Aviva opens two China life offices

INSURANCE giant Aviva has opened two new life insurance offices in Beijing, a week after offloading its non-life businesses across the Asia region for £249m.

The company says it plans to expand into the asset management business in China to invest the premiums it collects.

'We'll look for asset management opportunities,' Philip Scott, head of Aviva's international life insurance business, told Bloomberg. 'Clearly, the life insurance business collects funds on behalf of customers, and we will have growing asset management needs.'

Aviva's first foray into Chinese life insurance came last year via a joint venture with the Chinese National Cereals, Oils & Foodstuffs Import and Export Corp (Cofco).

The insurer is targeting the £860bn the country holds in savings and says it wants 10% market share in 10 major cities by 2010.

It plans to sell life insurance directly and through banks, and has agreements with Bank of China and Industrial and Commercial Bank of China in Guangzhou and Huaxia Bank in the Beijing.

Aviva, the former CGNU, said a week ago that it would sell its Asian property and casualty insurance unit to Japanese insurer Mitsui Sumitomo for £249m as it switches its focus in the region to long-term savings businesses.

Aviva has operations in Hong Kong, Malaysia, Thailand, Singapore-the Philippines, Indonesia and India, but China is the potential jewel in the Asian crown.

Some analysts say that insurance premiums may surge to three trillion yuan (£204bn) by 2020 from 388bn yuan last year. Scott said Aviva's pilot venture with Cofco saw the British company invest £20m for a 50% stake.

Last year it sold 35m yuan of premiums and is expecting a total of 45m yuan this year, below market leaders among foreign insurers.

AIU Insurance, owned by American International Group, is the leading overseas insurer in China, having sold more than 238m yuan of premiums in the first seven months of this year.