American International Group Inc., People’s Insurance Company of China (PICC) and PICC Life Insurance Co. Limited (PICC Life) said that they have entered into a joint venture agreement to form an agency distribution company in China.
AIG will own 24.9 percent of the distribution company, with PICC Life holding the remaining 75.1 percent. Board seats as well as management assignments will be based upon share holdings.
In December 2012, AIG invested $500 million as the largest cornerstone investor in the PICC initial public offering. In connection with this investment, PICC Life and AIG agreed to form this joint venture agency distribution company.
The companies said that they are considering distributing various products under the joint venture company including jointly developed life and retirement insurance products, existing PICC life products, PICC property/casualty insurance products, AIG property/casualty products, as well as other products aimed at this developing market.
AIG and PICC Life said they plan to begin operations of the joint venture by the first quarter of 2014, with the exact timeline being subject to regulatory approval
“This partnership builds on the longstanding relationship and history of cooperation between PICC and AIG to develop strategic business expansion opportunities,” said Robert H. Benmosche, president and CEO of AIG.
“Chinese consumers are changing the way they want to purchase and utilize insurance products throughout their lifetimes, and we are confident that this joint venture will be a leader in helping these consumers achieve this goal,” said Chairman Wu Yan of PICC.
Founded in 1949, PICC is the largest insurance company in China, with total annual revenue of $36.5 billion. It operates its P/C insurance business through PICC Property and Casualty Co. Ltd, which currently has the largest market share in the country; its life and health insurance businesses through PICC Life and PICC Health Insurance Co. Ltd. The company also has asset management, investment management, funds, trusts, and other specialty operations.
AIG Insurance Company China Limited is a wholly owned subsidiary of international insurer AIG with headquarters in Shanghai. It is the largest foreign-funded P/C insurer with the longest history in China.
AIG, which sold much of its stake in the Asian insurer AIA Group several years ago to help pay back the U.S. government for its bailout, has also agreed to invest $92.5 million (HK$718.1 million) in a rights offering of PICC Property and Casualty Co. AIG said that it will own 9.9 percent of shares in PICC P&C after the offering.