China will accept applications early next year from foreign insurers seeking to take control of their local joint ventures and is even weighing giving them full ownership earlier than flagged, Reuters reports, citing people with knowledge of the matter.
The regulator will publish its final guidelines as soon as the first quarter of 2019 and will begin taking applications from interested foreign insurers soon after that, the sources were quoted as saying
China has set an agenda to open up its financial sector and has already taken steps this year to relax foreign ownerships in securities ventures.
Beijing said in November last year that for insurance ventures it would first raise the foreign ownership cap to 51 percent from 50 percent. It has also pledged to remove the limit completely in three years.
But there has been little clarity on the status of the sector’s opening up, and doubts about Beijing’s commitment has crept in amid an escalating Sino-US trade war and a regulatory overhaul.
The plans for the insurance sector show the liberalization plan has not been derailed, the report said.
The regulator is now considering advancing the three-year timeline for allowing foreign insurers to take full control of their onshore joint ventures, sources told Reuters.
“We have seen no signs of China looking to delay or put on hold its commitments to open up the financial sector despite the challenges on other fronts. If anything, they are looking to advance the process,” a top executive at a large foreign insurance company was quoted as saying.
The China Banking and Insurance Regulatory Commission (CBIRC) is said to be currently reviewing the feedback it received as part of a sector consultation process that ended recently.
The regulator, in a consultation paper issued earlier this year and seen by Reuters, has proposed, among other measures, that the major shareholder of a foreign-funded insurer will not be allowed to sell the equity within five years from its acquisition.
While a one percentage point rise in the equity ownership would not have a big impact on the balance sheets of the global insurers, winning management control would help drive the business and facilitate decisions on expansion.
The regulator is likely to make it easier for foreign-owned joint ventures to expand into new provinces, moving away from its current practice of rationing of new branch opening applications, according to the report.
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