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Beijing, China, November 4, 2003
– The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to make an equity investment in China Life Reinsurance Company to support its transformation into a more efficient provider of services to Chinese customers. The transaction is part of IFC’s strategy to emphasize support for key institutions that promote a better foundation for the financial sector, which is necessary for sustainable private sector development in China.
China Life Reinsurance Company is a spinoff of China Reinsurance (Group) Company, or China Re, which is a 100 percent state-owned entity. The new company will have multiple shareholders, both domestic and foreign, and will be initially capitalized at RMB 800 million. The government’s stake will be less than 50 percent.
“Life insurance is an important ingredient of support for the financial sector in China. Reinsurance is essential to building capital markets and for sound risk management among life insurance providers,” said Declan J. Duff, director of IFC’s Global Financial Markets Department. Javed Hamid, IFC director for East Asia and the Pacific, added, “IFC’s participation in this investment is part of our ongoing effort to assist the Chinese government in transforming state-owned companies and to reduce their reliance on the state for capital to support their growth. The liberalization of the reinsurance market by 2007 will create a fundamental change in the insurance landscape. We are very pleased to be able to participate through China Life Re in the new environment.”
“The establishment of China Life Reinsurance Company will open a new chapter in China’s reinsurance history,” said Yao Hezhen, vice president of China Reinsurance (Group) Company, “China Re has made a great contribution to the development of the industry in China. In the post-WTO environment, however, China will need companies to compete effectively. So we are pleased to have quality domestic and foreign investors, such as IFC, as our shareholders and partners to build and develop the new company.”
China Re is the sole specialized domestic reinsurance company in China. It was incorporated on March 18, 1999, on the foundation of PICC Reinsurance, a subsidiary of the former People’s Insurance Company of China. China Re has been engaged mainly in mandatory and commercial reinsurance business, including property reinsurance and life reinsurance and other reinsurance business priced in RMB or foreign currencies. By the end the of 2002, total assets of China Re were RMB21.0 billion, and total gross premium written was RMB 19.2 billion.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $16.7 billion for its own account and $6.6 billion held for participants in loan syndications.
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