China's Guangdong Railway to Establish Insurance Broker Joint Venture

The China Insurance Regulatory Commission said it will permit Guangdong Provincial Railway Construction Investment Group, Huafu (Beijing) Insurance Broker Co. and Chang Cheng Insurance Brokers to jointly set up a new insurance broker joint venture in southern China's Guangzhou, with registered capital of 10 million yuan (US$1.5 million).

Of the total capital, Guangdong Provincial Railway will invest 5 million yuan, or 50% of the total. Huafu (Beijing) Insurance Broker and Chang Cheng Insurance Brokers will each invest 2.5 million yuan, or 25% of the total, said the CIRC.

The insurance broker joint venture will offer insurance solutions and will select insurers for the insured, provide consultancy services for risk evaluation and risk management and operate reinsurance and other approved businesses.

Kevin Zhang, assistant president of Huafu (Beijing) Insurance Broker and the leader of the project, told BestWire that in 2009, the company was appointed by Guangdong Provincial Railway as the insurance broker for the group's construction of "the first rail transit line of its rail transit inter-city Guangzhou, Dongguan-Shenzhen line project."

The new insurance broker joint venture, which according to Zhang is also based on operations of Guangdong Provincial Railway, will lead the insurance and other risk management efforts for the group related to "the investment, construction and operation of the Pearl River Delta inter-city railway line project, ensuring the smooth construction of the line."

The company's marketing strategy is based on "the construction and the operation" of the inter-city railway line and will develop its niche insurance brokerage business on a long-term basis, said Zhang. It will also expand its insurance brokerage operations to other projects, in particular the "transportation investment projects under Guangdong Provincial Railway and its subsidiaries."

In the early stage of development, the new insurance broker will mainly rely on Huafu (Beijing) Insurance Broker's resources and technologies. Zhang said the company will then gradually develop its own management and technology teams.

Zhang said he also believes the new company will be "a new beginning of sharing various resources and collaboration of technologies," as well as a way to grow businesses by focusing on its specialty and professional risk market advantages.

Attempts to reach Guangdong Provincial Railway and Chang Cheng Insurance Brokers for further comment were unsuccessful.

The construction of the rail transit inter-city Guangzhou, Dongguan-Shenzhen line in southern China's Pearl River Delta district, in which 19.7 billion yuan is invested, began in late December 2009, according to the Chinese government.

The government said Guangdong province will invest more than 350 billion yuan to build a total of 1,900 kilometers of track for the inter-city railway transportation network, covering nine major cities in southern China's Guangzhou, Shenzhen and Zhuhai cities, and connecting Hong Kong, Macau and other districts in the province by 2050.

Guangdong Provincial Railway was established in 1962, and comprises the businesses of railway transportation, construction, industrial manufacturing, trading and logistics, with total assets of 470 million yuan.

Huafu (Beijing) Insurance Broker was incorporated in June 2004, and provides national insurance brokering business and comprehensive insurance brokerage services in China. It has sales offices in Shanghai, Nanjing, Guangzhou, Wuhan, Fuzhou, Changsha, Yinchuan and Huhhot and offers insurance coverage in aeronautics, aviation, energy, electricity, rail transportation, expressway, steel and iron, chemical industry, pharmaceutical medicine, finance and education.

Guangzhou-based Chang Cheng Insurance Brokers was incorporated in June 2000 with registered capital of 30 million yuan. Its insurance services cover automotive, high-technology, infrastructure, energy, telecommunications, manufacturing, medical, tourism, trading, publishing, finance and securities industries.