IFC TO TAKE MINORITY STAKE IN CHINA RE LIFE UNIT

The International Finance Corporation (IFC), the private sector development arm of the World Bank, is to take a 7.5% stake in a newly-established life reinsurance unit of China Re, according to a local report. China Re, as a holding company, plans to retain controlling stakes of between 40% and 60% in the three operating subsidiaries. China Re established China Continent Property Re in Shanghai on October 20. The two other life and property reinsurance units are expected to have registered capital in the region of 800m yuan. The life unit is expected to assume about 2bn yuan of reinsurance business from its parent, while the property unit would take on about 1bn yuan-worth of business. Foreign investors’ stakes in domestic insurers are currently restricted by the government to 25%. Currently 95% of China Re’s income derives from a government requirement that all insurers in China reinsure 20% of their business with the company. This is being reduced by 5% annually and will be eliminated completely by the end of 2005, as part of China’s accession to the World Trade Organisation.