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February 14, 2018

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Strict eye on insurers’ overseas funding

CHINA intends to scrutinize insurers’ overseas funding activities more stringently, according to a latest joint notice by the country’s insurance and foreign exchange regulators.

Insurance companies must ensure that their outstanding overseas loans under domestic guarantee should be not more than 20 percent of their assets as of the end of the last quarter under a new policy.

Overseas loans under domestic guarantee are basically credit mainly aimed at domestic enterprises to help them bid for international contracts and provide funding for them to make foreign investments.

The Insurance Asset Management Association of China must assess insurance companies if their offshore funding activity backed by domestic guarantee exceeds US$50million, according to the joint notice from the China Insurance Regulatory Commission and the State Administration of Foreign Exchange.

Insurers who want to conduct a warranty loan business have to ensure their solvency adequacy ratio shall not be less than 150 percent as of the end of last quarter, the notice said.

Malpractices like foreign exchange fraud and transferring assets abroad in the name of overseas financing are forbidden as are any arbitrage or illegal speculative transactions.

Insurance companies must carry out comprehensive due diligence on the invested projects and to strictly enforce the nation's policy on overseas investment.


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