John Hancock Tianan Life Becomes a Chinese Insurer

Shanghai-based John Hancock Tianan Life Insurance Company, Ltd. as a Sino-foreign joint venture insurer has become a Chinese player.

Upon approval by China's insurance regulator China Insurance Regulatory Commission, Manulife Financial, the foreign parent of John Hancock Tianan Life Insurance has transferred its 50% stake in the insurance joint venture to four Chinese institutions. Soon, John Hancock Tianan Life Insurance will be altered into Tianan Life Insurance.

Out of various reasons, foreign shareholders of some Sino-foreign insurance joint venture companies have or are planning to withdraw. Sun Life Financial Services, the foreign shareholder of Sun Life Everbright Life Insurance Co., has expressed its intention to sell some equity of the joint venture life insurer to the Chinese parent China Everbright Group. Another example is China Life-CMG Life Assurance Company Ltd.. Commonwealth Bank of Australia, the foreign parent of the Shanghai-based life insurance joint venture, intends to sell more stakes in the venture to Bank of Communications (BoCom, 601328.SH, 3328.HK). Actually, BoCom has just taken over a 51% stake in China Life-CMG Life Assurance from China Life Insurance(Group)Company, former biggest shareholder of China Life-CMG Life Assurance.

As for these joint venture life insurers, the shareholder reshuffle is expected to vitalize them. Allianz China Life Insurance Co., Ltd., for example, have expanded the capital base, opened more branches and achieved strong performance, after CITIC Trust & Investment Co., Ltd., the subsidiary of China CITIC Group, became its new shareholder.

As for the life insurance sector, some experts thought that commercial banks and insurance companies have to beak the status quo, to turn from the product-oriented cooperation into the equity cooperation. In addition to BoCom, Bank of Beijing (601169.SH), and Industrial and Commercial Bank of China (601398.SH, 1398.HK) have also been reported to deepen their cooperation with some small and medium-sized insurers through making equity investment into local life insurers.

This would be a double-edged sword for insurance companies and threat seems to be more than cooperation. Once commercial lenders make investment into insurance companies, the banks could make use of the sale channels and customer resources of insurers to provide integrated financial products and services to customers. These banks actually have accumulated enough insurance talents reserve these years, thanks to the training programs provides by their insurance partners, which would be another challenge for insurance firms.

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