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Banks get nod for insurance buyouts

THE State Council will allow commercial banks to buy into insurers, the insurance regulator said today.

The State Council, or China's cabinet, has gave the nod for banks to invest in insurers and the China Banking Regulatory Commission and the China Insurance Regulatory Commission have signed a memorandum of understanding for regulatory cooperation, said Yuan Li, the assistant chairman of the China Insurance Regulatory Commission, today in Beijing.

Details will be available soon, he said.

Commercial banks have not been allowed to invest in the insurance industry. But lenders such as Bank of Communications are ready to invest now that regulators have given the green light.

The Shanghai-based lender is planning to buy a 51 percent stake of China Life-CMG Life Assurance Co from China Life Insurance Co. The country's fifth biggest bank will probably be the first bank to invest in insurance.

Qian Wenhui, vice president of Bank of Communications, said on Tuesday that the bank is interested in building a universal financial structure, with business spanning banking, assets management, trusts, insurance and brokerage.

China's insurance companies are estimated to have made a profit of 8.58 billion yuan in the first quarter, a year-on-year growth of 79 percent, Yuan said today.
Insurers' investment in equities gained 19 percent in the first quarter to 288.6 billion yuan at the end of March.

Equities investment accounted for 9 percent of the insurers' investment pool, up 1 percentage point from the beginning of the year. Fund's share dropped 0.4 percentage points to 5 percent. Bank deposits took 31.1 percent, up 4.6 percentage points in the period.

Insurers' total investments topped 3.2 trillion yuan at the end of March, up 5.3 percent in the first three months.

Insurers' investment returns sat at 1.4 percent in the first quarter with total returns of 43.36 billion yuan.

Swine flu should be covered by existing policies, Yuan said.

The net worth of premiums in the first quarter topped 327.6 billion yuan, up 10 percent on a year ago. Total insurance assets topped 3.5 trillion yuan at the end of March, up 6 percent on the beginning of the year.

The insurance regulator is considering allowing insurers to invest in health care.


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