By Wang Xinyuan
Two joint venture (JV) life insurance companies invested in by US-based Metlife are to be merged following the Chinese regulator's approval of a share transfer from Capital Airport Holding (CAH) to Sino-US Metlife to Shanghai Alliance Investment (SAI), the Chinese shareholder of United MetLife Insurance (UMI), Metlife's other JV, headquartered in Shanghai.
The CIRC posted the approval Monday on its website.
Currently Metlife has a 50 percent stake with CAH in Sino-US Metlife, and equal stakes with SAI in United Metlife. After the share transfer, Metlife and SAI will each have a 50 percent stake in the two JVs.
Both companies provide life, health and accident insurance products but with different business locations.
"Operations of the two joint ventures will remain unaffected during the transfer. Following the close of the equity transfer process and subject to regulatory approvals, MetLife and SAI are planning to integrate the two joint ventures. The move demonstrates MetLife's long-term growth strategy in China," United Metlife said in an emailed statement Tuesday.
"China is a key strategic market for MetLife. By having a single partner across the country we can create a stronger brand and portfolio of offerings for the market. This will allow us to accelerate growth and in turn provide increased value to our customers," Eugene Marks, executive vice president and head of the Asia Pacific region for MetLife, was quoted as saying in the statement.
The merger also enables Metlife to meet regulatory requirements. An overseas financial group licensed in the Chinese insurance market is not allowed to have financial stakes in more than one insurance company, according to a regulation issued by the CIRC in March 2008.
After investing in Sino-US Metlife with CAH in 2004, Metlife took control of United Metlife, a life insurance JV, from Citigroup after acquiring Citigroup's Travelers Life & Annuity unit in 2005. Metlife appears to have been out of compliance with the regulatory requirements since they went into effect in 2008.
"We should start to see (more) deals in the insurance sector," Keith Pogson, managing partner of Financial Services Far East at Ernst & Young, said Tuesday at a meeting on financial mergers and acquisition activities with reporters in Beijing.
Pogson also estimated there will be more M&A activities between banks and insurance companies in China this year.
A private equity unit under investment bank Goldman Sachs is in talks to acquire some or all of the 15.6 percent stake in Taikang Life being sold by French insurer AXA, the British Financial Times reported Tuesday.
China's second largest life insurer, Ping An, announced it took a minor stake in Shenzhen Development Bank in June last year.
Bank of Communications, one of China's four largest banks, also acquired a 51 percent stake in a Sino-Australian life insurance JV and renamed it BoComm Life Insurance last week following regulatory approval last year, making it the first bank in China to engage in such an investment.