French insurance provider AXA is set to become China's biggest foreign-funded property and casualty (P &C) insurer. The company is currently now seeking the approval of the China Banking and Insurance Regulatory Commission for it to fully purchase its joint venture in the country, AXA Tianping.
The company currently owns 50 percent of its Chinese joint venture. If it is approved by the regulatory agency, AXA will be able to purchase the remaining 50 percent of AXA Tianping Property & Casualty Insurance Co Ltd for $642 million. Both companies had reportedly already agreed on the figure back in November of last year.
The full acquisition of the Chinese joint venture company will give the French company a clear edge over its competitor in the world's second-largest insurance market. Demand for insurance in China has continued to increase as the country sees rapid growth in its middle-income population.
Between 2011 and 2017, China has seen a strong compound growth in insurance revenue from both domestic and foreign players. The country had quickly become the world's second-largest insurance market during that time, accounting for 11 percent of the global market.
According to the AXA Group CEO Thomas Buberl, the deal will be the first of its kind in the Chinese insurance market. The company hopes that the deal will eventually allow it to become the leading P&C insurer in the country with a strong foothold across China. Buberl explained that China continues to be a key growth engine in its overall business and the transaction only serves to be proof of its conviction to the Chinese market.
The chief executive of AXA China, Xavier Veyry, echoed the same sentiments and explained that the decision to purchase the joint venture was due to the fact that China has now become more open to foreign businesses. It is apparently now the right time to make such a move and the infrastructure set up by the joint venture should provide the right medium for AXA to deploy its ambitious strategy for the Chinese market.
Market analysts have revealed that the transaction should provide domestic companies the right incentive to enhance their own services and products. The entry of a fully foreign-backed insurer into the Chinese market will apparently end up increasing competition within the sector, which will eventually result in better products and competitive pricing.
As of the moment, 90 percent of AXA Tianping's business revolved around insuring vehicles. Veyry explained that the company plans to diversify the company's offering following the acquisition. AXA plans to explain the joint venture's business to address the growing needs of the growing middle-income group, which will include healthcare, life insurance, and lifestyle coverage.
