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The Actuary The magazine of the Institute & Faculty of Actuaries

China’s central bank builds stake in UK insurance sector

People’s Bank of China (PBC), the Chinese central bank, is reported to have built up a stake in the UK-based insurer Prudential. The stake, believed to be just under 1%, places the PBC within Prudential’s top 25 institutional investors.

PBC’s interest in Prudential is viewed as unsurprising by observers, as Prudential has built a successful business in the Chinese market and has emerged relatively unscathed from the credit crunch. The move is seen as part of a broader strategy by the PBC to diversify its vast foreign exchange reserves, which reached approximately $1tn in 2007.

While there is no suggestion that the PBC would be interested in taking over Prudential, sources close to the situation are reported as saying that stakes in other insurers such as Legal & General and Old Mutual have also been acquired.