INSURERS BOOSTED BY CEPA UPDATE

Government representatives of Hong Kong and the Chinese mainland have issued a further update to the closer economic partnership arrangement (CEPA) originally agreed between the two territories in June and due to come into force from January 1 next year. Among other things, the latest amendments make new provisions for insurers by permitting Hong Kong insurers to acquire equity stakes of up to 24.9% in mainland firms, up from an originally specified 15%. Another part of the agreement relevant to insurers includes opening the way to “strategic mergers” in order to help firms meet the enter criteria to enter the mainland market. Under current legislation any new entrants into the market need assets of US$5bn, plus 30 years’ or more market experience and two years with a mainland representative office, but CEPA will allow Hong Kong firms to pool their resources in order to meet entry requirements.