Tentative Measures for the Administration of Insurance Asset Management Products

Article 2:   These Measures shall govern the engagement in Product business by insurance asset management institutions established in the People's Republic of China, unless otherwise provided by laws, administrative regulations or the China Banking and Insurance Regulatory Commission (the CBIRC).

Article 3:   For the purposes of these Measures, the term "Product business" means a financial service wherein an insurance asset management institution, as entrusted by investors, establishes a Product, serves as manager thereof and carries out the investment and management of the property entrusted to it by the investors in accordance with laws, regulations and relevant contractual provisions.

Products include debt investment plans, equity investment plans, portfolio products and other products specified by the CBIRC.

Article 4:   Products shall be privately offered to qualified investors.

Article 5:   An insurance asset management institution engaging in Product business shall leverage the long-term and stability advantages of insurance capital to serve insurance protection and economic and social development.

Article 6:   An insurance asset management institution engaging in Product business shall comply with laws, administrative regulations and CBIRC provisions, abide by the principles of fairness and impartiality, safeguard the lawful rights and interests of investors, act in good faith and with due diligence, and guard against conflicts of interest.

Article 7:   An insurance asset management institution engaging in Product business shall strengthen investor suitability management, fully disclose information to investors and show them the risks involved and may not give undertakings to guarantee principal or returns.

An investor investing in a Product shall prudently make decisions in light of its/his/her own capabilities and solely bear the investment risks.

Article 8:   The property of a Product shall be kept separate from the property of the insurance asset management institution, custodian and other natural persons, legal persons and organizations that provide services for Product management, as well as the property managed thereby. Property and returns derived from the management, application, disposal or otherwise of Product property shall become Product property. Where an institution such as the insurance asset management institution or custodian is liquidated due to its being lawfully dissolved, lawfully closed down or lawfully declared bankrupt, Product property shall not constitute part of its property subject to liquidation.

Article 9:   The Insurance Asset Management Association of China, Shanghai Insurance Exchange Co., Ltd. and PICC Insurance Asset Registration and Trading System Co., Ltd. shall subject engagement in Product business of insurance asset management institutions to self-regulation in accordance with laws, administrative regulations and CBIRC provisions.

Article 10:   An insurance asset management institution engaging in Product business shall carry out offering, registration, custody, trading, settlement, information disclosure, etc. on asset registration and trading platforms (Platforms) recognized by the CBIRC such as the Shanghai Insurance Exchange Co., Ltd. and PICC Insurance Asset Registration and Trading System Co., Ltd.

Article 11:   The CBIRC shall oversee Product business in accordance with the law.

The CBIRC shall subject Product business to penetrative regulation, upwardly, identifying the end investors in Products and, downwardly, identifying the assets underlying a Product, and exercise comprehensive dynamic oversight over Product operation and management.

Part Two: Parties to a Product

Article 12:   For the purposes of these Measures, the term "qualified investor" means a natural person, legal person or other organization that has the appropriate risk identification capabilities and risk bearing capacity, invests not less than a certain amount in a Product and satisfies the conditions set forth below:

(1)  being a natural person who has at least two years of investment experience and satisfies one of the following conditions: net household financial assets of not less than Rmb3 million, household financial assets of not less than Rmb5 million or personal average annual revenue of not less than Rmb400,000 during the preceding three years;

(2)  being an entity with legal personality that has not less than Rmb10 million in net assets as at the end of the preceding year;

(3)  being an institution, including the asset management products offered by it, that is subject to the oversight of a financial regulator;

(4)  being a retirement fund, such as basic pension, social security fund or enterprise annuity; or

(5)  another circumstance that gives rise to a qualified investor as deemed by the CBIRC.

Article 13:   An insurance asset management institution engaging in Product business shall satisfy the following conditions:

(1)  having sound corporate governance, a good market reputation and satisfying CBIRC requirements in respect of investment management capabilities;

(2)  having sound operating procedures, internal control mechanisms, and risk management and auditing systems, and having established fair trading and risk isolation mechanisms;

(3)  having created professional positions for Product development, investment research, investment management, risk control, performance evaluation, etc.;

(4)  having a stable investment management team and relevant professionals numbering not less than the specified number;

(5)  not having committed any major violations of laws or regulations during the most recent three years, or, if it has been established for less than three years, not having committed any major violations of laws or regulations since the date of its establishment; and

(6)  satisfying other prudential conditions as specified by the CBIRC.

