BOC Insurance Boosting Bancassurance

BOC Insurance, fully owned by Bank of China (BoC, SH: 601988, HK: 3988), vows to further boost the bancassurance business with the reliance on the parent company.

Earlier, China’s insurance regulatory department China Insurance Regulatory Commission (CIRC) gave the approval for the leading foreign exchange bank to wholly take over BOC Insurance from Bank of China Group Insurance Company Limited (BOCG Insurance). As the parent company, BoC is expected to provide strong support to BOC Insurance in the aspects of customer resources, maintenance of customer relations, the sales channels, the risk control and so forth.

In the first half of this year, the agency business of BoC for selling the products of BOC Insurance was re-divided into the business introduction by the bank, the mode of agency sales and the bancassurance finance. Currently, the three modes are all operating well. By the end of this August, the bancassurance channel contributed about one half to the total premium revenues of BOC Insurance. In the meantime, BoC saw its commission incomes from the agency business for BOC Insurance rise by 168% from the same period of a year ago. As planned, BoC is expected to contribute about 70% to the premium revenues of BOC Insurance by 2011.

Based in Beijing as a state-owned commercial lender, BoC began selling CNY 5 billion worth of the renminbi bonds in Hong Kong as from September 8. Both individual and institutional investors can buy such bonds. Part A of such bonds has a term for two years and the annual interest rate of 2.65% and Part B of these bonds has a term for three years and the annual interest rate of 2.90%. 17 Hong Kong-based Banks or banking branches, including Bank of East Asia, the Hong Kong Branch of Bank of Communications and so forth, are responsible for selling the bonds of BoC. This is the third time for the China’s Mainland-based lender to issue bonds in Hong Kong. Actually, the bank has always played an important role in linking the financial markets of Hong Kong and China’s Mainland. One of its subsidiaries BOC International takes the leading position in the bond underwriting business in Hong Kong and China’s Mainland.

Besides, the listed lender’s refinancing plan has been approved by China Banking Regulatory Commission. Still, the plan has to be approved by China Securities Regulatory Commission. Earlier, the top management of BoC had expected to complete the CNY-60-billion share allocation in China’s Mainland and Hong Kong during the fourth quarter of this year.