MetLife may get new Beijing partner -sources
By Langi Chiang and George Chen
BEIJING/SHANGHAI, March 22 (Reuters) - The Shanghai partner of MetLife Inc. (MET.N) has entered exclusive negotiations to team up with the top U.S. life insurer to restructure its joint venture in Beijing, sources close to the deal said on Thursday.
If it goes ahead, MetLife would be able to consolidate its operations in China, a market with huge potential as only fewer than 4 percent of its 1.3 billion population have life insurance coverage.
MetLife's premiums in China more than tripled last year to 392.9 million yuan ($51 million).
At present, the company has two 50/50 joint ventures in China: United MetLife Insurance Co. in Shanghai and Sino-US MetLife Insurance Co. in Beijing.
Its partner in Shanghai is Shanghai Alliance Investment Ltd., which is run by the son of former Chinese President Jiang Zemin and is an investment arm of the city government.
In Beijing, it is Capital Airports Holding Co., China's largest airports operator.
Shanghai Alliance is now negotiating exclusively to buy the equity stake in the Beijing venture held by Capital Airports, parent of Beijing Capital International Airport Co. (0694.HK)., the sources told Reuters.
"Shanghai Alliance is the only bidder left in the negotiations," said one insurance source close to MetLife's business in China.
He said price was not the toughest issue; rather, the proposed deal hinged on regulatory support and whether staff and management problems in the two ventures could be solved.
While no final agreement had been reached, one source said MetLife had shown a positive attitude towards the plan.
The two MetLife ventures in Beijing and Shanghai declined to comment. Officials at Shanghai Alliance and Capital Airport were not immediately available for comment.
MetLife became the top life insurance seller in the United States after buying Travelers Life & Annuity from Citigroup Inc. (C.N) in 2005. That gave it a stake in the then yet-to-open Shanghai venture that became United MetLife Insurance in 2006.
China's insurance premiums rose 14.4 percent in 2006 to 564.14 billion yuan ($73 billion) and are expected to keep growing at a double-digit pace in the next five years.
Foreign insurers such as AIG (AIG.N) and AXA (AXAF.PA) are gaining wider access to the market since China joined the World Trade Organisation in 2001.
The insurance source in Shanghai said he expected the deal to be approved this year though it may take longer time for MetLife to consolidate its business and brand in China.
MetLife's Shanghai venture focuses on distributing life insurance in eastern China, while its Beijing venture mainly sells products in northern and central China. ($1=7.73 Yuan)