Article 14:   An insurance asset management institution engaging in Product business shall perform the following duties:

(1)  carrying out the procedures for registration of its Products in accordance with the law, as well as unit sale, custody and other such matters;

(2)  managing and accounting separately for the entrusted property of different Products managed by it and managing Product property in accordance with the contracts;

(3)  determining the plans for the distribution of returns in accordance with the Product contract and distributing the returns to the investors in a timely manner;

(4)  carrying out Product accounting and preparing financial accounting reports for the Products;

(5)  calculating and disclosing the net value of, or the investment returns on, the Products in accordance with the law;

(6)  carrying out information disclosure matters relating to entrusted property management business activities;

(7)  preserving records, account books, statements and other relevant documentation relating to entrusted property management business activities;

(8)  exercising litigation rights and carrying out other legal acts as the manager in the interests of the investors; and

(9)  performing other duties as specified by the CBIRC.

Article 15:   An insurance asset management institution engaging in Product business shall engage a commercial bank or other financial institution that satisfies CBIRC provisions and insurance asset custody business conditions to serve as custodian.

Article 16:   A custodian shall perform the following duties:

(1)  faithfully performing its custodial duties and duly safekeeping Product property;

(2)  opening separate dedicated accounts for different Products and ensuring that Product property is kept separate, secure and intact;

(3)  timely carrying out fund transfer, settlement and closing as instructed by the insurance asset management institution;

(4)  reviewing and examining the value of Product property as computed by the insurance asset management institution;

(5)  keeping abreast of and obtaining information on the management and operations of the Products and carrying out information disclosure matters relating to the custody business activities, such as issuing custody reports;

(6)  monitoring the investment operation of the insurance asset management institution, monitoring the investment scope, investment product types, etc. of the Product property in its custody and if it discovers that an investment or settlement instruction of the insurance asset management institution violates laws, administrative regulations, CBIRC provisions or the Product contract, refusing to execute such instruction and reporting the same to the CBIRC in a timely manner;

(7)  preserving records, account books, statements and other relevant documentation relating to Product custody business activities;

(8)  actively submitting to the scrutiny of the investors and the CBIRC, bearing an obligation of confidentiality in respect of Product investment information and related documentation and not providing relevant information or documentation to any institution or individual except as provided in laws, administrative regulations, rules, requested by an auditor or provided in the contract; and

(9)  performing other duties as specified in laws, administrative regulations, CBIRC provisions and the Product contract.

Article 17:   An insurance asset management institution engaging in Product business may, in accordance with relevant laws, administrative regulations and CBIRC provisions, engage professional service firms to provide professional services for its Products such as independent monitoring, credit rating, investment advice, legal services, financial auditing and asset appraisal.

An insurance asset management institution shall disclose information such as the qualifications and fees of professional service firms, as well as the conditions and procedures for the replacement and dismissal thereof to investors, and fully disclose the risks that could arise from the engagement of such professional service firms.

Article 18:   A professional service firm shall act in good faith and with due diligence, and satisfy the following conditions:

(1)  having business qualifications recognized by the relevant state authority;

(2)  having sound management systems, business procedures and internal control mechanisms;

(3)  being familiar with Product-related laws, regulations, policies, business procedures and transaction structures, having relevant service experience and capabilities and having a good business reputation; and

(4)  satisfying other prudential conditions as specified by the CBIRC.

An investment advisor engaged by an insurance asset management institution shall satisfy the following conditions, in addition to those set forth above:

(1)  having the professional qualifications and being subject to oversight by a financial regulator;

(2)  its key personnel having the professional knowledge and skills and having engaged in relevant business for at least three years;

(3)  not having committed any violations of laws or regulations relating to its investment advice business during the most recent three years; and

(4)  satisfying other conditions as specified by the CBIRC.

