Chinese insurers approved to commit more to private equity

For supervision purposes, the regulator has also categorized insurers' investments into five asset classes, according to a statement. Public equities and private equity sit together under the equity investment banner.

Previously, insurers were allowed to invest up to 25% of total assets in domestic listed companies, and 10% in private equity. This followed a decision to raise the private equity cap from 5% in 2012. However, only 4.61% of total assets across the industry, or RMB335.8 billion ($55 billion), was committed to the asset class by the end of October.

The CIRC has also capped investments in real estate at 30% of total assets, and limited "other financial assets" - which include wealth management products issued by commercial banks, asset-backed securities and trusts - at 25% of assets.

Overseas investments can now account for up to 15% of total assets. No ceiling was imposed on fix-income and liquid assets, such as currency, bank deposits, and government debt where the investment period is less than one year.

In November, Wenhui Chen, the CIRC's vice president, told an industry conference that current private equity allocations were lower than the 10% limit, and had much room to grow.

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.

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• Topics
• Greater China
• Regulation
• LPs
• regulation
• LPs
• China
• insurance