New | Insurers should invest for the long term, avoid speculative punts, Chinese regulator says
CIRC’s chairman Xiang adds his voice to calm aggressive buyouts, after CSRC head lambasted asset traders as “robbers” and “ghouls”
China’s insurance regulator has urged the country’s insurers to invest for long-term gains, and avoid using their funds for asset trading and deal making.
“Insurers must be a provider of long-term capital, rather than a speculator for the short term,” said the China Insurance Regulatory Commission’s chairman Xiang Junbo, in a speech published on the CIRC’s website after he summoned insurers to a Tuesday meeting in Beijing. “They should be a financial investor with good intentions, rather than a hostile acquirer and controller.”
The regulator will require insurers to maintain the security of their capital as their top priority, with the resolve of “cutting one’s own wrist,” he said.
Insurance companies may invest in fixed-income financial products, with some equities, and should avoid being the proverbial “barbarians at the gates” in funding corporate raiders and hostile takeovers, he said.
Xiang’s remarks mark the first time that the insurance regulator has added his voice, since the country’s securities regulator Liu Shiyu last week lambasted leveraged stock buyers as “robbers,” “barbarians” and “ghouls.”
Insurers, armed with vast amounts of savings and premium capital, are a convenient capital source for funding acquisitions.
On top of the regulator’s priority is the protection of the capital of policy holders, amid concerns that any foul play would spill over to public protests.