Tencent Holdings Ltd will set up China's first Internet-based life insurance company with State-run firm CITIC Guoan Group, according to a report in Shanghai Securities News.

The new company is positioned to be an innovative and light-asset online insurance firm, and may become the country's first Internet life insurance company if approved.

Tencent and CITIC Guoan will hold identical stakes in the joint venture. The other shareholders include private enterprises such as Shandong Sanxing Group and Beijing Easy Home. The actual shareholding pattern for the joint venture is yet to be disclosed.

Wang Hao, former vice-president of Qian Hai Life Insurance Co Ltd, is to head the preparatory team of the new company that will be based in Beijing.

Tencent, which owns abundant high-quality user groups, could convert the users into policyholders, and master the detailed underlying data of these users.

It is noteworthy that although the company is planning to be an Internet life insurance firm, it will not totally give up other sales channels, people with direct knowledge of the matter said.

The new company will develop bank insurance and Internet selling simultaneously in the preliminary stage, while other sales channels, such as personal insurance and telemarketing with high costs, will be excluded.

"Such a channel strategy reflects how the company aims to achieve scale quickly in a very short period of time and hopes to make profits as soon as possible," an industry source said.

The company plans to achieve profit within five years of operations, and will launch property insurance and asset management companies when the time is appropriate, the sources said.

(China Daily USA 09/03/2015 page13)