HSBC Holdings stated Monday its insurance subsidiary had agreed to acquire its China life insurance venture companion’s 50% stake to own the corporate fully under the new guidelines on foreign ownership that came into impact in January.
The shift will allow London-HQed HSBC, which gets the bulk of its income from Asia, to further expand its footprint in the world’s second-largest economy, where it has deployed billions of dollars as part of its Asia pivot strategy.
The transaction to purchase the stake in HSBC Life Insurance (HSBC Life China) from joint venture partner the National Trust shall be structured as a transfer of equity interest and is subject to regulatory permissions, the lender stated.
China is the world’s third-largest insurance market after the U.S. and Japan – worth around $318 billion in premiums based on a Swiss Re Institute report.
A lack of majority control, with international ownership capped at 50% until 2019, has long ired global insurers trying to expand market share in China, where individual wealth is rising, and comparatively few individuals have life insurance cover.
Global insurers, along with Britain’s Prudential and Canada’s Sun Life Financial, have been in China for many years, but their collective market share remains under 10% on account of ownership curbs and limited geographical presence.
But Beijing has been step by step easing access to its monetary sector for foreigners. As part of that push, it allowed overseas corporations to take full control of their local life insurance ventures from January 1 this year.