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China: CIRC issues guidelines to improve internal control of insurance funds

Source: Asia Insurance Review | Feb 2016

Chen Wenhui
The insurance regulator has published guidelines covering the internal control of insurance funds to enhance the sector’s risk management capability as insurers invest increasingly in stocks.
   Along with the guideline CIRC also released three separate documents to set standards and procedures for insurance funds’ investments in bank loans, fixed-income products, stocks and mutual funds investing mainly in stocks.
   These releases came following a sharp plunge in the Chinese stock market last summer and before another stock market rout early last month.
   “Insurance companies’ asset-liability management is facing a number of risks and problems, such as the increase of capital market volatility,” Mr Chen Wenhui, CIRC Vice Chairman, said in December. Piling into investments such as stocks that carry short-term risk increases the mismatch insurers face between assets and liabilities.
   Chinese insurers, led by privately owned Anbang Insurance Group and Ping An Insurance Group, have spent US$12.2 billion buying real estate, bank and other insurance company stakes at home and overseas, making 2015 a record deal-making year for them, according to Thomson Reuters data.
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