CBIRC Adjusts Bond Investment Conditions for Chinese Insurance Companies

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The China Banking and Insurance Regulatory Commission (CBIRC) has announced key adjustments to the conditions and requirements for insurance companies making bond investments.

CBIRC announced the release of the “Notice Concerning Adjustments to Insurance Fund Bond Investment Credit Ratings Requirements” (关于调整保险资金投资债券信用评级要求等有关事项的通知) on 22 November.

Key provisions of the Notice include:

  1. Cancelling the requirement for a white list of financial enterprise (company) bonds that insurance funds are permitted to invest in, as well as the requirement for external credit ratings.
  2. Category-based setting of the minimum external credit ratings requirements for permitted investment in non-financial enterprise (company) bonds based on the credit risk management capability and risk tolerance capability of insurance companies.
  3. Clarifying the concentration requirement for insurance company investments in BBB grade bonds and below.
  4. Clarifying the major category ratio equations for insurance company bond investments.
  5. Requiring that insurance companies pragmatically implement their duties, improve internal assessments, and engage in investment in a prudential manner.

CBIRC said that the implementation of the Notice would be of benefit to “expanding the insurance fund operations scope, optimising insurance asset allocation, expanding the space for independent decision-making by insurance companies, strengthening the development of risk management capability, establishing healthy, category-based regulatory mechanisms, reducing the dependence of regulators upon external credit ratings, and driving the high-quality healthy development of the bond market.”

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