(Yicai Global) July 24 -- China Huarong Asset Management, one of China's four major state-owned bad debt banks, will set up a joint venture with a unit of media producer Meisheng Cultural & Creative to break into the insurance sector.

Huarong Tianze Investment will establish a JV with Meisheng Cultural & Creative, among other partners, with an initial registered capital of CNY2 billion (USD294.4 million), the Hangzhou-based media firm said in a statement. The two firms will be the largest shareholders, each holding a 20 percent stake in the venture with a capital contribution of CNY400 million.

The new company will specialize in life, health, accident, and other personal insurance services. Huarong is the only one of the four state-owned asset management firms that has not yet been licensed for operating insurance business. The JV will apply for the related license and thereby fill the gap.

Many state-owned and private firms have established banks and insurance companies in recent years in response to the government's call on private investors to participate in financial innovations.

Founded in 2002, Meisheng Cultural & Creative has developed games, children's drama, and movies with successful cross-marketing operations. Part of the reason that it decided to pair up with Huarong is to ensure the liquidity of its working capital, a market analyst said.

Editor: Emmi Laine