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Insurers Knocking on Door of China's Stock Market
Insurers are perhaps the only important force in the Chinese economy that have been so far kept out of the country's fledging stock market, but they are ready and waiting at the gate.
Dazhong, a Shanghai-based property insurance company, was the latest insurer to acknowledge its intention to be listed on the domestic stock exchanges, and the first one to do so in the form of a public announcement.
A senior company official said it has received training by a securities house for more than six months. "We hope to rewrite history by becoming the first publicly-listed insurance firm in China," he said.
Other insurers, including Pacific, Xinhua Life, Ping'an and Huatai have expressed the same intention.
China's listing provisions require that a company must receive the tutorship of a securities house to ensure that it meets the conditions of listing in terms of corporate structure and management.
In a bid to curb financial risks, the Chinese regulators have been prudent in approving listings by financial institutions. The country already has a few small commercial banks and securities houses listed on the Shanghai and Shenzhen bourses, but there is not a single insurer among the country's over 1,000 listed firms.
As time goes by, the pressure for insurers' listing is mounting. China is one of the world's fastest growing insurance markets.
With China's WTO membership imminent, both the government and insurers are keen to consolidate their positions before the entry of their powerful foreign counterparts.
An easy solution is to open the stock market to insurers, which will allow them raise funding necessary to expand business and improve their solvency.
Firms that go public will also force insurers to improve their efficiency and management under investors' supervision, said Xu Wenhu, head of Fudan University's Insurance Institute.
Listings by insurers now face no policy or legislation obstacles. Rules issued by the State Council in 2000 on the supervision of insurance firms provide that insurers can issue stocks to the public. Financial regulators also said they encourage insurers to go public.
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