On 21 March 2011, the CIRC issued draft Provisional Administrative Measures for Administration of Insurance Business Transfers by Insurance Companies and is soliciting public opinion until 11 April 2011. Under the draft measures, insurance companies would be required to apply for CIRC approval before transferring all or part of their insurance business by submitting copies of the following documents:
- resolutions of the board of directors or shareholders of each party approving the transfer;
- basic information on insurance companies involved in the transfer;
- the insurance business transfer agreement;
- procedural arrangements for the transfer;
- a feasibility study on the operation and management of transferred business;
- an evaluation report issued by professional intermediaries;
- an evaluation report on the reserve fund of the transferred business; and
- the most recent annual solvency reports of the transferee insurance company and an analysis of how the transaction would impact solvency of the transferee.
Both insurance companies which are parties to a transfer of business agreement would be required to retain a law firm, accounting firm and other professional services organizations to advise on the transaction. Following CIRC approval, the transferor must provide detailed written notice of the transfer to policyholders and insureds and obtain their consent. In addition, both the transferor and transferee must publicly announce the transfer of business by posting information on their websites and publishing notices at least three times through designated media outlets during a period of at least one month.
The draft measures note that they would not apply to reinsurance transactions or transfers of business mandated due to bankruptcy or insolvency of the transferor insurance company.