Keywords: China Insurance Regulatory
Commission, CIRC, Permitted Investments, Insurance,
The China Insurance Regulatory Commission (CIRC) issued the
Circular on Issues relating to Investment of Insurance Funds in
Equity and Real Estate (the 2012 Circular) on 16 July 2012 and has
issued two other rules, all of which facilitate a more diversified
range of investment options for insurance companies.
The 2012 Circular amends certain provisions of the Interim
Measures on Investment of Insurance Funds in Equity (Equity
Regulations) and the Interim Measures on Investment of Insurance
Funds in Real Estate (Real Estate Regulations), promulgated by CIRC
in 2010. For more background information, please refer to our Legal
Update: CIRC Permits Insurance Companies to Diversify Their
Investments into Private Equity and Real Estate Sectors.
Major Changes under the 2012 Circular
The following table shows the changes introduced by the 2012
The 2012 Circular also significantly lowers the qualification
requirements for insurance companies that seek to make equity or
real estate investments by:
removing the requirement that an insurance company must be
profitable in the preceding year;
lowering the solvency adequacy requirement from 150% to 120%;
changing the asset requirement to RMB 100 million in net assets
for the preceding year (as compared to RMB 1 billion in net assets
under the Equity Regulations, and RMB 100 million under the Real
The 2012 Circular has the effect of facilitating equity and real
estate investments by insurance companies and encouraging insurance
companies, as institutional investors, to participate in private
equity funds, which is very important for the development of the
private fund industry in China. Meanwhile, the permitted equity
investment industry sectors also align with the government's
desire to develop certain strategic industries.
Other New CIRC Rules
The CIRC also issued two other rules in July 2012: the Interim
Measures on the Administration of Entrusted Investments of
Insurance Funds, which permits insurance companies to retain
external asset managers to manage investments on behalf of
insurance companies; and the Interim Measures on Investment in
Bonds of Insurance Funds, which reduces restrictions on investments
by insurance companies in bonds.
These new rules represent a concerted effort of the CIRC to
remove restrictions on investments by insurance companies and to
diversify the range of investment options.
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