Overseas investment cap tripled for insurers

Mainland insurers received a boost yesterday after getting approval from watchdogs to invest up to 15 per cent of their assets in overseas equities and derivative products, allowing them to seek higher returns on outbound markets.

The China Insurance Regulatory Commission, along with the central bank and foreign exchange regulator, published rules yesterday that the investment cap on insurers' overseas investment will be raised from 5 per cent while insurance firms with combined assets of 2.53 trillion yuan will also be able to diversify their exposure in higher-return equities rather than fixed-income products only.

The rules took effect immediately.

In 2005, the regulator started a trial programme which allowed some insurance companies to use their own foreign currencies to invest in overseas bonds.

The government's announcement was in line with economists' forecasts of a 15 per cent quota for the qualified domestic institutional investor scheme, under which insurers are allowed to exchange a certain amount of yuan into foreign exchange and invest abroad.

The deregulation is aimed to 'give insurers flexibility in allocating their assets, improve their performance, and ward off risks of the yuan's appreciation', the CIRC said.

Mainland insurance firms earlier this month received approval to double their purchases in the domestic A-share market to 10 per cent of their total assets.