Metlife Set To Kick Off China Operations
The US-based Metropolitan Life Insurance Company (MetLife) is all set to commence its business in China as part of its expansion in Asia. India is another country where the company is developing its business and has opened an office in Kolkata recently.
The company has procured a license from the China Insurance Regulatory Commission for floating a subsidiary in the country last month and has entered into talks with financial companies in China. MetLife sources said they expected talks to be concluded in around 60 days. MetLife will initially focus on individual insurance policies through career agency system.
Although the company has received an in-principle approval from the Chinese authorities for a single region, it is yet to receive approval for a specific area where it will commence its operations. In China foreign players need to procure licences for every area they want to operate in.
MetLife will apply for a region specific license only after it has completed negotiations with the domestic player. At present Met Life is engaged in talks with three private corporate in China.
The business model and other details will be finalised only after it has struck a deal with the domestic player.
The rule in China requires Met Life to float a subsidiary along with a domestic player with a minimum equity capital of $100 million that needs to be brought in by the partners in equal proportion.
Initial investment in China has to be around $100 million which needs to be enhanced as when the company procures licenses for other cities.
The Chinese government opened up insurance for foreign private players lately and a number of companies including, Sunlife Assurance, Max Life Insurance, have made a foray. The environment in China is very different from what it worldwide, and operations there need to be region specific.
Authorities in China along with the government are very cautious about foreign companies setting up insurance business there, and as such the foreign players need to work under a set of stringent norms. Further, licenses for other region will also depend upon its performance in its initial years.
MetLife has a presence in Beijing and Shanghai. Since establishing its first representative office in 1995, MetLife has served as advisors on a number of projects with government agencies and sponsoring several major seminars. MetLife also played a role in supporting the passage of Permanent Normal Trade Relations status for China with the US Congress and Executive Branch.
This 133-year old company is a major life insurance player in the US and has a total $2 trillion life insurance in force. The company serves approximately nine million individual households in the US. It covers approximately 33 million employees and members. MetLife also has international insurance operations in 15 countries including China.