Administrative Measures for the Use of Insurance Funds
Administrative Measures for the Use of Insurance Funds
Administrative Measures for the Use of Insurance Funds
Order of the China Insurance Regulatory Commission [2018] No.1
January 24, 2018
The Administrative Measures for the Use of Insurance Funds, adopted at the 5th chairman's executive meeting of the China Insurance Regulatory Commission on January 10, 2018, are hereby released for implementation as of April 1, 2018.
Chen Wenhui, Vice Chairman
Administrative Measures for the Use of Insurance Funds
Chapter I General Provisions
Article 1 In order to regulate the use of insurance funds, guard against the risks relating thereto, protect the legitimate rights and interests of the parties to insurance, and maintain the order of the insurance market, the Administrative Measures for the Use of Insurance Funds (hereinafter referred to as the "Measures") are hereby formulated in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the "Insurance Law") and other laws and administrative regulations.
Article 2 The Measures shall apply to the activities related to the use of insurance funds conducted by insurance group (holding) companies and insurance companies lawfully established within the territory of China.
Article 3 For the purpose of the Measures, the term "insurance funds" refers to the capital, provident funds, undistributed profits, various reserves and other funds of insurance group (holding) companies and insurance companies denominated in Renminbi and foreign currencies.
Article 4 Insurance funds shall mainly be used for serving the insurance industry. The use of insurance funds must be in compliance with the principle of prudence and safety and satisfy the regulatory requirements on solvency, and asset-liability management and full risk management shall be adopted subject to the nature of the insurance funds in order to realize such insurance funds are used in an intensified, specialized, standardized and market-oriented manner.
Insurance funds shall be used independently. No shareholders of insurance group (holding) companies or insurance companies may interfere with the operation of insurance funds in violation of laws and regulations.
Article 5 The China Insurance Regulatory Commission (hereinafter referred to as the "CIRC") shall exercise supervision and administration of the activities related to the use of insurance funds in accordance with the law.
Chapter II Forms for the Use of Insurance Funds
Section 1 Scope of the Use of Insurance Funds
Article 6 The use of insurance funds is limited to the following forms:
1. bank deposits;
2. trade in securities such as bonds, stocks and securities investment fund shares;
3. investment in real estate;
4. investment in equities; and
5. other forms stipulated by the State Council.
Where insurance funds are used for overseas investment, the related provisions of the CIRC, the People's Bank of China and the State Administration of Foreign Exchange shall apply.
Article 7 Where insurance funds are used for bank deposits, the deposit bank shall be a commercial bank that meets the following conditions:
1. its capital adequacy ratio, net assets and provision coverage conform to the regulatory requirements;
2. has a standardized governance structure, sound internal control system and good business performance;
3. has committed no substantial act in violation of laws and regulations in the recent three years; and
4. has a credit rating meeting the criteria as required by the CIRC.
Article 8 Bonds invested with insurance funds shall reach the credit rating level assessed by a credit rating institution recognized by the CIRC and be in compliance with the provisions, which mainly include government bonds, financial bonds, enterprise (corporate) bonds, non-financial enterprise debt financing instruments and other bonds that meet the requirements.
Article 9 Stocks invested with insurance funds shall mainly include those publicly offered and listed for trade and those privately offered to specific targets by listed companies.
Investment in stocks by insurance funds is divided into general stock investment, major stock investment, acquisition of listed companies and others, which are subject to differentiated regulation by the CIRC according to different circumstances.
Stocks of listed companies listed on the National Equities Exchange and Quotations and stocks subscribed and traded in foreign currencies invested in with insurance funds shall be subject to separate provisions of the CIRC.
Article 10 Where insurance funds invest in a securities investment fund, the fund manager shall meet the following conditions:
1. has good corporate governance and sound risk control mechanism;
2. performs the contract according to the law and protects the legitimate rights and interests of investors;
3. has been established for more than one year (inclusive);
4. has committed no major illegal act in the recent three years; if it has been established for less than three years, it has not committed major violations of laws and regulations since its establishment;
5. has established an effective firewall system between the securities investment fund and the asset management business for specific customers; and
6. has a stable investment team with good historical investment records, and a relatively stable asset management scale or fund shares.
Article 11 Real estates invested in with insurance funds refer to land, buildings and other fixtures attached to the land. The specific measures shall otherwise be provided by the CIRC.
