Top global insurer AIG, the beneficiary of preferential treatment in China, is sticking with its 100 percent ownership model as it looks to expand in the country, but did not rule out another approach if warranted.
The US giant, founded in Shanghai in 1919, was the first overseas insurer to re-enter China, in 1992, and remains the only life underwriter allowed to own 100 percent of its operations, a privilege won under AIG's legendary former Chief Executive Maurice "Hank" Greenberg, who was forced aside early this year.
"We would like to expand our branch operations on a wholly-owned basis. We're in constant dialogue with the insurance regulator, and I hope to visit him very soon in Beijing," Martin Sullivan, AIG's new president and chief executive, told a luncheon audience on Friday in Hong Kong.
"That's our strategy at the present moment," added the white-haired Londoner, who has worked at AIG since 1971 and became the company's third chief executive in March.
American International Group, the world's most valuable insurer, faces the challenging China market without the dominating presence of Greenberg, who was forced out in the wake of regulatory probes into accounting.
Called "grandfather" by the Chinese, Greenberg is known to have "guangxi", or connections, in China, where he is said to enjoy a personal friendship with former Premier Zhu Rongji.
Now 80, Greenberg is credited with helping AIG pull off a coup ahead of the nation's entry to the World Trade Organisation in 2001, when he reportedly managed to hold up the deal unless AIG got unfettered ownership of its existing business in China. While AIG got first crack at a market with a personal savings pool that has ballooned to $1.5 trillion, foreign foes are only allowed to own up to 51 percent of their mainland life units.
Despite the restrictive nature of the sector, foreign players such as Manulife Financial Corp, ING and Sun Life Financial have piled into wealthy cities such as Beijing, Shanghai and Shenzhen to tap an underserved market that is dominated by state-run providers.
AIG operates in eight cities in China, where overall life premiums rose 12 percent to 246 billion yuan (US $30.4 billion) in the first eight months of 2005 but fewer than 4 percent of the 1.3 billion population has insurance.
It has not all been smooth-sailing for AIG in China.
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