China regulator to unveil new stock investment rules for insurers

[BEIJING] China's insurance regulator will soon announce new rules to tighten control over insurance companies' stock market investment activities, local media Caixin reported.

The China Insurance Regulatory Commission (Circ) is expected to publish a new notice that will, for the first time, set some boundaries for insurers' parties acting in concert when they acquire public firms, Caixin reported, without specifying its source of information.

The Circ's new rules will require insurers' parties acting in concert to apply for regulatory approval before acquiring listed companies and their purchases must be funded by their own capital, according to the Caixin report.

The regulator will also ban insurance firms from acquiring public firms in concert with any non-insurance parties, according to the report.

The move comes amid an intensifying regulatory crackdown on risky activities by some aggressive players in the insurance sector, particularly those seen to be engaging in financial market speculation using expensive short-term funds.

Last week, Circ suspended Evergrande Life, the insurance arm of China Evergrande Group, from conducting stock market investment, saying it was engaging in speculative, frequent, high-volume trading.

It also said would soon send two inspection teams to check compliance at Evergrande Life and Foresea Life, a unit of financial conglomerate Baoneng Group.

Both firms have been actively engaged in stock market trading this year, sparking criticism of their speculative activities using insurance funds.

In a meeting on Tuesday, Circ Chairman Xiang Junbo warned that insurers should be long-term money providers and not short-term capital market "savages".

"Becoming a friendly player in capital markets should not allow insurers to become hateful savages, and also should not allow insurance capital to become a nightmare for capital markets," he said.

If an insurer acquires more than 20 per cent of a listed company, the purchase would be considered by the insurance regulator as a "major" stock investment, which would be subject to more detailed information disclosure requirements, Caixin reported.

REUTERS