China Life targets foreign markets
Insurer seeks state approval to invest US$3.5b of listing proceeds overseas
China Life Insurance president Wang Xianzhang says the company is seeking to park US$3.5 billion worth of listing proceeds raised in Hong Kong late last year in overseas markets.
The authorities are trying to remove constraints on the industry, which is banned from direct stock investments and overseas investments.
Any funds raised by mainland firms from overseas listings are required to be repatriated to the mainland, usually within several months, under China's capital control regime.
Mr Wang's comments point the way for a policy somersault in the industry. More radical changes are expected shortly.
China Insurance Regulatory Commission chief Wu Dingfu recently promised mainland insurers that they would be allowed 'direct stock investments' through 'multiple means'.
Details have not been forthcoming so far.
At present, they are allowed to invest in government bonds and bank deposits and can place up to 15 per cent of their assets in domestic stocks through fund managers.
Speaking on the sidelines of the Chinese People's Political Consultative Conference meeting, Mr Wang said: 'We are seeking permission to park abroad all of the listing proceeds.'
While he said it might be difficult to have all of the funds kept overseas, 'I can assure you that at least some of the listing proceeds should be allowed to sit overseas.' He insisted that the process would be gradual because it might be too much for any market 'to absorb that huge amount of money' at the same time.
Mr Wang did not say which overseas markets he preferred but the Hong Kong stock market would be expected to rank highly, given that it is home to most of the mainland stocks listed outside China.
Both stocks and bonds would be considered as investment options overseas, Mr Wang said.
He said China Life was hoping to introduce foreign strategic investors to sharpen its newly created asset-management company.
Unlike banks' asset managers, which were set up to resolve bad loans, these insurance handlers are charged with overseeing the assets of policyholders and guaranteeing steady returns.
China Life's asset handler would also generate new business by managing funds for others for a fee, Mr Wang said.
China Life collected premium income of 162 billion yuan last year, accounting for 53.8 per cent of the mainland's total life insurance premiums that year.
going abroad
The authorities are trying to remove industry constraints
Funds raised by mainland firms now required to be repatriated
Insurers have been promised direct stock investments
