Insurers’ investment limits scrapped

The China Banking and Insurance Regulatory Commission (CBIRC) has published a first draft of new guidelines that would lift limits on how much and in what insurers can invest, specialised media outlet Caixin reports.

Currently, insurance firms can only buy shares of fellow insurance companies, non-insurance financial companies and companies linked to the insurance sector such as healthcare and motor services. Investments are capped at 30 percent of a company’s assets.

The regulator was quoted by the publication as saying that the permission will offer long-term, stable funding support for listed companies and will help mitigate liquidity risks related to shares pledged as collateral for loans.

According to official data, by the end of 2017 the insurance sector was worth up to USD2.7 trillion.

As per the CBIRC’s new rules, only insurance asset management firms can establish specialised investment products, provided they have not been subject to administrative penalties during the last three years.

The amounts invested in equities through the specialised products will not be subject to existing restrictions on stock investments based on insurers’ total assets and CBIRC will oversee the investment products in the same way as other financial investments.