Article 12 Equity invested in with insurance funds shall be that of a company limited by shares and that of a limited liability company, which has been established and registered within the territory of China according to the law and not publicly listed on the stock exchanges.
Article 13 Insurance group (holding) companies and insurance companies shall use their own funds to purchase real estates for self-use, acquire listed companies or engage in equity investment to achieve control over other enterprises.
Article 14 Where an insurance group (holding) company or insurance company makes equity investment to achieve control over other enterprises, it shall satisfy the regulatory requirements on solvency. Where the subsidiary of an insurance group (holding) company fails to meet the regulatory requirements of the CIRC on solvency, such insurance group (holding) company may not invest in non-insurance financial enterprises.
Equity investment to acquire control over other enterprises shall be only conducted by the following enterprises:
1. insurance enterprises, including insurance companies, insurance asset management institutions, professional insurance agencies, insurance brokerage and insurance loss adjusting institutions;
2. non-insurance financial enterprises; and
3. enterprises engaging in insurance-related business.
"Insurance asset management institution" as mentioned in the Measures refers to the financial institutions registered upon consent of the CIRC in accordance with the law and entrusted with the management of funds such as insurance funds, including insurance asset management companies and their subsidiaries and other specialized insurance asset management institutions.
Article 15 Insurance funds may be invested in asset-backed securities.
The asset-backed securities mentioned in the preceding paragraph refer to the financial products issued by financial institutions on the basis of credit enhancement through structuring and other means backed by the cash flows generated by specialized underlying assets.
Article 16 Insurance funds may be invested in venture capital funds and other private funds.
The term "venture capital fund" as mentioned in the preceding paragraph refers to an equity investment fund that is established according to the law and managed by a qualified fund management institution and mainly invests in the ordinary shares of a start-up enterprise or preferential shares that can be converted into ordinary shares according to the law, convertible bonds and other equities.
Article 17 Insurance funds may be invested in the establishment of professional insurance asset management institutions such as real estate, infrastructure and pension, and the said institutions may set up qualified private insurance funds, with the specific measures to be formulated by the CIRC.
Article 18 Except as otherwise stipulated by the CIRC, an insurance group (holding) company or insurance company engaging in the use of insurance funds may not commit the following acts:
1.
......
Order of the China Insurance Regulatory Commission [2018] No.1
January 24, 2018
The Administrative Measures for the Use of Insurance Funds, adopted at the 5th chairman's executive meeting of the China Insurance Regulatory Commission on January 10, 2018, are hereby released for implementation as of April 1, 2018.
Chen Wenhui, Vice Chairman
Administrative Measures for the Use of Insurance Funds
Chapter I General Provisions
Article 1 In order to regulate the use of insurance funds, guard against the risks relating thereto, protect the legitimate rights and interests of the parties to insurance, and maintain the order of the insurance market, the Administrative Measures for the Use of Insurance Funds (hereinafter referred to as the "Measures") are hereby formulated in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the "Insurance Law") and other laws and administrative regulations.
Article 2 The Measures shall apply to the activities related to the use of insurance funds conducted by insurance group (holding) companies and insurance companies lawfully established within the territory of China.
Article 3 For the purpose of the Measures, the term "insurance funds" refers to the capital, provident funds, undistributed profits, various reserves and other funds of insurance group (holding) companies and insurance companies denominated in Renminbi and foreign currencies.
Article 4 Insurance funds shall mainly be used for serving the insurance industry. The use of insurance funds must be in compliance with the principle of prudence and safety and satisfy the regulatory requirements on solvency, and asset-liability management and full risk management shall be adopted subject to the nature of the insurance funds in order to realize such insurance funds are used in an intensified, specialized, standardized and market-oriented manner.
Insurance funds shall be used independently. No shareholders of insurance group (holding) companies or insurance companies may interfere with the operation of insurance funds in violation of laws and regulations.
Article 5 The China Insurance Regulatory Commission (hereinafter referred to as the "CIRC") shall exercise supervision and administration of the activities related to the use of insurance funds in accordance with the law.
Chapter II Forms for the Use of Insurance Funds
Section 1 Scope of the Use of Insurance Funds
Article 6 The use of insurance funds is limited to the following forms:
1. bank deposits;
2. trade in securities such as bonds, stocks and securities investment fund shares;
3. investment in real estate;
4. investment in equities; and
5. other forms stipulated by the State Council.
