This March 9, 2010 photo shows an advertising board for British insurer Prudential on the top of a building on the Kowloon peninsula in Hong Kong. (MIKE CLARKE / AFP)
Prudential Plc, Britain's largest insurer, plans to expand operations and open more offices in China, as it steps up efforts to expand its presence in the country's insurance sector, according to a senior company executive.
Nic Nicandrou, chief executive of Prudential Corp Asia, said that its life insurance joint venture with CITIC will set up its 20th branch in Northwest China's Shaanxi province. It also plans to open new offices in 10 to 15 cities, and recruit more insurance agents in China.
"Last year, we increased the number of agents by 9 percent to 48,000. We also partnered with more than 40 banks and have access to 5,000 bank outlets. We will continue to broaden our distribution network in China," Nicandrou said.
He noted that Eastspring Investments, Prudential's asset management business in Asia, has opened a wholly-owned investment and distribution office in Shanghai.
There are fast-growing needs in savings andhealth insuranceeverywhere in China.
Nic Nicandrou,Chief executive of Prudential Corp Asia
"To begin with, Eastspring has just completed a successful initial public offering for an onshore private fund that will be sold to qualified investors in China. The fund is a China A-share equity strategy and we hope to launch it later this month subject to regulatory approval. In the future, we hope to offer qualified Chinese investors the opportunity to invest in global offshore funds and also provide global investors with the opportunity to invest directly in China."
At the same time, CITIC-Prudential is preparing to submit its application for a pension license, as China has introduced measures to further open up its pension insurance sector.
On March 27, the China Banking and Insurance Regulatory Commission approved three foreign financial institutions to enter the country's pension insurance industry, marking another step toward insurance opening-up.
Wan Qun, an official from Heng An Standard Life, one of the companies that got the approval, said: "China's insurance market, especially the pension insurance market, maintains huge growth potential. The country's opening-up in the sector brought many opportunities for foreign insurance companies. Currently, many toplevel foreign insurers wish to enter the Chinese market, where they anticipate a bright future.
"Foreign companies can give full play to their global advantages to bring their expertise, talents and techniques to China, and at the same time, the companies' profits and scales can be raised to a new level. We are confident on China's pension insurance industry."
Wang Xujin, dean of the Insurance Department at Beijing Technology and Business University, said that China is now in the process of optimizing its market economy system, and accelerating insurance sector opening-up. "There is unlimited potential in the sector," Wang said.
Nicandrou noted that China's insurance market has huge room for growth. "At present, only 115 million Chinese people have any form of insurance and savings products. When you add up all of the money that they save with insurance, that's about US$2 trillion. It may sound like a lot of money, but it's less than 20 percent of the country's GDP. If you compare this to the United States, or Europe, that will show over 270 percent of GDP."
Therefore, the insurer is bringing its capabilities into the market. Last year, it signed a memorandum of understanding with the State Council Development Research Center to look at how the retirement and pensions market could be developed in China.
"There are fast-growing needs in savings and health insurance everywhere in China," Nicandrou said.
He noted that China's opening-up in the financial sector allows the company to bring more expertise and investments into China. "I think it will allow us to play a more significant part in building a financial system that supports the rising needs of China's aging society. We are doing that and would like to do more."
The insurer said it is also interested in the country's policies related to the Greater Bay Area, because as a leading insurance company in Hong Kong, it has around 20 percent market share there. It is also looking to expand its business on the Chinese mainland as well.
"The policies could offer a lot of opportunities not only for Hong Kong, but for the Chinese mainland more broadly."
Currently, China is one of the largest contributors to Prudential's new sales and profit in the region, according to Nicandrou.
The executive said that the insurance market in China is still underdeveloped compared with developed countries, which offers immense growth potential for Prudential to expand its presence.
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