AXA XL Receives Green Light to Convert its Shanghai P&C Subsidiary into a Reinsurance Company

On 1 July 2020, AXA XL announced that it has received green light from the Chinese insurance regulator to convert its Shanghai based P&C insurance company, XL Insurance (China) Company Limited (XL China), into a non-life reinsurance company. The new reinsurer will be named XL Reinsurance (China) Company Limited (XL Re). This will be the first foreign-owned reinsurance subsidiary in China. All other foreign reinsurers having presence in China are currently operating in the form of branches.

After the conversion of XL China into a reinsurance company, AXA will have four insurance related licences in China, including P&C (AXA Tianping), life (ICBC-AXA Life), assets management (ICBC-AXA Assets Management) and reinsurance (XL Re).

In 2006, AXA obtained its first P&C insurance licence in China through acquiring Swiss Winterthur Insurance. Winterthur Insurance Shanghai Branch (Winterthur China) was set up in China in 1997 and was the first European P&C insurer established in China.

Further, in February 2014, AXA acquired 50% of Tianping Auto Insurance, a local auto insurance company, which merged with Winterthur China and became today's AXA Tianping. On 13 December 2019, AXA completed the acquisition of the remaining 50% stake in AXA Tianping from its domestic shareholders for a total cash consideration of 4.6 billion yuan, which made AXA Tianping a 100% foreign-owned P&C insurer in China.

AXA-Minmetals Assurance Ltd (AXA-MM), AXA's life insurance joint venture with China Minmetals,was first set up in Shanghai in 1999. In 2010, Industrial and Commercial Bank of China (ICBC), AXA and China Minmetals reached agreement on the equity transfer of AXA-MM.

AXA-MM was renamed ICBC-AXA Life and officially launched in 2012. AXA Group currently owns 27.5% in the company, with ICBC owning 60% and China Minnetals owning 12.5%.

In May 2019, ICBC-AXA Life set up a wholly-owned insurance assets management subsidiary, ICBC-AXA Assets Management Company in Shanghai. This is the first Sino-foreign joint venture insurance assets management company approved by the regulator.

XL China was set up by XL Insurance Company SE and XL Reinsurance America Inc in Shanghai in 2010. In May 2015, XL Group acquired Catlin Group. As a result of the acquisition, XL Catlin owns two presences in China: one is XL China and the other is Catlin's syndicate operating through Lloyd's China platform. In September 2018, AXA completed the acquisition of XL Group and XL China became an entity of AXA in China. Following its conversion into XL Re, AXA will now also own a reinsurance licence in China.

From the recent grant of the first 100% foreign life insurance to AIA China to the approval of AXA XL's reinsurance licence, there is a clear sign for the full opening up of China's insurance market to the foreign investors.

In 2019, Allianz was given the green light by the regulator to set up China's first wholly foreign-owned insurance holding company in Shanghai. Since then, there has been market rumor that AXA may also consider setting up a foreign insurance holding company in China.

Although AXA has not made any formal application in this respect, the grant of the new reinsurance licence is no doubt another important step taken by the French insurance giant in developing and achieving its Chinese market strategy and vision.