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BIZCHINA / Top Biz News

China to widen investment channels
(Reuters)
Updated: 2006-06-23 14:56

China is poised to issue new regulations that would greatly broaden
investment channels for the country's insurers, the China Securities
Journal said on Friday.

The new rules would allow insurers to invest in more stocks, asset-backed
securities and property and take part in venture capital projects, the
paper quoted unnamed industry sources as saying.

The State Council, the cabinet, would soon issue the new guildelines in a
document on boosting development of the insurance industry.

Chinese insurers can invest up to 5 percent of their assets in the
domestic stock market. The insurance regulator said earlier this month
that insurance firms had invested an average 3 to 4 percent of their
total assets in stocks.

"According to the guidelines, and on condition that risks are controlled,
insurers will be encouraged to invest in the capital market and
investment limits will gradually be increased," the paper cited one
source as saying.

Also in June, the China Insurance Regulatory Commission said it would
start letting insurers take stakes in local banks.      

Separately, the paper said the insurance regulator was working to flesh
out details on investment into banks.

In the future, insurers would only be able to invest in banks that had
capital adequacy ratios exceeding 8 percent, whose total assets stood
above 50 billion yuan and whose non-performing loan ratio was below 5
percent, it said.

The insurance regulator would also issue revised regulations on overseas
investment by insurance firms.

The authorities said in April that insurers could buy certain quotas of
foreign exchange to invest in overseas fixed-income and money market
instruments. The insurance regulator later set the quota at 15 percent of
an insurance firm's total assets.

The insurance regulator would also expand the overseas investment scope
for insurers to include other products, such as equity and funds, the
China Securities Journal said.

Insurance premiums in China in the first five months of this year rose
12.84 percent from a year earlier to 247.66 billion yuan, according to
earlier state media report.

(For more biz stories, please visit Industry Updates)

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