Lloyd's of London received a license to establish a branch office in Beijing on Friday, an announcement considered a big milestone for the insurance market's long term strategy to expand its China operations.
Lloyd's already opened an underwriting office in Shanghai in 2007, and the success of its Shanghai operations has encouraged it to apply to open an underwriting office in Beijing.
"China is an important market for Lloyd's, with huge growth potential. We have a long standing relationship with china that spans many decades," said 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," Nelson said.
He said Lloyd's will now be working closely with the Chinese regulators on the details of Lloyd's Beijing branch office as the process progresses.
Home to the world's largest insurers, Lloyd's insurance market started operations in a coffee house in London where ship owners met to make insurance deals 300 years ago.
Despite its long history, Lloyd's entry into China has been fairly recent. It established a representative office in Beijing in 2000 and later the underwriting office in Shanghai in 2007.
As a direct insurance company, Lloyd's China is currently licensed to write general insurance in Shanghai, general insurance outside of Shanghai classified as large commercial risk & international Marine, Aviation & Transit, and onshore and offshore reinsurance business of general insurance.
Nelson said in a previous interview to China Daily that Lloyd's entry into Shanghai "was very much noticed", explaining that the group effectively facilitated the entry of several other international insurance companies that did 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.
He said that while Shanghai will still host a lot of Lloyd's underwriting business, having an additional branch in Beijing will make it more attractive for international insurance firms wanting to enter China through Lloyd's.
While reinsurance is its main business in China, Lloyd's is also making progress with its direct insurance services. Lloyd's direct insurance business got commission approval in 2010, but currently is relatively small in scale.
Lloyd's is also keen to attract Chinese insurance companies to join the Lloyd's market so that they can take advantage of the more diversified marketplace, Nelson said previously.
China Re, the Chinese national reinsurance company, entered the Lloyd's market in 2011 through a partnership with the Bermuda-based insurance and reinsurance company Catlin.