Whenever an insurance asset management institution is to cooperate with any investment advisor for the first time, it shall report the details of their cooperation to the CBIRC 10 working days in advance. An investment advisor may not undertake investment decision-making duties, may not directly execute investment instructions and may not undertake to guarantee principal or returns in any manner. An insurance asset management institution may not pay fees to an investment advisor that does not provide substantive services or pay fees that are disproportionate to the services provided thereby.

Part Three: Offering, Life and Termination of Products

Article 19:   Depending on their investment nature, Products are divided into fixed-return products, equity products, commodity and financial derivative products and hybrid products.

The percentage of a fixed-return product invested in debt assets shall not be less than 80%, of an equity product in equity assets not less than 80%, of a commodity and financial derivative product in commodities and derivatives not less than 80%. A hybrid product shall invest in debt assets, equity assets and commodity and financial derivative assets and the percentage invested in any one type of assets shall be less than the figures for the first three types of products.

If the restriction on a percentage specified above is surpassed not due to a subjective factor attributable to the insurance asset management institution, it shall make the adjustments to satisfy the requirement within 15 trading days of the liquidity limited assets becoming saleable or transferable or the resumption of trading.

Article 20:   A qualified investor shall invest not be less than Rmb300,000 in a fixed-return product, not less than Rmb400,000 in a hybrid product or not less than Rmb1 million in an equity product or commodity and financial derivative product. Where a Product invests in non-standard debt assets, the amount entrusted by a qualified investor accepted by the Product shall not be less than Rmb1 million.

Article 21:   An insurance asset management institution shall carry out specified procedures such as registration of the Products offered by it with a firm recognized by the CBIRC.

An insurance asset management institution shall submit Product materials in accordance with provisions. Such materials shall be true, complete and compliant. A CBIRC recognized firm shall review Product materials only for completeness and compliance, and will not render a substantive judgment on the investment value or risks of the Product.

Article 22:   During the life of a Product, the insurance asset management institution shall register information such as the Product's basic elements, offering details, distribution of returns and the number of units held by investors on an ongoing basis in accordance with relevant provisions and the business rules of the Platform.

Article 23:   The registration information on the Platform shall prevail in respect of the information on the units of a Product held by investors. The beneficiary certificates for a relevant Product shall be issued and centrally held in custody by the Platform.

Where an investor objects to information as registered, the Platform shall review the same and give a response in a timely manner. If a data error arises and investors incur a loss due to a work error by the Platform, the Platform shall bear the attendant liability.

Article 24:   A Platform and the registration institution shall establish a Product information sharing mechanism, realize interconnection between their systems, promote effective linkage between the industry infrastructure system and regulatory information system, and effectively perform their information submission responsibilities in a timely manner.

Article 25:   An insurance asset management institution, its custodian, investors and relevant professional service firms shall submit Product materials, data and information in accordance with the data standards and technical interface specifications issued by the Platform and registration institution.

Article 26:   An insurance asset management institution may itself sell its Products or, alternatively, engage a qualified financial institution or other institution recognized by the CBIRC as its agent to sell its Products.

An insurance asset management institution and the institution acting as its sales agent shall act in good faith and with due diligence, guard against conflicts of interest, perform relevant obligations such as the obligation of giving explanations and anti-money laundering obligation, and bear relevant responsibilities such as investor suitability reviews, Product promotion and qualified investor confirmation.

An insurance asset management institution and the institution acting as its sales agent shall evaluate a natural person investor's risk bearing capacity, determine his/her risk bearing capacity grade and sell to him or her a Product compatible with his/her risk identification capabilities and risk bearing capacity. The specific rules for the sale of Products shall be formulated separately in accordance with the law by the CBIRC.

Article 27:   An insurance asset management institution shall formulate dedicated systems and establish sound mechanisms based on the nature and scale of a Product, and create positions and appoint professionals independent from the offering of the Product to manage the Product during its lifetime. Management during the life of a Product shall cover risk early warning, risk event handling, data submission, information disclosure and reporting, etc.

During the life of a Product, the registration institution and Platform shall carry out tasks such as the keeping of information statistics and risk monitoring in accordance with the law.

