Zurich Financial Services (ZFS) has become the first foreign insurer to obtain a licence to establish a general insurance branch in the Chinese capital, Beijing.This content was published on May 22, 2006 - 11:44
The Swiss company said on Monday the business license was granted after approval from China's insurance regulatory commission.
"We are excited about the opening of our Beijing branch as it is in step with our strategy to grow profitably and serve our customers wherever they may do business," commented Zurich's chief executive James Schiro in a statement.
"In bringing our financial strength and our global risk management expertise to corporate customers in China, we also expect to contribute to the development of the domestic insurance industry, which is vital for the overall economic performance of the country," he added.
The new unit will focus on serving corporate customers, including foreign customers with activities in China, and large- and medium-sized enterprises from China, particularly those with business overseas.
ZFS noted that Beijing was one of the fastest growing cities in China with a gross domestic product (GDP) growth rate of 11.1 per cent last year.
It said Beijing was home to many leading private companies and to most of the large state-owned enterprises, as well as to many local and foreign multinational companies.
This created a growing demand for general insurance with customers looking for sophisticated insurance services.
Zurich spokesman Daniel Hofmann described the licence as a success for the company.
"It is a big breakthrough because you should keep in mind that there are only a few foreign insurers that have been licensed to operate in China at all," he told swissinfo.
Hofmann said there was a "big potential" in the Chinese insurance market which was "completely under served".
"Over the last years growth rates in premium volume in China have been in the 10-15 per cent rate per annum, which means that your business can double in as little as six years."
He added that the company was spending an initial $25 million (SFr30.37 million) on the Beijing office with a staff of about 30. "But that's bound to grow quickly."
Chief executive Schiro told last week's St Gallen Symposium in eastern Switzerland that less than four per cent of Chinese had an insurance policy and less than three per cent of the Chinese market was supplied by foreign insurers.
However, he warned that for private insurers to play a meaningful role in emerging countries, functioning markets had to be established first.
"Contract certainty has to be guaranteed and economies must attain a development stage that allows for profitable pricing in a competitive environment.
"It also requires a stable financial sector, which in turn depends on stable financial markets deep enough to generate the capacity for the transfer of risk."
Financial figures 2005
Pre-tax profit: $5.466 billion (+49% more than in 2004)
After-tax profit: $3.33 billion (+29.5%)
Net profit: $3.214 billion (+30.3%)
Staff : About 55,000
China is now the world's fourth-largest economy behind the United States, Japan and Germany, and the biggest holder of foreign reserves.
Zurich Financial Services has been present in China since 1993, first with representative offices in Beijing and Shanghai, and then with a minority stake in New China Life, the fourth-largest life insurer.
Zurich, which was founded in 1872, has been active in Asia for more than 40 years.