Measures for the Administration of the Capital Guarantee Funds of Insurance Companies

(Issued by the China Insurance Regulatory Commission on, and effective as of, July 7 2011.)

Bao Jian Fa [2011] No.39

Part One: General provisions

Article 1: These Measures have been formulated pursuant to the PRC Insurance Law (the Insurance Law) in order to strengthen the administration of the capital guarantee funds of insurance companies, and safeguard the stable and healthy development of the insurance market.

Article 2: For the purposes of these Measures, the term “insurance company” means a commercial insurance company, the establishment of which was approved by an insurance regulatory authority and that is registered in accordance with the law.

Article 3: For the purposes of these Measures, the term “capital guarantee funds” means the funds equivalent to 20% of an insurance company's total registered capital that, pursuant to the Insurance Law, an insurance company is required to set aside after its establishment and may not use except to discharge its debts when it is being liquidated.

Article 4: The China Insurance Regulatory Commission (the CIRC) oversees the capital guarantee funds of insurance companies in accordance with the law. The deposit and disposal, etc. of their capital guarantee funds by insurance companies shall comply with these Measures.

Article 5: Insurance companies shall deposit their capital guarantee funds in accordance with the principles of “full amount, safety and stability”.

Part Two: Deposit

Article 6: An insurance company shall select at least two commercial banks wherewith it shall deposit its capital guarantee funds. A deposit bank shall satisfy the following conditions:

(1) being a national Chinese-invested commercial bank;

(2) having net assets of not less than Rmb20 billion as at the end of the previous year;

(3) its capital adequacy ratio and bad asset ratio as at the end of the previous year complying with relevant provisions of the regulator of the banking sector;

(4) having a sound corporate governance structure, internal audit and control systems and risk control systems;

(5) not having an affiliated relationship with the insurance company; and

(6) not having a record of major violations of laws or regulations during the most recent two years.

Article 7: An insurance company shall deposit its capital guarantee funds with designated banks in the domicile place, municipality directly under the central government, city with independent development plans or provincial capital of its organisation with legal personality.

Article 8: An insurance company shall open independent bank accounts to deposit its capital guarantee funds.

Article 9: If, during the term of the deposit of capital guarantee funds, a deposit bank ceases to comply with these Measures or an event that could have a material adverse impact on the safe deposit of the capital guarantee funds (e.g. the bank is punished by a regulatory authority for a major violation of laws or regulations, its capital adequacy ratio is insufficient, etc.) occurs, the insurance company shall promptly report the same to the CIRC and transfer its capital guarantee funds to a bank that is in compliance with provisions.

Article 10: Within 30 working days after approval by the CIRC to open for business or within 30 working days after approval to increase its registered capital (working capital), an insurance company shall punctually deposit its capital guarantee funds in full with banks specified by the CIRC.

Article 11: An insurance company may deposit its capital guarantee funds in the following forms:

(1) term deposit;

(2) large contracted deposit; or

(3) another form as approved by the CIRC.

Article 12: The term of a deposit of capital guarantee funds may not be less than one year.

Article 13: The amount of each deposit of capital guarantee funds may not be less than Rmb10 million (or the equivalent in foreign currencies). If an insurance company increases its registered capital (working capital) by less than Rmb50 million (or the equivalent in foreign currencies), it shall allocate a certain amount as capital guarantee funds for the additional capital.

Article 14: When an insurance company is to deposit capital guarantee funds, it shall execute an Agreement for the Deposit of Capital Guarantee Funds with the head office or a top level branch of the proposed deposit bank. The contracting parties may not rescind the agreement without the approval of the CIRC.

Article 15: The insurance company shall require a deposit bank to endorse the deposit slip for the capital guarantee funds as follows: “This deposit is a deposit of capital guarantee funds. Without seeing the written approval of the CIRC, the deposit bank may not agree to the change of the nature of the deposit, transfer of the principal of the deposit out of the deposit bank or other requests to dispose of the deposit made by the depositor. If the deposit bank fails to duly carry out its review obligation, it shall bear joint and several liability for the debts of the insurance company that fall within the amount of the capital guarantee funds that were used”.

Article 16: The insurance company shall carry out after-deposit record filing with the CIRC within 10 working days after duly depositing the capital guarantee funds. When carrying out the after-deposit record filing, it shall submit the following documentation:

(1) documents for record filing of the deposit of the capital guarantee funds;

(2) a Form for Record Filing of the Capital Guarantee Funds of an Insurance Company (in duplicate);

(3) an original of the Agreement for the Deposit of Capital Guarantee Funds;

(4) a photocopy of the deposit slip of the capital guarantee funds and a photocopy of the endorsement on the deposit slip; and

(5) other materials the submission of which the CIRC requires.

