CHINA yesterday for the first time clarified the criteria for overseas investors seeking to buy stakes under 25 percent in domestic insurance companies, in a draft rule soliciting public opinion.
Overseas investors in Chinese insurance companies must have more than US$2 billion in assets, the China Insurance Regulatory Commission said yesterday on its Website.
Overseas investors also must have made profits for three straight accounting years and gained a credit rating of more than A level from international rating firms over three years, the top insurance regulator said.
Foreign investors are also banned from selling their stakes within three years of delivering the capital, the watchdog said.
Domestic insurers must gain approval from the regulator to sell shares to overseas financial players.
Investors in domestic insurers are banned from financing their acquisitions by loans, and must pay hard currency. A single investor can hold up to 20 percent of a domestic insurer.
In a rule made in December 1999, the regulator stipulated the criteria for domestic investors in insurance companies. This will be scrapped once the new rule takes effect.
Once overseas investment in a domestic insurer is raised over the 25-percent limit, the insurer will be classified as an overseas company and must obey other regulations on overseas insurers.
For instance, foreign insurers must have assets of more than US$5 billion, have been in business for more than 30 years and have operated in China for more than two years to set up a joint venture or wholly owned overseas insurer in the country.