China Petroleum and Chemical Corporation (Sinopec), the country's largest oil refiner, plans to pour 338 million yuan (US$41.7 million) into Anbang Property & Casualty Insurance Co for a 20 percent stake to become the joint largest shareholder with Shanghai Automotive Industry Corp, an insider told China Daily.

"We have reached an agreement with Sinopec and are waiting for approval from the China Insurance Regulatory Commission (CIRC), the industry watchdog," a manager of Anbang Insurance, who did not want to be named, disclosed.

Shanghai Automotive Industry Corp, currently the largest shareholder, is expected to increase its investment to be on par with Sinopec.

Sinopec refused to comment on the Anbang move but it does have a stake in another insurer. It has injected 200 million yuan (US$24.7 million) into Sunshine Property and Casualty Co which will begin operations today.

The Anbang insider added: "We are also in discussions with other investors to boost our capitalization."

After the capital injection, Anbang's capitalization will soar from the current 500 million yuan (US$61.7 million) to 1.69 billion yuan (US$208 million), becoming the fourth largest property and casualty insurer in China.

The top three are PICC Property and Casualty Insurance Co, Ping An Property and Casualty Insurance Co of China and China Pacific Property Insurance Co, with registered capital of 7.7 billion yuan (US$950 million), 2.5 billion (US$308 million) and 2.45 billion yuan (US$302 million) respectively.

So far, all shareholders in Anbang - established in September last year - are car-manufacturing companies with their strength lying in auto insurance.

"The entry of Sinopec and other investors will expand our business scope to all property and casualty insurance," the insider said. "And the board is mapping out the development strategy after capital enlargement."

Anbang currently has 10 branch companies covering the major cities in China. Last month, it got the green light from the CIRC to set up four branch companies in Shanxi, Shaanxi, Guangxi and Yunnan.

"Anbang will step up its expansion with the confidence of having deep pockets," she added.

The Chinese mainland's insurance industry has boomed along with the economy in recent years; and rising awareness of risk protection among consumers has also fuelled the increase.

Premium growth averaged an annual 30 percent over the past two decades, attracting a growing number of companies.

According to a report by ratings agency Standard & Poor's (S&P), the mainland life insurance sector has long-term growth potential because of low penetration and increasing demand.

(China Daily September 6, 2005)