FRENCH insurer AXA Group plans to acquire a 50 percent stake of Shanghai Tianping Auto Insurance Co Ltd to gain a strong foothold in China's booming auto insurance sector.
AXA will buy 33 percent of Tianping from its existing shareholders for 1.9 billion yuan (US$304.7 million) and inject another 2 billion yuan to support its future growth. AXA's Chinese property and casualty (P&C) insurance unit will merge with Tianping, the French insurer said in a statement yesterday.
"The acquisition will give AXA unique direct distribution capabilities in the fast-growing P&C insurance market in China," AXA chairman Henri de Castries said in the statement.
"It will further strengthen the profile of AXA's global P&C franchise and serve as a stepping stone towards our ambition to expand faster in high-growth markets."
The acquisition is still subject to the approval of the China Insurance Regulatory Commission, according to the statement.
The Chinese P&C insurance market has grown at an annual rate of 23 percent since 1981, reaching a total premium income of 564 billion yuan in 2011.
Tianping, established in 2004, is the first insurance company to specialize in car insurance in China and is one of the first insurers to win a direct distribution license.