CIRC relaxes rules on corporate bond investment

Oct. 23, 2009 (China Knowledge) - The China Insurance Regulatory Commission, said on its website on Thursday that Chinese insurers' investment in corporate bond can be as much as 40% of their assets, compared with 30% previously.

The insurance regulator said bonds that insurers invest in of large-size state-owned enterprises or Hong Kong-listed red chips, or companies issuing H-shares, must be rated BBB and above by qualified rating agencies.

Meanwhile, the CIRC also removed the criteria that had required those bond issuers in which insurers are allowed to invest to be in profit for the previous three financial years. Interest payments of all the bond investment of one year should now be less than the companies' average distributable profit of the previous three financial years.

As of the end of June, the combined assets of Chinese insurers amounted to RMB 3.7 trillion, which means that RMB 1.48 trillion can be used to invest in corporate bonds under the amended rules.