Chinese insurance companies are knocking on the stock market door to seek more direct financing to survive anticipated cut-throat competition with foreign counterparts.
The Shanghai-based Pacific Insurance Company of China is planning to list its property insurance business section, according to company president Wang Guoliang.
Wang said listing work is now in the stage of "coaching period," time a would-be listed company must spend to learn stock market knowledge and standardized practice, required by the securities watchdog.
Wang Liping, vice-president of the Shenzhen-based Ping An Insurance Company of China, said the company has been preparing for the listing.
Although she declined to reveal details on how its debut is expected to be, insiders said the company would probably bundle its insurance and securities businesses together to forge a financial group for listing.
Zhao Dafa, president of the Xinjiang Corps Insurance Company, said his company also has strong interests in replenishing their capital stocks by turning to the stock market.
Analysts said the move came at a time when China's insurance sector is bracing itself for the country's accession to the World Trade Organization, expected to further open the insurance industry.
Concern over domestic insurers' ability to survive in the more competitive environment is intense as domestic companies are believed to be much weaker in capital than their peers in Western countries.
Chinese insurance companies have recorded explosive growth in the past two decades.
The country's 28 insurers generated 79.6 billion yuan (US$9.5 billion) of premium income in the first six months of this year compared with the annual premium income of 460 million yuan (US$55.4 million) in 1980.
Even with fast growth in premium income, insurers' financing ability is limited, mainly relying on private placement and leading to capital inadequacy for most Chinese companies.
The capital shortage has blocked development of the insurance companies, said Ma Yongwei, chairman of the China Insurance Regulatory Commission.
Without enough capital, expansion of business networks and co-operation with foreign partners cannot be realized, Ma said.
Although listing is not the only method, insurance companies can get much-needed funds to maintain capital, set up more affiliates and expand business operation, said Dong Chen, an analyst with China Securities.
Analysts said that pooling funds would not be the only benefit brought by public listing. The move would result in a strong push for industry reform.
Investor demands for profits and transparency will motivate the insurance industry to perform better, experts said.
Dong said listing could be a great promotion for Chinese insurance companies as they would be put in the spotlight and gain attention from the country's 30 million stock investors.
Dong said listing would be a win-win deal for the insurance industry and the country's stock market. The insurance companies will improve the structure of listed companies, proving more options for stock investors.
The country's top securities and insurance watchdogs seem willing to support the listing of insurance companies.
A warm welcome was released in May by Zhou Xiaochuan, chairman of the China Securities Regulatory Commission, for the listing of financial firms including banks and insurance companies.
Ma, also chairman of the China Insurance Regulatory Commission, said earlier this month that the listing of qualified insurance companies is supported.
