Chinese insurers to outsource investment management

According to new rules published on the CIRC's website, fund houses and brokerages must be registered in China to qualify as managers for insurers' assets.

In addition, they must have at least RMB10 billion ($1.56 billion) in assets under management, minimum registered capital of RMB100 million and at least 15 investment professionals. Five of these professionals must have over five years of industry experiences and another five having more than three years of experience.

Insurers have been required to manage their investments directly or through asset management subsidiaries since 2000 when the CIRC introduced temporary policies that barred brokerage involvement. According to local reports, these policies have now been terminated.

The move is partly driven by concerns that insurers are delivering low investment yields. Last week, China Pacific Insurance issued a profit warning, saying that its first-half net income may drop by 55% year-on-year due to the significant decline in investment yield and the slowdown in the business growth.

Last month, CIRC outlined rules allowing insurers to expand their investment scope in order to diversify portfolios. It is suggested that they will be allowed to invest in foreign private equity funds, depository certificates, real estate, and other investment vehicles. The ceiling for domestic private equity investments was also raised.

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• Topics
• Greater China
• Regulation
• China
• CIRC
• insurance
• regulation