News30 Aug 2016

China:CIRC denies billions in insurers' funds will exit bourse

30 Aug 2016

The Chinese insurance regulator, CIRC, has denied that up to CNY600 billion (US$90 billion) worth of capital from life insurers which market universal life products will withdraw from the local A-share market, even as it is considering stricter regulations on universal life insurance.

Media reports said that stock funds worth CNY500 billion to CNY600 billion in the A-share market, from universal life insurance providers, would be withdrawn or replaced within five years once new rules take effect, reported Global Times.

A CIRC official said that the regulator will ensure the protection purpose of life insurance products and focus on long-term insurance capital.

"We referred to some insurers in relation to the management of life insurance products, but the related document is still a draft for comment," the official said in a statement on the agency's website.

In March, the CIRC launched a crackdown on universal life insurance products, which are typically sold as short-term high cash-value products. Last week, CIRC met representatives from about 30 insurance companies, seeking their opinions on two draft regulations relating to new measures to clamp down on high-yield, short-term policies. Such products offer a certain amount of insurance coverage, allowing them to be classified as insurance. But they are more appealing as short-term investment products because they also offer high return rates even if buyers cancel them before they mature. The CIRC action is seen as a bid to reduce risk created by the high liquidity needs of such products.

At last month’s Politburo meeting, Chinese leaders pledged to curb a developing assets bubble as more money is flowing into the bond, equities and property markets.

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