On 26 May 2010, the China Insurance Regulatory Commission (the CIRC) announced that it is considering liberalising current restrictions on investments by People’s Republic of China insurance companies in stocks and bonds.

Under the new investment rules, the CIRC will permit insurers to invest up to 20% (up from the current limit of 15%) of total assets in unsecured debt investments. The credit ratings of bonds that insurers are authorised to invest in will be lowered from AA grade to A grade (global rating agency unspecified). Other measures the CIRC is proposing include allowing insurers to invest up to 20% of their assets in securities and equity funds only (previously this limit included bond funds and money market funds, as well as securities and equity funds).

Insurers in China will no longer be restricted to investing only in mainland stocks listed in China. The CIRC proposes to allow insurers to invest in all equity counters listed on the main board of the Hong Kong bourse and may consider permitting insurers to invest in rated corporate bonds issued in Hong Kong.

The CIRC has yet to announce the details and timetable for the implementation of the new investment rules.

Please see our previous blog on this topic here.