To strengthen the statistical administration of foreign currency businesses of insurance institutions and improve the quality and comparability of the statistical information about foreign currency businesses, the China Insurance Regulatory Commission issued the Measures for the Administration of Currency Types and Conversion Rates for the Statistics of Insurance-related Foreign Currencies ( the “Measures”) on December 22, 2006. The Measures will become effective as of January 1, 2007.
1. Insurance Institutions
According to the Measures, the China Insurance Regulatory Commission (CIRC) and its local branches shall adopt a currency-type based statistical system for the foreign currency businesses of insurance institutions (each, an “Insurance Institution”), which includes insurance companies and insurance asset management companies.
2. Currency Types
The currencies, which CIRC uses in the statistics of foreign currency businesses of Insurance Institutions, include the U.S. dollar, Euro, Japanese yen, Hong Kong dollar, and pound sterling. An Insurance Institution shall submit to CIRC the following statistical information of foreign currencies:
i) The statistical information of businesses denominated in U.S. dollars, Euros, Japanese yen, Hong Kong dollars, and pounds sterling;
ii) The statistical information about all foreign currencies translated into U.S. dollars; and
iii) The statistical information about all foreign currencies translated into Ren Min Bi (RMB).
3. Foreign Currency Conversion Rates
When an Insurance Institution submits the statistical information about all businesses relating to the conversion of foreign currencies into U.S. dollars, it shall employ the U.S. dollar-based exchange rates for all kinds of currencies, which are announced by the State Administration of Foreign Exchange (SAFE) on a monthly basis.
When an Insurance Institution submits the statistical information for all businesses relating to the conversion of foreign currencies into RMB, it shall employ the medium rates of RMB against such foreign currencies, which are announced by the People’s Bank of China (PBOC) on the last day by the end of the reporting period.
The Measures also provide for methods to determine the conversion rate in the event that SAFE or PBOC fails to announce the U.S. dollar-based or the RMB conversion rate for certain foreign currencies.