Aviva, the world's fifth-largest insurance group, plans to set up a pension company and a fund management firm by the end of this year as part of its efforts to strengthen its business in China, said Aviva Asia's managing director yesterday.

 

"We've filed an application to establish an independent pension business to the China Insurance Regulatory Commission," Aviva Asia Managing Director Charles Anderson told China Daily, adding that preparations for the new company will be completed by the end of this year.

 

Currently, Aviva has a 50-50 joint venture life insurance company with COFCO Limited.

 

"We will still join hands with COFCO in tapping into China's pension business, a sector that has a huge potential," said Anderson.

 

China has only three pension companies: Taiping, Ping An and China Life Pension, all wholly owned Chinese firms. But with the aging population rapidly growing in the country, the pension business is becoming increasingly attractive for life insurers.

 

"More customer education is needed in China's pension market," Anderson said when asked about the major challenges in this emerging market. "And we will bring in more innovative pension products."

 

Aviva is also actively seeking another partner in launching a fund management company.

 

"Besides COFCO, we would like to have another initiator for the fund management company, but Aviva will be the controlling stakeholder of the new firm," Anderson said.

 

According to Kathleen Jiang, head of the strategic planning sector of Aviva China, setting up a brand new firm will make the stake structure clearer though it will be more time-consuming compared with acquiring an existing company.

 

"We prefer the partner to be a security firm or a trust company," said Jiang, adding the industry regulator is quite supportive of Aviva's initiative.

 

Beijing-based Aviva-COFCO Life Insurance opened for business in 2003 and operates in six provinces. In January, the insurance regulator approved Aviva-COFCO to increase the company's registered capital by 400 million yuan to 900 million yuan. "Another capital injection is expected to be completed before the end of August," said Anderson, but declined to elaborate.

 

(China Daily June 26, 2007)