Life Insurance Ownership

Sale of its Asia insurance operations will test the resolve of regulators in countries such as Malaysia and Thailand where foreign insurers are barred from owning 100 percent of domestic life insurance companies.

Foreign insurers eager to tap Asia's rapid premium growth often face regulatory hurdles due to ownership restrictions. Here is a snap shot of foreign ownership limits in Asia. Australia, Hong Kong, Japan, South Korea, Singapore and Taiwan are among the Asian markets that offer 100 percent foreign ownership in the life insurance industry

INDIA
India allows insurance companies to own a maximum 26 percent stake in insurance joint ventures. Domestic and foreign insurers, which have invested billions of dollars in India over the last decade, have been lobbying the government for years to raise the limit to 49 percent from 26 percent.
The Indian insurance sector was thrown open to private players in 2000, facilitating the entry of global majors including ING and British insurer Prudential (PRU.L), as well as local companies.
Life insurance penetration in India is about 4.4 percent of the country's gross domestic product in terms of total premiums underwritten each year. That compares with 8 percent in Japan and 9.5 percent in Britain.

CHINA
Foreign stakes in Chinese life insurance ventures are capped at 50 percent, which curbs overseas investors' ambition to expand in China. Foreign insurers also suffer from lengthy regulatory approval procedures when they apply for new branch licences. Last year, foreign life and non-life insurers had market shares in China of just 4 percent and 1 percent, respectively. Due to the challenges, some overseas firms have reduced their presence. Canada's Sun Life (SLF.TO), which two years ago halved its stake in a 50-50 joint venture formed with China Everbright Group a decade ago to qualify as a domestic company, is one example.

MALAYSIA
In 2009, Malaysian regulator Bank Negara issued new guidelines limiting foreign ownership in the insurance sector to 70 percent. However, Bank Negara has said it is open to allowing foreigners to own larger stakes on a case-by-case basis for companies who can facilitate industry consolidation.

THAILAND
Foreign ownership is limited to 49 percent. The finance ministry can allow a foreign company to raise its holding above that limit, but requests are reviewed on a case-by-case basis and exemptions are rare. Recently, Japan's Tokio Marine Holdings was permitted to increase its holding in a Thai affiliate, Tokio Marine Sri Muang Insurance, after the Thai firm was forced to raise funds to cover insurance claims because of last year's floods.

INDONESIA
Indonesia is clamping down on foreign ownership in its banking sector, but so far has left the rules governing its insurance sector untouched. Foreign owners are allowed an 80 percent stake in Indonesian insurers. Insurance penetration is low, with some estimates putting it at less than 1 percent of GDP. As a result, Indonesia has attracted the attention of foreign insurance executives around the world. Panin Financial's life insurance unit, the life insurance unit of state-owned lender BNI, and general insurance firm Asuransi Jaya Proteksi are all looking to sell stakes to foreign investors.