China Reinsurance has submitted a plan for restructuring to the China Insurance Regulatory
Commission, South China Morning Post said. Under the plan, the state-owned company would be turned into a holding company with separate subsidiaries for the reinsurance of life and non-life policies. It hopes to launch the subsidiaries in the first half of next year, in co-operation with domestic or foreign investors.
China Reinsurance was created in 1999 from the reinsurance arm of the People's Insurance Company of China. Under China's mandatory cession rules, domestic insurers are required to reinsure 20 per cent of their policies with China Re. Insurers also reinsure a small part of their policies, mostly catastrophe-related, with foreign insurers. Compulsory reinsurance provides about 95
per cent of China Re's revenue, expected to reach Yn18bn this year.
However, under the terms of its accession to the WTO, China is committed to allowing foreign firms into the reinsurance market and to cutting mandatory cession by 5 per cent annually over the next four years. Both Swiss re and Munich Re have obtained licences to set up branches in China, though they have not yet begun operations.