On 26 February 2025, the National Financial Regulatory Administration of China (the "NFRA") issued a notice on matters relating to investment in insurance companies by Hong Kong and Macau financial institutions (the "NFRA Notice"), according to which, starting from 1 March 2025, a Hong Kong or Macau financial institution would no longer be required to have total assets of US$2 billion or more at the end of the most recent year to invest in mainland insurance companies. This requirement remains applicable to other overseas financial institutions investing in Chinese insurance companies.
The removal of such total assets requirement for Hong Kong and Macau financial institutions, which marks part of China's efforts to deepen opening up in its financial services sector and expand the pool of investors eligible to invest in Chinese insurance companies, follows agreements signed in October 2024 between Mainland China and Hong Kong, as well as between Mainland China and Macau, to revise the Agreement on Trade in Services under the Mainland and Hong Kong Closer Economic Partnership Arrangement ("CEPA") and CEPA between Mainland China and Macau. The following qualification requirements on Hong Kong and Macau financial institutions investing in mainland insurance companies remain unchanged under CEPA:
- a good and stable financial condition with continuous profit-making record for the recent three consecutive accounting years;
- a long term credit rating of A or above from international credit agencies in the last three years;
- no records of significant violation of laws and regulations for the last three years; and
- having fulfilled the requirements of prudential supervision standards of the financial regulators where they are domiciled.
While the NFRA Notice and CEPA provide a window of opportunity for Hong Kong and Macau financial institutions to gain greater access to the Chinese insurance market, there are some other qualification requirements under NFRA rules that generally apply to investors in Chinese insurance companies, including the various requirements under the Administrative Measures for Equity Interests in Insurance Companies for financial shareholders, strategic shareholders or controlling shareholders of Chinese insurance companies.
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