(ATF) A subsidiary of HSBC Holdings plans to purchase the remaining 50% stake in its Chinese life insurance joint-venture amid relaxed foreign-ownership limits.
In a move designed to deepen the UK-headquartered bank’s presence in what is becoming the world’s largest life insurance market, HSBC Insurance said it has reached an agreement with its life insurance partner National Trust in China to acquire the half of HSBC Life it doesn’t hold.
After the transaction is completed, HSBC Life will become a wholly owned subsidiary of HSBC Asia in China.
The transaction has been made possible by lifting of limits of foreign investment in joint-venture life insurance businesses. The China Banking Regulatory Commission removed the cap in January, enabling the establishment of companies funded entirely with foreign money.
HSBC Life was established on June 27, 2009, and mainly operates in nine major cities in the Chinese mainland, including Shanghai, Beijing, Tianjin, Hangzhou, Guangzhou, Foshan, Dongguan, Zhuhai and Shenzhen.
The premiums and investment income of HSBC Life in 2019 increased by 28% and 130.63% year-on-year. Its net profit also rose from a loss of 206 million yuan ($29.26m) to a 15m yuan profit.
However, in the first quarter of this year, although the premium income rose 132.6% year-on-year, losses increased to 76.2m yuan due to the coronavirus epidemic.