Investment options for insurance companies improved
October 29, 2012 Category Finance, Weekly
The China Insurance Regulatory Commission (CIRC) has expanded investment options for insurers to help them improve returns and enhance their operations. Insurers can now invest in stock futures as well as other swaps and forwards contracts to hedge risks from investments. They are also allowed to buy wealth management products and asset-backed securities from domestic banks, and invest in mature commercial properties in main cities of developed countries. Under the new rules, insurance companies can also lend indirectly to infrastructure projects that have stable cash flows. Insurers can invest up to 15% of their total assets overseas, and can buy privately-held shares of foreign companies in the finance and energy sectors, according to the rules. Banks and trust companies are expected to benefit from the measures as they are now allowed to manage insurance assets for the first time. The CIRC is on a comprehensive expansion drive to allow more players to engage more assets in more types of investments, both on- and offshore, Z-Ben Advisors said in a note. The CIRC also lifted a restriction limiting Chinese insurers to invest only on the mainland or in Hong Kong. They will now be able to invest in 45 countries, including 25 developed economies such as the United States, Australia and Japan, as well as 20 developing economies including Brazil, India and Thailand. Approved asset classes have also been expanded from equities and bonds to real estate, currency products and non-bond fixed-income products.
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