Article 28:   A Product shall terminate if:

(1)  the term of the Product expires;

(2)  the objective of the Product is fulfilled or cannot be fulfilled;

(3)  relevant parties of the Product agree thereto through consultations;

(4)  a circumstance requiring termination as specified in the Product contract arises; or

(5)  another circumstance as specified in laws, administrative regulations or by the CBIRC arises.

Article 29:   Upon termination of a Product, the insurance asset management institution shall arrange for and carry out the liquidation work in accordance with CBIRC requirements and the Product contract, and carry out its reporting obligations in a timely manner.

Part Four: Product Investment and Management

Article 30:   A Product may invest in sovereign bonds, local government bonds, central bank notes, government agency bonds, financial bonds, bank deposits, certificates of deposit, interbank negotiable certificates of deposit, corporate credit bonds, securitized products offered in trading markets established with the consent of the State Council such as the interbank bond market or securities exchange market, publicly offered securities investment funds, other debt type assets, equity type assets and other assets approved by the CBIRC.

The investment scope of a Product in which insurance capital is invested shall satisfy relevant regulatory provisions for the application of insurance capital.

Article 31:   The requirements in respect of the Product grading arrangement, debt percentage ceiling and management of the investment limit on, and maturity matching of, non-standard debt assets shall satisfy relevant provisions of the financial authority.

The balance of non-standard debt assets invested in by all of the portfolio products managed by an insurance asset management institution may not at any time exceed 35% of the net assets of all of the portfolio products managed by it.

A Product may not directly invest in the credit assets of commercial banks, with the exception of the asset-backed securities business engaged in thereby in accordance with the rules issued by the financial authority.

A Product may not directly or indirectly invest in industries or sectors wherein debt or equity investment is prohibited by laws, regulations or state policies.

Insurance asset management institutions are encouraged to invest the proceeds derived from the offering of Products into sectors that satisfy state strategic and industry policy requirements and those that satisfy state supply-side structural reform requirements provided that they do so lawfully, compliantly and in a commercially sustainable manner. Insurance asset management institutions are encouraged to support transformation of the economic structure, and support market-oriented and rule-of-law based debt-for-equity swaps with the proceeds derived from the offering of Products so as to reduce corporate leverage ratios.

Article 32:   The number of investors in any one Product shall satisfy laws, administrative regulations and CBIRC provisions. Where a Product accepts investments from other asset management products, the number of investors of the other asset management products shall not be added to its total, but the actual investors and the ultimate source of funds of the Products shall be effectively differentiated.

An insurance asset management institution may not violate relevant provisions by exceeding in a disguised manner the limitation on the number of investors or other regulatory requirements by establishing multiple Products for one financing project.

Article 33:   An insurance asset management institution shall duly perform its active management responsibilities, may not assign its management duties and may not provide roundabout services to the asset management products of other financial institutions that would permit them to evade regulatory requirements in respect of scope of investment, leverage constraints, etc.

Article 34:   Where a Product invests in another asset management product, it shall expressly specify that the asset management product invested in may not further invest in other asset management products, with the exception of publicly offered securities investment funds, unless otherwise provided in laws, administrative regulations or by the financial authority.

When an insurance asset management institution carries out the procedure for registration, etc. of a Product, it shall fully disclose information such as the investment orientation of the proceeds, the scope of investment and the transaction structure.

Article 35:   An insurance asset management institution may not raise financing by pledging units of a Product that it has been entrusted to manage. Where an insurance group (holding) company or insurance company, as investor, raises financing by pledging Product units that it holds, it shall do so on the Platform in accordance with the law.

Article 36:   The net value of a Product shall be recognized and measured in accordance with relevant provisions of the Enterprise Accounting Standards and the Opinions on the accounting for, and valuation of, financial instruments.

Article 37:   An insurance asset management institution shall specify the rate for allocating the management fee for a Product in the Product contract based on factors such as the scale of the Product, its investment scope and risk features, and in accordance with market principles.

Article 38:   An insurance asset management institution shall determine a reasonable term for the assets in which a Product invests and strengthen its management of the liquidity risks arising from a maturity mismatch.

