A file photo shows Guo Guangchang, chairman of Fosun International Ltd, takes part in a video news conference in 2007. The Shanghai-based conglomerate announced it has obtained regulatory approvals for its new Hong Kong reinsurance company on Wednesday. David Paul Morris / Bloomberg

Shanghai conglomerate launches HK unit with $550m initial capital

Fosun International Ltd, a Hong Kong-listed diversified conglomerate, has launched its new business, a reinsurance company, in the city to tap into the underserved reinsurance markets in the region.

The reinsurer, Peak Reinsurance Co Ltd (Peak Re), announced on Wednesday it has successfully obtained regulatory approvals to launch its underwriting operations with an initial capital of $550 million in Hong Kong.

The company is 85.1-percent-owned by Fosun and 14.9 percent owned by International Financial Corporation (IFC), an arm of the World Bank Group.

Concentrating on the Asia Pacific region in particular, Peak Re is established to capture the emerging middle class and the strong growth in the property-casualty insurance sector backed by the sound economic fundamentals across the region, said Franz Josef Hahn, CEO of the reinsurer.

"Hong Kong is an ideal location to build the business given the city's ready access to Chinese mainland and other major markets in the region, robust legal and regulatory systems," Hahn said during a media briefing in Hong Kong.

Reinsurers help primary insurers shoulder risks in return for a share of the premiums. Peak Re's initial focus is to provide property and casualty treaty reinsurance solutions in Asia Pacific, according to Hahn. The company was rated A- by the international insurance industry credit rating agency, A.M. Best Company.

Peak Re Chairman, Wang Qunbin, who is also the president of Fosun, said Fosun has participated in several insurance investment projects in recent years as it is bullish on the long-term outlook of insurance industry.

Fosun and Prudential Financial Inc established a life-insurance joint venture on the mainland in Sept last year to commence business in one of fastest growing insurance markets in the world.

Fosun may also consider further investment to the reinsurer group if necessary, according to Wang, who said the company is in talks on several merger and acquisition opportunities. But, he declined to disclose details.

Hahn said Peak Re will enter seven emerging Asian economies, including India and Indonesia, in the next five years. "China is our most important market," he added.

The company is also expected to start making profits in five years from now on, according to Hahn.

"Local companies licensed to carry out reinsurance business are still rare in Hong Kong, and it could become a good attempt for Fosun to further diversify its businesses in the market," Linus Yip, a strategist from First Shanghai Securities, told China Daily in an telephone interview.

Fosun's share price surged HK$0.20, or 3.8 percent, to close at HK$5.47 on its Hong Kong trading on Wednesday, compared with the 0.46-percent gain of the city's benchmark Hang Seng Index.

litao@chinadailyhk.com

(HK Edition 01/10/2013 page2)