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Regulator Starts Examination of Insurance Firms
Chinese insurance market regulators have launched a nationwide investigation on the use of insurance funds in domestic and foreign insurance companies, sources with the China Insurance Regulatory Commission (CIRC) said Friday.
Feng Xiaozeng, CIRC vice chairman and the person in charge of the examination, said that the move was aimed to standardize insurers' fund management activities in a bid to guard against financial risks.
"We will work out rules and regulations on the basis of a follow-up analysis on insurers' fund management capacity, investment returns and possible risks," he said.
This is the first time the insurance market regulator has undertaken such a massive check-up to put the market in order. All insurers, domestic or foreign-funded, joint-ventures and their branches, will be under review.
The commission will focus on fund management efficiency, and will determine if illegal capital is involved and if insider trading is occurring.
Firms that are doing securities investment businesses without the commission's approval will be punished.
The commission reiterated that no insurer is allowed to invest more than 20 percent of its assets in any individual securities investment fund, or have more than 10 percent share of the total shares of the fund, according to related rules.
Feng said that the returns of insurance fund management are the main source of insurers' profit. For this reason, the commission is working on ways to expand fund management channels and had already introduced a set of policies in this regard.
It has allowed a number of insurance firms to purchase securities bonds on the interbank market, to invest in securities, and deal with large contract deposits and other businesses to help improve insurers' profitability.
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