Article 39:   An insurance asset management institution shall endeavor to ensure that the composition of the assets invested in by each Product is clear and their risks identifiable.

An insurance asset management institution shall endeavor to ensure that the proceeds of each Product are separately managed, kept in separate accounts and separately accounted for, and may not engage or participate in fund pool business with features such as rolling offering, centralized operation and partitioned pricing.

Part Five: Information Disclosure and Reporting

Article 40:   An insurance asset management institution shall, in accordance with relevant CBIRC provisions, actively, truthfully, accurately and completely disclose information to investors in a timely manner such as the details of a Product offering, the investment orientation of the proceeds, the distribution of returns, custody arrangement, investment account information and major investment risks.

An insurance asset management institution shall disclose the net value of a Product and other important information to investors at least each quarter.

Article 41:   An investor may access information on Product property from the insurance asset management institution or the Platform in accordance with the contract. Without prejudice to the lawful rights and interests of the other investors, the insurance asset management institution and Platform shall truthfully, accurately and completely provide the relevant information in a timely manner, and may not refuse to do so or shift the responsibility among one another.

Article 42:   The custodian and other professional service firms shall perform their information disclosure and reporting obligations to the insurance asset management institution and the CBIRC in accordance with the relevant contract provisions.

Article 43:   An insurance asset management institution shall, in accordance with the requirements of the People's Bank of China and the CBIRC, submit basic Product information, and initial offering information and offering information during the Product's life, etc. in a timely manner, and, once the Product has terminated, termination information to the People's Bank of China, the CBIRC and the institutions designated by it.

Article 44:   Unless otherwise provided herein, in the event of the occurrence of a material event that could have a substantive impact on the decision-making or interests of investors, the insurance asset management institution shall, in a timely manner, disclose the same to investors and report the same to the CBIRC and the institutions designated by it.

Article 45:   A registration institution and Platform shall report to the CBIRC dedicated Product statistics, analyses and other such information regularly or on an ad hoc basis as required by the CBIRC. In the event of a material unforeseen event, both parties shall strengthen information and resource sharing and report the same to the CBIRC in a timely manner.

Part Six: Risk Management

Article 46:   An insurance asset management institution shall establish a full coverage risk management organization system and operating mechanism with whole-course monitoring and in which all persons participate, categorize, identify, quantify and assess the liquidity risks, market risks and credit risks of a Product through means such as the management system and auditing, and effectively manage, control and respond to risks. The board of directors of an insurance asset management institution shall be responsible for regularly reviewing and assessing the management of the business.

Article 47:   An insurance asset management institution engaging in Product business shall establish a risk officer system and specify the relevant risk officers.

Article 48:   An insurance asset management institution shall include its Product business in its internal auditing and annual auditing of fund operation internal control, and report the same to the CBIRC in accordance with the law.

Article 49:   An insurance asset management institution shall establish a Product risk handling mechanism, formulate a contingency plan to effectively control and mitigate latent risks, and report the same to the CBIRC in a timely manner.

Article 50:   An insurance asset management institution shall ensure that the positions and personnel relating to risk management and control have the right to know and right to inquire necessary to perform their duties, have the right to review and inquire about data, documentation and details relating to Products and can attend relevant meetings in a non-voting capacity.

Article 51:   An insurance asset management institution shall establish the appropriate risk reserve mechanism to ensure that the requirements for the business to withstand unforeseeable losses are satisfied. The allocation percentage for the risk reserve shall be 10% of the Product management fee income and such reserve shall be mainly used to compensate for losses incurred by the Product property or investors due to a violation of laws or regulations, breach of the Product agreement or operational errors by the insurance asset management institution or technical malfunctions. No further allocations need be made once the balance of the risk reserve equals 1% of the Product balance.

Article 52:   An insurance asset management institution shall establish sound Product business personnel access, training, evaluation and accountability systems, ensure that its personnel have the necessary professional knowledge, industry experience and business capabilities, fully understand relevant laws, regulations, regulatory provisions, as well as the legal relationships, transaction structure and main risks of the Products and the methods of managing and controlling such risks, and observe the code of conduct and professional ethics standards.

