HSBC to Take Full Control of Chinese Life Insurance Venture

The silhouette of a person riding on an escalator is seen at the HSBC Holdings Plc headquarters building in the Central district of Hong Kong. Photo: Bloomberg

(Bloomberg) — HSBC Holdings Plc agreed to buy the remaining 50% stake in its Chinese life insurance venture as Chief Executive Officer Noel Quinn pushes ahead with a business overhaul.

The lender will take full ownership of HSBC Life Insurance Co. Ltd. after buying out its partner, The National Trust Ltd., according to an emailed statement. Financial details weren’t disclosed.

“This transaction supports our ambition to accelerate growth within our Asian franchise, particularly in the dynamic and fast-growing Greater Bay Area, where we fully intend to expand in all lines of businesses,” Quinn said. “It also allows us to further extend our capabilities in wealth, another area of strategic focus for the group.”

Quinn is seeking to boost the performance of HSBC by shifting investments and capital to Asia and restructuring the business. China this year is further opening its vast $45 trillion financial markets to allow foreign companies to take full ownership of businesses spanning insurance, investment banking and fund management.

The Chinese insurance venture was formed in 2009 and operates in nine mainland cities, including Shanghai, Beijing, Guangzhou and Shenzhen.

The push fits into the vision of HSBC Chairman Mark Tucker, who formerly ran AIA Group Ltd. and Prudential Plc. At a conference in Hong Kong in November, Tucker said the coming years will be a time of “great interest and opportunity” for the insurance sector with exciting prospects for the lender’s insurance arm.

But it faces heavy competition. Foreign joint ventures such as HSBC’s brought in just 8% of the sector’s premiums last year and also lagged behind the growth of domestic competitors, according to Fitch Ratings. Local companies have vast distribution networks and millions of agents, led by China Life Insurance Co. and Ping An Insurance (Group) Co.

Among foreign companies poised to expand their presence is German insurer Allianz SE, which late last year got approval to set up an entirely foreign-owned insurance holding company.

The transaction will be subject to regulatory approvals, including from the China Banking and Insurance Regulatory Commission.