Huatai Insurance, China's fourth largest property insurer on Tuesday inked a landmark deal with US-based ACE Group to transfer a minor part of its stakes to the foreign giant financial company, making it the first Chinese property insurer to tie-up with foreign rivals for stake transfers.
The move also marks the latest progress made by domestic insurance firms in their long plan to join with giant foreign counterparts in a move to prop up their reform process and performance in the domestic market.
According to the deal, three different arms of the New York-listed ACE Group, one of the world's famous providers of insurance and assurance will obtain a total of 22.13 percent of Huatai's total stakes at a price of US$150 million, which are now in the hands of Huatai's 63 domestic shareholders.
The three companies, including ACE Tempest Reinsurance, ACE US and ACE INA, will also establish a strategic partnership with Huatai, the companies announced at the signing ceremony on Tuesday.
Prior to the move, China's Taikang Life, Ping An Insurance and New China Life -- three Chinese insurers best known for their life-insurance businesses, have all successfully developed tie-ups in the form of minor stake transfer with foreign big names in the past several years.
The two companies agreed that they will join hands in areas of product development, business management, personnel training and reinsurance. Meanwhile, senior personnel from ACE will join Huatai's board of directors to take a direct part in the company's decision-making process, and they will advise Huatai on actuaries, financial affairs, underwriting and information technology.
Wang Zimu, Huatai's chairman, said that the company's success in attracting foreign investment and setting up strategic partnerships with the world's big names would enable Huatai to develop better corporate governance complying with international standards. The company also hopes the move will fuel its capacity for product innovation and technology know-how.
Brian Duperreault, chairman and Chief Executive Officer of ACE Group, said the ACE-Huatai alliance would help ACE companies across the world provide localized services in China and efforts would be made to gain full access to China's insurance market.
"Huatai will undoubtedly benefit from localized operations of our ACE partners in China and from its internationalized operations," said Wang, adding that their cooperation will lead to a win-win situation.
Launched in 1993, Huatai Insurance Company, with a registered capital of 1.33 billion yuan (US$160.6 million), is the country's first nationwide shareholding property insurance company.
(China Daily May 29, 2002)