Where insurance funds are used for overseas investment, the related provisions of the CIRC, the People's Bank of China and the State Administration of Foreign Exchange shall apply.
Article 7 Where insurance funds are used for bank deposits, the deposit bank shall be a commercial bank that meets the following conditions:
1. its capital adequacy ratio, net assets and provision coverage conform to the regulatory requirements;
2. has a standardized governance structure, sound internal control system and good business performance;
3. has committed no substantial act in violation of laws and regulations in the recent three years; and
4. has a credit rating meeting the criteria as required by the CIRC.
Article 8 Bonds invested with insurance funds shall reach the credit rating level assessed by a credit rating institution recognized by the CIRC and be in compliance with the provisions, which mainly include government bonds, financial bonds, enterprise (corporate) bonds, non-financial enterprise debt financing instruments and other bonds that meet the requirements.
Article 9 Stocks invested with insurance funds shall mainly include those publicly offered and listed for trade and those privately offered to specific targets by listed companies.
Investment in stocks by insurance funds is divided into general stock investment, major stock investment, acquisition of listed companies and others, which are subject to differentiated regulation by the CIRC according to different circumstances.
Stocks of listed companies listed on the National Equities Exchange and Quotations and stocks subscribed and traded in foreign currencies invested in with insurance funds shall be subject to separate provisions of the CIRC.
Article 10 Where insurance funds invest in a securities investment fund, the fund manager shall meet the following conditions:
1. has good corporate governance and sound risk control mechanism;
2. performs the contract according to the law and protects the legitimate rights and interests of investors;
3. has been established for more than one year (inclusive);
4. has committed no major illegal act in the recent three years; if it has been established for less than three years, it has not committed major violations of laws and regulations since its establishment;
5. has established an effective firewall system between the securities investment fund and the asset management business for specific customers; and
6. has a stable investment team with good historical investment records, and a relatively stable asset management scale or fund shares.
Article 11 Real estates invested in with insurance funds refer to land, buildings and other fixtures attached to the land. The specific measures shall otherwise be provided by the CIRC.
Article 12 Equity invested in with insurance funds shall be that of a company limited by shares and that of a limited liability company, which has been established and registered within the territory of China according to the law and not publicly listed on the stock exchanges.
Article 13 Insurance group (holding) companies and insurance companies shall use their own funds to purchase real estates for self-use, acquire listed companies or engage in equity investment to achieve control over other enterprises.
Article 14 Where an insurance group (holding) company or insurance company makes equity investment to achieve control over other enterprises, it shall satisfy the regulatory requirements on solvency. Where the subsidiary of an insurance group (holding) company fails to meet the regulatory requirements of the CIRC on solvency, such insurance group (holding) company may not invest in non-insurance financial enterprises.
Equity investment to acquire control over other enterprises shall be only conducted by the following enterprises:
1. insurance enterprises, including insurance companies, insurance asset management institutions, professional insurance agencies, insurance brokerage and insurance loss adjusting institutions;
2. non-insurance financial enterprises; and
3. enterprises engaging in insurance-related business.
"Insurance asset management institution" as mentioned in the Measures refers to the financial institutions registered upon consent of the CIRC in accordance with the law and entrusted with the management of funds such as insurance funds, including insurance asset management companies and their subsidiaries and other specialized insurance asset management institutions.
Article 15 Insurance funds may be invested in asset-backed securities.
The asset-backed securities mentioned in the preceding paragraph refer to the financial products issued by financial institutions on the basis of credit enhancement through structuring and other means backed by the cash flows generated by specialized underlying assets.
Article 16 Insurance funds may be invested in venture capital funds and other private funds.
The term "venture capital fund" as mentioned in the preceding paragraph refers to an equity investment fund that is established according to the law and managed by a qualified fund management institution and mainly invests in the ordinary shares of a start-up enterprise or preferential shares that can be converted into ordinary shares according to the law, convertible bonds and other equities.
Article 17 Insurance funds may be invested in the establishment of professional insurance asset management institutions such as real estate, infrastructure and pension, and the said institutions may set up qualified private insurance funds, with the specific measures to be formulated by the CIRC.
Article 18 Except as otherwise stipulated by the CIRC, an insurance group (holding) company or insurance company engaging in the use of insurance funds may not commit the following acts:
1.
......