Agreements were signed Wednesday in Shanghai between the company and five foreign financial institutions, including the Zurich Insurance Company, the International Finance Corporation and the Japan-based Meiji Life Insurance Company. New China did not release the names of the other two institutions.

According to the agreements, the five institutions will purchase 24.9 percent of New China's shares, said the company.

The sale will increase New China's net assets from the present 630 million yuan (US$75.9 million) to more than 1.6 billion yuan (US$192.8 million).

"The sale will not only greatly help New China's development, but it is also a good opportunity for foreign insurance companies who want to get involved with the Chinese market," said New China Board Chairman Guan Guoliang.

The injection of foreign funds will augment New China's capital funds, the lack of which has long hindered the company's development, said Guan.

Almost all China's insurance companies are suffering from a lack of capital funds.

Ma Yongwei, chairman of the China Insurance Regulatory Commission (CIRC), the industry watchdog, has asked all insurance companies to enlarge their capital funds as soon as possible.

"Private share-sales are an important channel for share holding companies to enlarge their capital funds," said Ma at a recent conference.

The CIRC last year approved the plans of New China and Taikang Life Insurance Co, another national-level insurance company, to bring in foreign shareholders.

"A solid financial basis is a prerequisite if Chinese companies are to compete successfully with their foreign counterparts after the country enters the World Trade Organization," said New China's Guan.

More importantly, New China will also improve its management system by introducing advanced technology from abroad via the foreign shareholders, said Guan.

The company has signed technical support contracts with the five holders whereby they will provide advanced technology and management know-how to New China.

For the foreign shareholders, they have been given a chance to enter the relatively closed Chinese market at a reasonable price.

As China insists on opening the insurance market only gradually, only a few foreign companies will be allowed to enter the market every year.

"I think the sale is a win-win thing for both sides," Guan said.

New China, a major national-level life insurance company in China, has been developing rapidly since its establishment in 1996.

After the sale, the shareholders will receive as much as 37 percent in annual returns on their investments, said Guan.

The Zurich Insurance Company is a subsidiary of the Zurich Financial Service Group, which specializes in life and non-life insurance, reinsurance and assets management. The International Finance Corporation is a member of the World Bank.

(China Daily)