Jointly issued by the CIRC, the PBOC, the SAFE and effective since 28 June 2007
The Measures aim at encouraging overseas investments by insurance companies and on their face are applicable equally to domestic and foreign-invested insurers.
The Measures no longer subject insurance companies to quantitative requirements in terms of total assets or foreign exchange funds. Instead, insurance companies seeking to invest overseas are now subject to a broad range of prudential requirements. This indirectly provides greater discretionary power to the CIRC.
Under the Measures, insurance companies are now allowed to invest up to 15 per cent of their total assets in overseas markets (under previous rules, the total of such overseas investments could not exceed 80 per cent of an insurer’s foreign exchange reserves at the end of the year preceding the investment). The Measures also facilitate the conversion of RMB denominated assets into foreign exchange for the purpose of investments outside China.
The Measures significantly expand the scope of allowed investments by insurance companies. Under the previous regime, insurance companies were allowed to invest in fixed income products only. The Measures now allow insurance companies to make equity investments, including acquiring stocks and options. Investments in derivative products can only be performed for the purpose of risk hedging. Implementation rules for the Measures are expected to be promulgated shortly.