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Alarm over insurers鈥 listed holdings
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CHINA’S insurance regulator yesterday warned insurers about risks as they raised their stakes in publicly listed companies, and took issue with their lack of internal risk control.
Volatility in the stock market has brought risks and problems to the insurance firms in managing assets and liabilities, Chen Wenhui, vice chairman of the China Insurance Regulatory Commission, said at a conference yesterday.
Chen warned that some insurance firms will face solvency pressure as they aggressively invest in stocks, while some insurers are having liquidity issues after actively acquiring stakes in publicly listed companies.
Chen made the comments as insurance companies are buying shares in listed companies. Foresea Life Insurance made headlines in helping parent Baoneng Group battle for a controlling stake in real estate giant China Vanke Co.
Foresea issued a 5.8 billion yuan bond this year to replenish capital and has sold investment-related insurance policies to get funds.
Between June and December 11, 26 listed companies have announced increased holdings by insurance firms, according to Sinolink Securities Co.
Chen said major shareholders and controllers of some insurance firms have used them as a platform to raise funds for other related companies. These insurers lack a system of internal risk control.
He said the CIRC will coordinate with other regulators to strictly enforce regulations on assets and liabilities.
The CIRC last week ordered insurers to disclose investments in publicly listed firms such as transaction type, funding sources and other parties acting in concert within two days after a listed company discloses that their total ownership or extra purchases exceed 5 percent of its stock.
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