China will double the ownership cap for a single investor in mainland insurers to 20 per cent from June 15, in an attempt to attract more private investment capital into the sector.
Foreign companies are set to be major beneficiaries of the liberalisation, which comes as China prepares to lift geographic restrictions on overseas insurers before the end of the year to comply with World Trade Organisation rules.
HSBC Holdings and American International Group had already unveiled plans to raise their 10 per cent stakes in mainland partners Ping An Insurance and PICC Property and Casualty, respectively.
Nomura International Hong Kong regional insurance analyst Karen Chan said the change was unlikely to trigger a new wave of foreign investment as most of the 24 main domestic insurers already had a foreign partner.
There have already been cases in the past where foreign firms had obtained special State Council approval to buy stakes of more than 20 per cent in mainland insurers. Dutch-Belgian financial services group Fortis, for example, took a 24.9 per cent stake in Tai Ping Life.
Nonetheless, foreign firms will welcome the changes.
'To foreign investors, the change is definitely good news,' Ms Chan said. 'This is an important step towards regulatory certainty, and winning them a measure of management control.'
