Chinese insurers’ PE investment scope to further relax - CIRC

Currently, insurers are allowed to put up to 10% of their total assets into private equity following a decison to raise the cap from 5% last year. However, only 4.61% of total assets across the industry, or RMB335.8 billion ($55 billion), was commited to the asset class by the end of October.

"Current PE allocations were lower than the 10% upper limit, and have much room to grow," Wenhui Chen, CIRC's vice president, told an industry conference.

He added that while the Chinese economy is in a high-growth stage, enhancing insurers' asset allocation into private equity could help solve the issues surrounding over-reliance on indirect financing among Chinese enterprises.

Chen also said that, at a recent meeting of the Communist Party's Central Committee, the government had expressed support for multi-channel equity financing and direct financing for companies.

"It is a key strategic move, which implies that central government puts much emphasis on private equity investments," he said.

CIRC expects that insurers' investment returns in 2013 will reach 5% of total investment, up from 3.39% last year, mostly as a benefit of PE investment, giving the regulator more incentive in raising the investment ceiling.

With insurers' premium growth rates falling, firms are now seeking to bolster their investment returns, and they are increasingly turning to alternative investments to do so, according to advisory firm Z-ben.

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• Topics
• Greater China
• LPs
• Regulation
• China
• LPs
• CIRC