American International Group Inc., New York, says it has received firm assurances from China that China will not require AIG to reduce ownership of any of its existing 100%-owned insurance operations in China.
China Insurance Regulatory Commission officials told AIG executives in a meeting that the company would be able to keep its 100%-owned Chinese insurance operations, according to AIG.
The meeting followed a Sept. 4 report in the Wall Street Journal quoting anonymous CIRC sources as saying that AIG would be required to relinquish its existing 100% ownership rights as a condition for China gaining admission to the World Trade Organization.
But Reuters has reported confirmation from officials at the China Ministry of Foreign Trade and Economic Cooperation that China has agreed to preserve AIGs existing 100% ownership rights in China and permit AIG to continue to operate in the same way that it is now operating in China.
AIGs wholly owned operations in China have been a point of contention between the European Union and the United States over finalizing conditions for Chinas entry into the WTO.
Under the WTO entry agreement, new life insurance businesses entering the Chinese market must be at least 50% Chinese-owned.
The question of how China would treat new AIG branches in China is especially controversial.
AIG and the United States say any new Chinese branches would be part of the existing company, but the European Union insists new branches would be new businesses subject to the 50% Chinese ownership rule.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.