On April 8, 2014, China’s Insurance Regulatory Commission (“CIRC”) announced that it is relaxing merger and acquisition (M&A) rules in the insurance industry. Specifically, CIRC scrapped the rule that would previously limit insurers from buying more than one peer that competes in the same market segment. This move has been welcomed by both domestic and foreign players in the highly-fragmented $288 billion market that is nevertheless dominated by a few state-owned insurers.
In particular, foreign players, such as Germany’s Allianz and Canada’s Manulife Financial Corp, will have the opportunity to acquire domestic companies with a nationwide license to reach target distribution scale.
In addition, many smaller insurance companies, struggling in recent years due to their lack of scale despite the rapidly expanding insurance market, may find financial succor from larger and more financially healthy peers in the form of M&A.
This development came after a change CIRC announced in October 2012, which broadened the range of markets into which insurers may invest.
For more information about China’s rapidly changing Merger and Acquisition rules, please see: