An agriculture insurance joint venture between Ant Financial Services Group and China United Insurance Holding Co. has received a green light from China’s insurance regulator, making it the first agriculture technology company co-established by an insurer to achieve regulatory approval from the China Insurance Regulatory Commission (CIRC).
Nonglian Zhongxin Technology Co., Ltd. will be 60% owned by China Insurance and 40% owned by Shanghai Yunxin Venture Capital Management Co, a wholly owned subsidiary of Ant Financial, which is a financial services affiliate of Alibaba Group.
The joint venture between one of China’s financial technology leaders and China Insurance, an insurer founded in western Xinjiang province and now based in Beijing, will aim to meet increasing demand for insurance products driven by modernization of the agricultural sector.
Nonglian Zhongxin will provide one-stop services such as financing, insurance and supply chain services to an emerging class of Chinese agricultural companies utilizing advanced technology in their operations, it said in an announcement.
Agriculture insurance is booming in China and represents a lucrative new frontier for Ant Financial and Alibaba. Agricultural insurance premiums expanded seven times to RMB41.72 billion in 2016 from RMB5.18 in 2007, according to statistics from the CIRC.
Leveraging Ant Financial and Alibaba’s vast resources in e-commerce, digital payment, logistics and offline presence, especially an expanding network of rural Taobao shops, the joint venture will aim to provide insurance and other financial services to agriculture firms with ease of transaction and after-sale services.
Ant Financial and Alibaba have made significant inroads into China’s rural regions and the agriculture sector. Last December, Ant Financial said it would invest in CFPA Microfinance Management Co., and become the second largest shareholder of the company. CFPA Microfinance Management provides small loans to farmers in extremely poor rural areas in China.