China Insurance Regulatory Commission, Adjustment to the Proportion of Investments by Insurance Companies in Bank Subordinated Bonds, Bank Subordinated Debt with Fixed Term and Enterprise Bonds Circular

Issued: June 25 2004
Effective: as of date of issue
Applicability: The Circular also applies to investments in subordinated bonds by insurance asset management companies with their own funds and to investments in subordinated bonds in China by branches of foreign-invested insurance companies established in China (Item One).

Main contents: Bank subordinated bonds invested by insurance companies shall be bank subordinated bonds that are subject to the approval of the People's Bank of China and the China Banking Regulatory Commission for issuance and that comply with the Administration of the Issue of Subordinated Bonds by Commercial Banks Procedures (hereafter, Subordinated Bonds). The balance of an insurance company's investments in Subordinated Bonds, calculated at cost, shall not exceed 15% of its total assets at the end of the preceding month; the proportion of the aggregate investments in Subordinated Bonds issued by a bank shall not exceed 3% of the insurance company's total assets at the end of the preceding month; the proportion of investments in Subordinated Bonds in one issue shall not exceed 20% of the issued amount of Subordinated Bonds in that issue (Item One). The proportion of an insurance company's aggregate investments in subordinated debt with fixed term issued by a bank to the insurance company's total assets at the end of the preceding month shall be adjusted from 1% to 2% (Item Two). The maximum proportion of an insurance company's holding of enterprise bonds of the same type in the same issue to its total assets at the end of the preceding month shall be adjusted from 2% to 3% (Item Three).
Related legislation: Administration of the Issue of Subordinated Bonds by Commercial Banks Procedures; Matters Relevant to the Investments in Bank Subordinated Debt with Fixed Term by Insurance Companies Circular, 2004 and China Insurance Regulatory Commission, Administration of Investments in Corporate Bonds by Insurance Companies Tentative Procedures, May 30 2003, CLP 2003 No.6 p51