Limits imposed on Insurance firm investments: CIRC

07:35, March 26, 2010      

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The China Insurance Regulatory Commission (CIRC) announced Wednesday that insurance groups and their subsidiaries cannot invest more than 10 percent of their total net assets in non-financial companies and the investment to non-insurance financial companies such as commercial banks, should not exceed 30 percent.

The major business of insurance companies is equity investment and management, stated the regulation.

This regulation only applies to the equity investment of insurance groups, and has nothing to do with financial investment, said an official with CIRC.

Insurance groups can invest in four kinds of insurance enterprises, including insurance companies, insurance asset management companies, insurance intermediary organizations and other insurance companies, said the regulation.

Insurance groups can also invest in non-financial companies whose businesses are related to insurance. But for investment in non-financial companies, the amount should not exceed 25 percent of the actual capital of the company and the insurance companies cannot be involved in the operation of the non-financial company.

The CIRC official said conditions on establishing insurance groups are also described in the regulation.

The regulation is the first document on the management of financial groups in China, aimed at regulating investment behavior and proposing precautionary measures on cross-sector risks, said the CIRC official.

Source: Global Times
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