Assets management company to set up
By Zhao Renfeng (China Daily)
Updated: 2004-06-25 07:47

The China Life Insurance Assets Management Co Ltd will be formally launched next Monday, becoming the nation's largest insurance assets management company, senior executives with the company said yesterday.

"This is a landmark step for China Life as launching an assets management company will further enhance our capability to manage increasing capital well," said Wang Xianzhang, chairman of China Life, the nation's largest life insurer.

Wang will also take the helm of the new assets management company.

The overseas-listed China Life Insurance Co Ltd and its parent China Life Insurance (Group) Co are two shareholders of the new firm with the listed firm taking a controlling stake of 60 per cent, said Miao Fuchun, vice-president of the listed company.

The new company will become another subsidiary of the China Life Insurance (Group) Co, managing most of the parent and listed firms' assets, which are estimated at about 400 billion yuan (US$48.2 billion).

That is nearly half of the total assets embraced by the country's insurance industry.

The to-be-launched company will be the second insurance assets management company in China after the PICC Insurance Assets Management Co Ltd was opened last year.

Experts said managing assets has become a pressing challenge for insurance companies as huge piles of premium incomes have been built up, putting pressure on insurance companies for better yields.

The China Insurance Regulatory Commission, the industry regulator, issued recently a long-awaited provisional regulation on the supervision of insurance asset management companies, which took effect on June 1.

The underwriting operations and asset management operations are seen as two important wings for insurance companies, according to the CIRC.

Li Liangwen, vice-president of the listed firm, said China Life has submitted to the government an application for investing in overseas capital markets and is now waiting for the green light.

"Once the application is approved, we will consider investing in the long-term treasury market," said Li.

"We are still studying the overseas markets... but we will not opt for short-term speculations," Li said.

He also said that China Life is not considering entering the domestic A-share market at the moment and they are still weighing whether the A-share market is one of the best cost-efficient channels for financing.

"Financing was not the first goal when we chose to go public in New York and Hong Kong last year," he said, adding that China Life is not short of capital thanks to its fine performance in past years.

"Rather, improving corporate governance is something that we think weighs even more heavily through public trading,"Li said.

China Life revealed its annual report last week in New York and Hong Kong, showing its strong growth in premiums.

The company said that its market share in China's mainland market expanded quickly during the past two years, reaching 45 per cent by the end of first quarter from 37 per cent in 2001.

The company's executives said they are noticing the increasingly fierce competition between domestic and foreign insurers since China's commitment to the World Trade Organization allows foreign companies easier access to the domestic market.

But they are confident that foreign insurers pose no immediate threat to China Life in keeping its market-leading position.

The company debuted its IPO (initial public offering) last December in Hong Kong and New York. Its US$3.5 billion IPO was the world's largest last year.

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