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|Friday, March 02, 2001, updated at 09:31(GMT+8)|
Securities Market Opens Wider to Insurance FundsChina's securities market opened wider to insurance funds Thursday as three insurers were given the go-ahead to invest more of their money in securities investment funds, the China Insurance Regulatory Commission (CIRC) announced Thursday.
The industry watchdog has decided to allow Ping An Insurance Company of China, New China Life Insurance Company and the Manulife-Sinopec Life Insurance Co to invest all their premium income from unit-linked products in securities funds.
Unit-linked products are a new type of life insurance that allow insurance companies to invest their premium income and render returns to policy holders. They have been selling well since their debut at the end of 1999.
Before this decision, no more than 30 per cent of these funds could be invested in the securities market -- the remaining 70 per cent was put in the bank, into treasury bonds, corporate bonds and inter-bank loans.
This has kept back the profitability of insurance companies, industry experts said.
Industry insiders and experts have been calling for the securities market to open up wider to increase investment returns for life insurers to fend off the mounting payment risks in China's life insurance industry, resulting from a severe imbalance of high nominal rate policies and the low profitability of insurers.
Channelling more insurance funds into the stock market would also mean increased risks for the insured, because the stock market is more risky than the present investment channels.
It requires insurance companies to possess as much management know-how and expertise as professional fund management companies to ensure proper returns.
Some of China's insurance companies already have enough professionals to deal with securities investment. Companies like Ping An have set up their own investment division.
Ping An is China's largest shareholding insurance company. New China Life is also a major shareholding life insurer in China, and Manulife-Sinopec is China's first joint venture life insurance company.
Source: China Daily
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