Article 17: An insurance company shall pay close attention to fluctuations in the exchange rate of deposits of capital guarantee funds in foreign currencies. If fluctuations in the exchange rate cause the total capital guarantee funds (as translated into renminbi) of an insurance company to be less than the statutory requirement for 20 working days in succession, it shall, within five working days from the following working day, make up the difference in its capital guarantee funds in accordance herewith and carry out the relevant after-deposit record filing procedures.

Part Three: Oversight

Article 18: The CIRC will render its written reply on whether to grant or withhold after-deposit record filing within 20 working days from the date of receipt of the after-deposit record filing materials.

Article 19: If after-deposit record filing is not carried out with the CIRC or if the CIRC withholds after-deposit record filing, the deposit of capital guarantee funds will not be recognised.

Article 20: Before disposing of its capital guarantee funds in any of the following ways, an insurance company shall require the prior approval of the CIRC:

(1) changing the nature of the deposit upon maturity;

(2) premature withdrawal;

(3) transferring it to another bank, including a transfer between (sub-)branches of the same bank;

(4) using the capital guarantee funds to discharge debts at the time of liquidation;

(5) when its registered capital (working capital) is reduced, withdrawing a portion of the capital guarantee funds; or

(6) otherwise using or disposing of its capital guarantee funds.

Article 21: If an insurance company applies to change the nature of a deposit of capital guarantee funds upon maturity or applies to prematurely withdraw the same, it shall submit the following documentation to the CIRC:

(1) application documents for disposal of the capital guarantee funds;

(2) an Application Form for Disposal of the Capital Guarantee Funds of an Insurance Company;

(3) a photocopy of the Agreement for the Deposit of Capital Guarantee Funds for the capital guarantee funds to be disposed of;

(4) a photocopy of the deposit slip of the capital guarantee funds to be disposed of and a photocopy of the endorsement on the deposit slip;

(5) the record filing materials (provided in accordance with the requirements of Article 16 hereof) for the capital guarantee funds to be deposited; and

(6) other materials the submission of which the CIRC requires.

Article 22: If an insurance company applies to transfer capital guarantee funds to another bank, including a transfer between (sub-)branches of the same bank, it shall, in addition to submitting the documentation specified in Items (1), (2), (3), (4) and (6) of Article 21 to the CIRC, provide the Agreement for the Deposit of Capital Guarantee Funds (Draft) it proposes to execute.

Article 23: If an insurance company applies to use the capital guarantee funds to discharge debts when it is being liquidated, it shall, in addition to submitting the documentation specified in Items (1), (2), (3), (4) and (6) of Article 21 to the CIRC, provide the document from the CIRC approving its liquidation.

Article 24: If an insurance company reduces its registered capital (working capital) and applies to withdraw a portion of its capital guarantee funds, it shall, in addition to submitting the documentation specified in Items (1), (2), (3), (4) and (6) of Article 21 to the CIRC, provide the document from the CIRC approving its capital reduction.

Article 25: The CIRC will render its written decision on whether to grant or withhold approval of an application from an insurance company for the disposal of capital guarantee funds within 20 working days from the date of acceptance thereof.

Article 26: An insurance company may not use its capital guarantee funds except to discharge its debts at the time of its liquidation.

Article 27: During the term of the deposit, an insurance company may not change the nature of its deposit of capital guarantee funds.

Article 28: A deposit of capital guarantee funds may not be used as a pledge for financing purposes.

Article 29: If capital guarantee funds are not allocated or disposed of in accordance with these Measures, the CIRC will impose penalties in accordance with the law.

Part Four: Supplementary provisions

Article 30: These Measures shall govern the administration of the capital guarantee funds of insurance holding companies and insurance group companies that engage in insurance business.

Article 31: The CIRC is in charge of interpreting these Measures.

Article 32: These Measures shall be effective as of the date of issuance. The Circular on Issuance of the Tentative Measures for the Administration of the Capital Guarantee Funds of Insurance Companies (Bao Jian Fa [2007] No.66) shall be repealed simultaneously.

Appendix 1

AGREEMENT FOR THE DEPOSIT OF CAPITAL GUARANTEE FUNDS (MODEL BASIC TERMS)

Party A: __________ Bank of China, Shanghai Branch

Address: No.____ Pudong Avenue, Shanghai

Party B: ______________ Life Insurance Co., Ltd.

