China’s Banks Seek to Invest in the Insurance Industry
China’s four banks have applied to invest in the insurance industry, the insurance regulator said on Tuesday.
The regulator is also planning to expand investment channels for insurers.
The China Insurance Regulatory Commission has received applications from the Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Bank of Beijing to buy shares in insurers, Yuan Li, a spokesman for the CIRC, said in Beijing on Tuesday.
The insurance regulator will submit such applications to the State Council after consideration, Yuan said. The insurance regulator and the China Banking Regulatory Commission are now drafting rules on banks’ investment in insurers, Yuan said.
Chinese banks are extending their business into fund management, brokerage and trust business to expand profit channels.
The regulator is drafting rules to expand insurers’ investment in infrastructure and overseas, Yuan said.
Authorities are cautiously widening the investment scope for domestic insurers including allowing them to invest in infrastructure on a trial basis.
Chinese insurers generated combined investment returns of 64.87 billion yuan (US$9.51 billion) in the first half of this year.
The Chinese stock market has lost almost a half in the first half, leaving insurers seeking other profit generators.
Domestic insurers had 10.7 percent of their assets in equities at the end of June, down from 2007 year-end’s 17.7 percent. The share of mutual funds fell to 6.9 percent, from 9.5 percent.
Their assets in bonds grew to 53.6 percent, up from 44 percent at the end of 2007. Bank deposits accounted for 25.8 percent of insurers’ assets at the end of June, up from 24.4 percent.
Yuan said he expected insurance payouts for natural disasters in the first half of the year to exceed 10 billion yuan.
By the end of June, payments related to snowstorms in January and February surpassed 5 billion yuan, while those for May’s Sichuan earthquake stood at about 520 million yuan, he said.
China is also preparing for the set-up of its insurance protection fund company with related rules still under consideration, Yuan said.
The industry’s premiums grew 51.1 percent to 561.8 billion yuan in the first half. Among them, life premiums increased 64.2 percent to 385.9 billion yuan while non-life premiums jumped 19.9 percent to 129.9 billion yuan.
Tags: CCB, deposits, Insurance, insurer, investment, mutual-fund