Restrictions on Insurers' Bond Investment Loosened

China Insurance Regulatory Commission (CIRC), the top Chinese insurance regulator, appropriately loosened restrictions on insurers' bond investment recently.

The watchdog achieved the goal from four aspects, including the proportion of capital they use for bond investment, qualification and credit rating of bond issuers, as well as qualification of raters. Firstly, profit a bond issue gains in recent three years should be more than three-year interest of bonds it plans to issues. Secondly, those who plan to issue bonds in the Hong Kong market should have at least BBB ratings from global rating agencies. Thirdly, the proportion of capital insurers use for bond investment to their total assets is raised to 40 percent from previously 30 percent. Lastly, an insurer should allocate two rating persons.

Insurers in the country are allowed to invest in local government bonds, medium-term bills, bonds large-sized state-owned companies issue in Hong Kong, convertible bonds and etc. in March 2009.