Huarong Asset Eyeing Insurance Market

China Huarong Asset Management Corp. is in talks with concerned parties in a bid to stretch out reach to the nation's life insurance sector, Lai Xiaomin, president of the Big Four state-owned Chinese asset management company, said in an interview recently.

It expects to establish a foothold in the domestic insurance market and is confident of achieving a lot in the field.

In order to dispose non-performing assets, China set up four asset management companies, including Huarong Asset, China Great Wall Asset Management Corp., China Orient Asset Management Corp., and China Cinda Asset Management Corp. for the nation's Big Four state-owned commercial lenders, including Industrial and Commercial Bank of China (ICBC, SHSE: 601398, and SEHK: 1398), Agricultural Bank of China (ABC), Bank of China (BoC, SEHK: 3988 and SHSE: 601988), and China Construction Bank (CCB, SHSE: 601939, and SEHK: 0939), in 1999.

Terms of the four asset management firms are ten years, each and they are due to expire this year. It has become a problem that with what status they will exist with the restructurings and listings of the four banks. Like the four banks, they may be listed after asset liquidation, external audit, private placement, restructuring and strategic investor introduction. So far, all of them have submitted restructuring plans to the State Council, pending approval, reiterated Lai.

Despite that, they have begun making preparation for commercialization. Till now, only Huarong Assets has not gained a license to be engaged in insurance. Cinda Asset has bough into Happy Life Insurance Co., Ltd. and Orient Asset has taken a stake in Aeon Life Insurance Co., Ltd. Great Wall Asset last month gained regulatory approval to take a 50 percent stake in Nissay-SVA Life Insurance Co., Ltd. from SVA Group Co., Ltd. for about CNY 152 million.

Any company that wants to become a strategic investor of Huarong Asset should have not only sound management concept but also good reputation and outstanding comprehensive strength, added Lai. It prefers to Chinese financial institutions, especially large-sized commercial banks. Previous sources said that ICBC, the biggest commercial bank in China, planned to buy into the company as a strategic investor.

The profit Huarong Asset captured this year has surged by about 54.3 percent from that it gained last year.