News Regulations11 Sep 2019

China:Regulator caps investment by insurers in their shareholders

11 Sep 2019

China's insurance regulator has capped how much insurance firms can invest in their shareholders, in a move aimed at curbing risks in the sector, reported Reuters.

Under the revised rules, which took effect on 9 September, an insurance company's combined investments in its shareholders or their related parties must not exceed 30% of the insurer's total assets or net assets in the previous year, the CBIRC said in a statement.

In addition, an insurer's investment in any single shareholder is capped at 15% of the insurance firm's total assets, the regulator said.

The board of each insurer will also have to set up a committee to routinely control and assess the risks of related transactions, according to the revised regulations.

China is sharpening its supervision of insurers’ and small banks’ shareholders amid fears that loans and investment given to big investors could prove a weak point in the country’s financial system.

“Several insurance companies pass vested interests to shareholders and related parties through non-financial units and well-packaged financial products,” the CBIRC said.


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