Chinese insurance companies will be allowed to invest in the
listed and unlisted equities of domestic banks, Wu Dingfu, chairman
of the China Insurance Regulatory Commission (CIRC) told a recent
symposium.
Relevant policies have been approved by the State Council and
will be soon released, Wu said at the Beijing-Tianjin Insurance
Symposium in Beijing.
The move, together with a package of policies recently put to
effect by CIRC, has unveiled a trend of strengthened cooperation
among the country's insurance, banking and securities
industries.
In April, the People's Bank of China adjusted its foreign
exchange management policy, which expands the overseas securities
investment business of insurance organizations and permits
qualified insurers to purchase foreign exchange for investment in
products with fixed returns and money market tools abroad.
Wu said that the quota for overseas investment by insurance
companies will be lifted to 15 percent of their gross assets.
He also said that the State Council has agreed CIRC's decision
to allow a number of domestic companies to channel their insurance
funds into the country's large infrastructure projects.
Meanwhile, the proportion of insurance companies' actual stock
investment to their total assets will be lifted up from the
previous one percent to three or four percent.
Under these new policies, insurance firms will no longer need to
park most of their assets in low-yielding government bonds and bank
deposits. Hikes will be seen in their investment returns,
industrial experts noted.
Since China has promised to fully open its service industry in
the end of 2006 as required by the World Trade Organization,
domestic insurance industry has picked up its pace to expand its
presence in home and overseas markets.
"These measures will be of significant and far-reaching
influences on the fast but steady development of home insurance
industry," Wu said.
The chairman called on insurance organizations to tighten their
supervision of insurance fund and be highly alert for possible
financial risks.
Official statistics revealed that Chinese insurers had about 1.6
trillion yuan (US$200 billion) in gross assets by the end of
February. The average returns on investment of China’s insurers are
expected to rise from 3.5 percent in 2005 to 5 percent in 2006.
(Xinhua News Agency June 11, 2006)