HSBC to buy out life insurance joint venture partner in China

HONG KONG (Reuters) – HSBC Holdings PLC (HSBA.L) said on Monday its insurance unit had agreed to acquire its China life insurance venture partner’s 50% stake to own fully the company under the new rules on foreign ownership that came into effect in January.

The move will allow London-headquartered HSBC, which gets the bulk of its revenue from Asia, to further expand its footprint in the world’s second-largest economy, where it has deployed billions of dollars as part its Asia “pivot” strategy.

Financial details of the transaction were not disclosed.

The transaction to buy the stake in HSBC Life Insurance Co Ltd (HSBC Life China) from joint venture partner the National Trust Ltd will be structured as a transfer of equity interest and is subject to regulatory approvals, the lender said.

China is the world’s third-largest insurance market after the United States and Japan – worth about $318 billion in premiums according to a Swiss Re Institute report.

A lack of majority control, with foreign ownership capped at 50% until last year, has long frustrated global insurers looking to expand market share in China, where individual wealth is rising and comparatively few people have life insurance cover.

Global insurers including Britain’s Prudential (PRU.L) and Canada’s Sun Life Financial (SLF.TO) have been in China for decades, but their collective market share remains below 10% as a result of ownership curbs and limited geographical presence.

But Beijing has been gradually easing access to its financial sector for foreigners. As part of that push, it allowed overseas companies to take full control of their local life insurance ventures from Jan. 1 this year.

“Despite the current difficult environment engendered by the COVID-19 pandemic, we continue to take steps to implement our growth strategy,” HSBC Chief Executive Officer Noel Quinn said in a statement.

Shanghai-headquartered HSBC Life China was formed in 2009 as a 50:50 joint venture between HSBC and the National Trust. It had a registered capital of 1.03 billion yuan ($145.89 million) at end-December, and has network in nine Chinese cities.

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