Global reinsurance player Munich Re continues to demonstrate an appetite to source more risk through its primary insurance arm where it can, with the Chinese property and casualty (P&C) market a new location it has now gained a foothold.
Munich Re’s primary insurance unit ERGO announced today that it is making an investment in Taishan Property & Casualty Insurance Co., Ltd., a nationwide property and casualty (P&C) insurer in China, based in Shandong.
The company has signed shareholder’s and capital increase agreements for a transaction that will see ERGO Group taking a 24.9% equity interest in Taishan Insurance, through subsidiary ERGO Versicherung AG.
Taishan P&C Insurance is a largely state-owned entity, under the supervision of the Shandong State-owned Assets Supervision and Administration Commission.
In recent year’s the Chinese government has looked to pull foreign capital into some of its state-owned insurance entities, which can be an attractive proposition for significant reinsurance capacity players looking to new sources of diversified returns.
Munich Re has, of course, been active in China for years, as too has its primary insurance arm ERGO.
But this deal provides a much broader platform for the group to source risks from the China marketplace, while deploying capital into a diversified P&C insurance and reinsurance marketplace through a vehicle that is closely aligned with state backers.
Dr. Markus Rieß, Chief Executive Officer and Chairman of the Board of Management of ERGO Group, commented on the move, “In our global portfolio, China holds a central role. Taishan Insurance is a dynamic and ambitious insurance company in the Chinese P&C market, which drives its business with great competence and determination. We are looking forward to building a strong partnership together and to bundling our strengths in this important market.”
“ERGO Group’s strategic investment into Taishan Insurance is a strong entry point into China’s P&C market that also complements our existing Life and Health businesses in China. Through this investment, ERGO Group has the opportunity to share our insurance expertise and global resources with Taishan Insurance and to boost our innovative capabilities and competitiveness in the Chinese market,” added Jürgen Schmitz, CEO ERGO China.
Zhang Bin, Director of Shandong State-owned Assets Supervision and Administration Commission also commented, “The strategic investment by ERGO Group will maximize resources from both sides to further drive Taishan’s development in the areas of competitiveness, innovation and risk control, and contribute to the high-quality economic development of Shandong Province.”
“We are pleased to have ERGO Group become our strategic shareholder. We look forward to working closely with ERGO Group to explore new business opportunities and introduce new business models and technologies to our customers,” Zhu Huajian, Chairman of Taishan Insurance stated.
The announcement noted that the strategic input of ERGO will “enhance Taishan’s market offering as China’s financial services sector continues to open up.”
ERGO Group has been active in China for almost two decades, while Munich Re has been providing reinsurance there for longer.
This move positions Munich Re as group to have greatly enhanced access to Chinese risks, with the potential to deploy much more capacity into that marketplace as it grows.
Our sister publication Reinsurance News recently reported that China Pacific Insurance Company (CPIC) is moving forward with a London listing to support its overseas expansion, with global reinsurance giant Swiss Re serving as its cornerstone investor.
It’s no surprise to see these major global insurance and reinsurance players looking to secure China market tie-ups, for the benefits of market access and sourcing diversified risks for their portfolio.