The Zurich Financial Services Group has acquired a 10 per cent stake in China's largest private insurance company, New China Life. The deal comes three months after Switzerland and China signed a deal on the sale of insurance licences.
Zurich's investment in what is also China's fourth largest life insurer amounts to $39 million (SFr62.79 million). Its participation has been carried out by a share capital increase of New China Life with three other foreign investors.
The deal comes three months after the Swiss economics minister, Pascal Couchepin, signed an agreement on the sale of insurance licences with China's foreign trade minister, Shi Guangsheng, at the World Trade Organisation (WTO) in Geneva. The agreement removed some of the last obstacles to China's accession to the WTO.
New China Life started business in Beijing in 1996 and now operates throughout China. The company, with 500 employees and 2,500 agents, wrote premiums amounting to about $120 million in 1999.
A statement from the Zurich group's headquarters said the company had also entered into a "Technical Assistance Agreement" with New China Life.
Under the deal, Zurich will second senior executives to the Chinese firm, and provide technical assistance and training to its employees. Zurich will also take a seat on New China Life's board of directors.
"We are very excited about the fact that Zurich is among the first foreign insurers to be allowed to have a shareholding in a nationwide operating Chinese life insurance company," said Malcolm Jones, member of the group management of Zurich Financial Services and responsible for Asia Pacific.
"We expect that the economic and social reforms such as the deregulation of medical care and pension business will increase the potential of the Chinese life insurance market tremendously," he added.
Zurich, which currently operates representative offices in Beijing, Guangzhou and Shanghai, says it expects to be awarded a non-life licence under a bilateral trade agreement reached between Switzerland and China before China's accession to the World Trade Organisation.
In November, another Swiss insurer, Winterthur, bought a stake in China's fifth largest life insurer, Tai Kang Life, for an undisclosed sum.
Winterthur added that the deal was the first such alliance to be struck by a western company.
Insurance companies in the industrialised world have been scrambling to secure a foothold in China, which is seen as the world's fastest growing market place for financial services.
swissinfo with agencies