial crisis has created more room for new insurers in China as some established insurance firms have been hit hard in the worst downturn since the Great Depression.

However, he also admitted that the crisis has made it more difficult than two years ago to find the right partner who is willing to expand into life insurance.

The insurer is likely to venture into tier-2 cities where the market potential is yet to be realized. Overseas players like Allianz, AXA and MetLife entered the Chinese market via Shanghai and Beijing and then moved to other cities such as Chengdu.


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