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China will be back in focus for international players in 2019

  • 10 December 2018 10 December 2018
  • Asia Pacific

  • Insurance

Regulatory clarity clears a path for deal-making.

China will be back in focus for international players in 2019

After three or more years of regulatory uncertainty in the world's second largest insurance market, calendar year 2018 saw the newly merged China regulator – the China Banking & Insurance Regulatory Commission (CBIRC) – issue a slew of new regulations, with a number of aims.

First, to encourage foreign-insurer controlling equity interests in CBIRC-regulated carriers, brokers and managing agents.

Second, to actively and explicitly prevent a single domestic shareholder from ever acquiring controlling equity interests in CBIRC-regulated carriers (with grandfathering exceptions remaining – tentatively – for existing circumstances).

Third, to clean up market misconduct by CBIRC-regulated entities and set significantly higher 'fit & proper' criteria for existing and prospective shareholders of CBIRC-regulated entities.

And finally, to set a new Rule 101 for CBIRC-regulated carriers:  Solvency, Solvency, Solvency (with greatly increased fines and punishment for deliberate or careless misrepresentation of a carrier's solvency position, by the carrier and/or its auditors/actuaries).

As a result, foreign insurer interest levels in China's insurance market are at their highest levels in many years, and we expect a number of significant and creative foreign insurer-invested transactions to emerge through 2019.

You can read the rest of our insurance predictions here.

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