Address: No.____ __________ Road, Pudong New Area, Shanghai

Pursuant to the PRC Insurance Law and the Measures for the Administration of the Capital Guarantee Funds of Insurance Companies and based on the principles of mutual benefit and trustworthiness, the Parties enter into this Agreement after having reached a negotiated consensus:

1. Party B's capital guarantee funds, in the amount of Rmb_________, shall be deposited with _________ Bank of China, _________ Branch, _______ Sub-branch in the form of a ___ year term deposit. Party A shall issue Party B a term deposit slip.

2. The date on which interest shall commence to accrue on the term deposit of the capital guarantee funds shall be ________, 20__.

3. Interest on the term deposit of the capital guarantee funds shall accrue as follows: interest shall be paid once each ____, at a rate of __% and the interest payment dates shall be ________.

4. The deposit may not be used as a pledge for financing purposes.

5. The deposit is a capital guarantee fund deposit. Without seeing the written approval of the China Insurance Regulatory Commission, Party A may not agree to the change of the nature of the deposit, transfer of the principal of the deposit out of Party A or other requests to dispose of the deposit made by Party B. If Party A fails to duly carry out its review obligation, it shall bear joint and several liability for the debts of Party B that fall within the amount of the capital guarantee funds that were used.

6. In the event of a dispute arising in connection with this contract, the Parties shall resolve the same in accordance with the laws and regulations of the People's Republic of China and submit the outcome thereof to the China Insurance Regulatory Commission.

7. If the Parties wish to terminate this Agreement early, they shall report the same to the China Insurance Regulatory Commission for its approval.

8. If this Agreement is not recorded with the CIRC or if the CIRC withholds record filing, the Parties may hold consultations to terminate it.

9. This Agreement is made in __ copies, of which the Parties shall each hold __ copies, and one copy shall be submitted to the China Insurance Regulatory Commission for record filing.

Party A: __________ Bank of China, Shanghai Branch (affix stamp)

Legal representative (or authorised representative): (signature)

Date: _____________________

Party B: ______________ Life Insurance Co., Ltd. (affix stamp)

Legal representative (or authorised representative): (signature)

Date: _____________________

Appendix 2 APPLICATION FORM FOR DISPOSAL OF THE CAPITAL GUARANTEE FUNDS OF AN INSURANCE COMPANY Application date: Stamp of organisation: 保监发 [2011] 39号 1. Basic Particulars of the Company Name of the company Date opened for business Organisational form Registered capital Capital guarantee funds Legal representative Contact person of applying company Contact telephone Person in charge of the applying department of the company Contact telephone 2. Basic Indicators of the deposit bank (as at the end of _______) Name Net assets Capital adequacy ratio Bad asset ratio Original deposit bank Proposed deposit bank 3. Change of deposit bank Original deposit bank Amount and currency Term Interest rate Beginning and end dates Amount and currency Term Interest rate Beginning and end dates Amount and currency Term Interest rate Beginning and end dates Proposed deposit bank Amount and currency Term Interest rate Beginning and end dates Amount and currency Term Interest rate Beginning and end dates Amount and currency Term Interest rate Beginning and end dates 4. Discharge of Debts When the Company is Liquidated Title and number of the document approving the liquidation Approval date Person in charge of the liquidating organisation Contact telephone Amount of the capital guarantee funds to be used to discharge debts 5. Application for the Use or Disposal of Capital Guarantee Funds (additional sheets may be used) Omitted (if a change in deposit bank is to be made, the draft of the Agreement for the Deposit of Capital Guarantee Funds on which the insurance company and the proposed deposit bank have reached a negotiated consensus needs to be provided) 附件2： 保险公司资本保证金处置申请表 申请日期：                                                                     机构印章： 一、公司基本情况 公司名称 开业时间 组织形式 注册资本 资本保证金 法定代表人 申请公司 联系人 联系电话 申请公司部门 负责人 联系电话 二、存放银行基本指标（ 年末） 名称 净资产 资本充足率 不良资产率 原存放银行 拟存放银行 三、改变存放银行 原存放银行 金额及币种 存期 利率 起讫日期 金额及币种 存期 利率 起讫日期 金额及币种 存期 利率 起讫日期 拟存放银行 金额及币种 存期 利率 起讫日期 金额及币种 存期 利率 起讫日期 金额及币种 存期 利率 起讫日期 四、公司清算时清偿债务 批准清算的文件名称及文号 批准时间 清算机构负责人 联系电话 拟动用资本保证金用于清偿债务的数额 五、资本保证金动用或处置申请书（可加附页） 此略（若改变存放银行，需提供保险公司与拟存放银行协商一致的资本保证金存款协议草案）

Appendix 3

FORM FOR RECORD FILING OF THE CAPITAL GUARANTEE FUNDS OF AN INSURANCE COMPANY (In duplicate)