American International Group has announced that it will be working with PICC.
The latest insurance news from U.S. insurer American International Group, Inc., is that it will be entering into a joint venture with the life policy business unit of People’s Insurance Co. (Group) of China, Ltd.
This may place AIG into a situation where it is competing directly with its former Pan-Asian business unit.
This insurance news has been released as the insurer announced that it would be purchasing $500 million worth of PICC shares in that companies up to $3.6 billion IPO. This will make AIG the biggest foreign stakeholder within the fourth largest insurer in China.
This insurance news represents one of the largest Asian investments the insurer has made since its bailout.
PICC is a company with a long history, having grown from an insurer that was originally founded in 1919 in Shanghai. This is important insurance news as it marks a new type of large move that is being made among the first times since the financial crisis. In fact, this intended investment represents a complete reversal for the behaviors that AIG has been making within the region.
AIG had previously made insurance news when it had been forced to sell AIA Group Ltd., the heart of its Asian life operations, in order to help it to pay back the bailout money it received from the U.S. government during the financial crisis. AIG now has an ownership of that company – which has been public since October 2010 in Hong Kong – worth 13.69 percent.
The intention to begin a joint venture with PICC could place AIG in direct competition with AIA in China. AIA is the only foreign company to have a full license within that country, having received it only after extensive lobbying of Chinese leaders. The new joint venture would have AIG distributing life insurance and other coverage products by way of a specialized agency force across China. It would concentrate primarily on the larger cities.
This is also big insurance news for PICC, which makes the majority of its earnings from property and casualty products.