Insurers get nod to outsource investments
By Feng Jianmin |
July 24, 2012, Tuesday
|
Print Edition
Print Edition
CHINA has for the first time allowed insurers to outsource investment management service to brokerages and fund houses to improve investment returns as the regulator seeks to expand investment options for insurers.
Under the new rules, dated July 16, insurance companies can use brokerages and fund management companies to manage bank deposits and invest in equities, bonds and mutual funds on their behalf, the China Insurance Regulatory Commission said in a statement yesterday.
The new rules may be helpful especially for small insurers, the regulator said.
"Currently, most medium and small-sized insurers ... have insufficient investment abilities, and they urgently need investment management agencies with strong risk control and professional knowledge," it said.
Fund houses and brokerages managing at least 10 billion yuan (US$1.58 billion) in equities will qualify to manage investments for insurers, according to the rules.
Unconventional types of asset management companies must have at least a paid-in capital of 100 million yuan in addition to meeting the 10 billion yuan minimum.
The new rule was released amid the regulator's efforts to provide more investment options for insurers as they suffered from slower business growth and losses from a weak domestic stock market.
Chinese insurers were allowed to invest in hybrid and convertible bonds, the CIRC said in a statement last Thursday. It raised the ceiling on insurers' investment in unsecured bonds to 50 percent of total assets from 20 percent previously.
They may be allowed to invest in 13 more financial products, including derivatives, asset-backed securities, bank wealth management products and trusts, according to a document CIRC circulated in May to seek feedback.
The combined assets of Chinese insurers amounted to 6.78 trillion yuan at the end of June, CIRC data showed.
Analysts estimated that around 4 trillion yuan of the assets could be used to invest in the capital market.
Under the new rules, dated July 16, insurance companies can use brokerages and fund management companies to manage bank deposits and invest in equities, bonds and mutual funds on their behalf, the China Insurance Regulatory Commission said in a statement yesterday.
The new rules may be helpful especially for small insurers, the regulator said.
"Currently, most medium and small-sized insurers ... have insufficient investment abilities, and they urgently need investment management agencies with strong risk control and professional knowledge," it said.
Fund houses and brokerages managing at least 10 billion yuan (US$1.58 billion) in equities will qualify to manage investments for insurers, according to the rules.
Unconventional types of asset management companies must have at least a paid-in capital of 100 million yuan in addition to meeting the 10 billion yuan minimum.
The new rule was released amid the regulator's efforts to provide more investment options for insurers as they suffered from slower business growth and losses from a weak domestic stock market.
Chinese insurers were allowed to invest in hybrid and convertible bonds, the CIRC said in a statement last Thursday. It raised the ceiling on insurers' investment in unsecured bonds to 50 percent of total assets from 20 percent previously.
They may be allowed to invest in 13 more financial products, including derivatives, asset-backed securities, bank wealth management products and trusts, according to a document CIRC circulated in May to seek feedback.
The combined assets of Chinese insurers amounted to 6.78 trillion yuan at the end of June, CIRC data showed.
Analysts estimated that around 4 trillion yuan of the assets could be used to invest in the capital market.
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