Lloyd's given branch office approval

Insurer adds Beijing to Shanghai as it seeks to simplify operations

The insurance market Lloyd's of London will boost its China presence soon by setting up a branch office in Beijing, following on from the success of its Shanghai underwriting office since 2007.

Lloyd's received its license to open the Beijing branch office on Sept 12, during the UK-China Economic and Financial Dialogue held in London, led by British chancellor George Osborne and Chinese Vice-Premier Ma Kai.

"China is an important market for Lloyd's, with huge growth potential," says John Nelson, chairman of Lloyd's.

"Lloyd's underwriters in China are providing a range of innovative insurance products including specialist marine cargo, renewable-energy technology and agriculture lines."

Lloyd's will now be working closely with the Chinese regulators on the details of the Beijing branch office, and he expects all the systems to be up and running in the next few months, he says.

Lloyd's insurance market, home to the world's largest insurers, started operations in a coffee house in London where ship owners met to make insurance deals 300 years ago.

Lloyd's established a representative office in Beijing in 2000 that does no underwriting business, and later the underwriting office in Shanghai in 2007.

Nelson says Shanghai will still be Lloyd's main hub in China, but having a Beijing branch will make it easier for its syndicates to deal with Chinese carriers whose headquarters are in Beijing.

"All the business we write is specialist, which requires a lot of detailed discussion, so having the syndicates in Beijing as well as Shanghai just makes the process easier," Nelson says.

Lloyd's operations in Shanghai and Beijing make it easier for international insurance companies to do business in China, even if they do not have the resources to set up subsidiaries in China themselves.

Because Lloyd's is an insurance market, Western companies that are already syndicates of Lloyd's can enter the Chinese market without applying for licenses separately. Instead, they work and are regulated under the Lloyd's umbrella, which is in turn regulated by the China Insurance Regulatory Commission.

Lloyd's has nine syndicates in Shanghai, and another three are expected to join in the next few months.

Lloyd's syndicates in Shanghai together wrote business worth $400 million (310 million euros) last year.

Although the Beijing branch is still in the process of being established, Lloyd's expects four syndicates to join to begin with.

"Shanghai will remain and continue to grow, and I expect it to be our largest center," Nelson says. "But there has been a demand in Beijing to be closer to some of our corporate carriers that have their office in Beijing."

While reinsurance is Lloyd's main business in China, it is also making progress with its direct insurance services. Lloyd's direct insurance business was granted commission approval in 2010, but is relatively small.

As a direct insurance company, Lloyd's China is licensed to write general insurance in Shanghai, general insurance outside Shanghai classified as large commercial risk and international marine, aviation and transit, and onshore and offshore reinsurance business of general insurance.

Most of Lloyd's business is still in reinsurance, Nelson says, but he sees great potential for Lloyd's to grow its direct insurance business in the long term.

"We need to develop carefully in a prudent way. Our hope is to be there for the long term, with our sophisticated and innovative products, making them available to the Chinese market."

cecily.liu@chinadaily.com.cn

(China Daily European Weekly 09/19/2014 page23)