CHINA'S insurance regulator said yesterday it has received applications from banks which are seeking investment in insurers to expand their profit channels.
The regulator is still processing the applications, Yuan Li, a spokesperson of the China Insurance Regulatory Commission, said without naming any. The authorities allowed China's banks to buy equity stakes in insurance companies on a trial basis in January.
Big Chinese banks are trying to expand into the non-banking financial sector including asset management, insurance and financial leasing as they build themselves into global comprehensive financial enterprises. Banks can set up asset management joint ventures or wholly-owned financial leasing firms.
The China Banking Regulatory Commission has circulated its first rules governing acquisitions by commercial banks of financial companies, a move that may make it easier for banks to expand into industries such as insurance, Bloomberg News said earlier this month.
The insurance regulator has also sent a proposal to the State Council, China's Cabinet, to allow insurers to invest more in infrastructure projects, and is considering rules to allow insurers to buy into property investments, Yuan said yesterday at the watchdog's quarterly briefing.
Backs listing
The insurance regulator also supports qualified insurers for a listing, he said.
China's insurance premiums rose 52 percent to 297.9 billion yuan (US$42.7 billion) in the first quarter from a year earlier, the regulator said yesterday. Insurers' total assets topped 2.94 trillion yuan at the end of March.
Life insurance premiums climbed 62 percent to 213.1 billion yuan (US$30.88 billion), while property and casualty premiums jumped 25 percent to 64.2 billion yuan.
Equity investments by Chinese insurers stood at 347.8 billion yuan, making up 13 percent of their overall investments, the regulator said without offering a year-earlier comparison. Insurers had 220 billion yuan in stock funds, or 8.3 percent of total investments.
Analysts said 2008 will be tough for insurers to earn rosy returns as the stock market is correcting. The key Shanghai Composite Index has lost more than one third this year.