An insurance asset management institution shall improve its long-term incentive and constraint mechanisms, and may not engage in Product business by means such as bringing external personnel under its wing or contracting out part of the business.

Article 53:   A director, supervisor, senior executive or relevant business personnel of an insurance asset management institution may not:

(1)  treat the managed property of different Products in an unequal manner;

(2)  exploit Product property or take advantage of his/her position to seek improper gains for a third party other than the investors;

(3)  appropriate or divert Product property;

(4)  divulge non-public information to which he/she is privy as a result of his/her position or exploit such information to engage in, or to explicitly or implicitly instruct another to engage in, relevant trading activities;

(5)  be derelict in his/her duties or fail to perform his/her duties in accordance with provisions; or

(6)  perform another act prohibited by laws, administrative regulations or the CBIRC.

Article 54:   An insurance asset management institution shall formulate sound affiliated transaction rules, regulate the criteria for determining affiliated transactions, the pricing method, the decision-making procedure, etc., and may not use the proceeds of a Product to engage in illegal acts with affiliated persons, such as unfair trading, funneling of benefits, insider trading or market manipulation.

Part Seven: Oversight

Article 55:   The CBIRC oversees the business activities of parties involved in Product business in accordance with the law. Parties shall actively cooperate with it and may not:

(1)  refuse or interfere with monitoring inspections by regulatory personnel;

(2)  refuse to provide, or delay in providing, documentation relating to inspection matters;

(3)  conceal, fabricate, alter or destroy account books, accounting statements or other related documentation; or

(4)  commit other acts prohibited by the CBIRC.

Article 56:   The CBIRC shall scrutinize the directors, supervisors, senior executives and relevant business personnel of insurance asset management institutions in accordance with the law. It shall question and give regulatory lectures to persons responsible for a violation of relevant laws, administrative regulations or these Measures, and impose administrative penalties such as giving them a warning, assessing fines, revoking their qualifications for their positions or banning them from the insurance industry in accordance with the law.

If it is discovered after a relevant responsible person of an insurance asset management institution leaves such institution that he/she violated a relevant law, administrative regulation or these Measures while working for the institution, his/her liability shall be pursued in accordance with the law.

Article 57:   Where a banking/insurance institution, such as an insurance asset management institution, custodian or investment advisor, violates a relevant law, administrative regulations or these Measures, the CBIRC shall impose administrative penalties in accordance with the law.

Article 58:   Where another party involved in Product business violates a relevant law, administrative regulations or these Measures, the CBIRC shall make a record of its improper act and report the relevant circumstances to the competent department. If the circumstances are serious, the CBIRC may require that insurance asset management institutions, insurance group (holding) companies and insurance companies not engage in relevant business with it for three years and recommend to the relevant regulator that it impose administrative penalties in accordance with the law.

Article 59:   A professional service firm and its relevant personnel that provide services for Product business shall abide by the code of practice and professional ethics, act objectively, impartially and with due diligence, and independently issue professional opinions. Where a relevant professional service firm or an employee thereof fails to act with due diligence or a report issued by it/him/her contains false records, misleading statements or material omissions, it/he/she shall bear the attendant legal liability.

Article 60:   A registration institution shall, in accordance with relevant CBIRC provisions, establish sound mechanisms, formulate dedicated systems, improve its registration business system, establish dedicated positions, staff them with the necessary full-time employees and carry out registration in a prudent, transparent and efficient manner.

Article 61:   A Platform shall, in accordance with relevant CBIRC provisions, establish sound mechanisms, formulate dedicated systems, establish dedicated positions, staff them with the necessary full-time employees, duly safeguard the stable operation of the Platform's relevant systems and provide good services for the development of the Product business.

Part Eight: Supplementary Provisions

Article 62:   Where a qualified retirement insurance company engages in Product business, matters shall be handled with reference to these Measures.

Article 63:   Where an insurance asset management institution engages in cross-border Product business, matters shall be handled with reference to these Measures, and it shall comply with provisions on cross-border renminbi and foreign exchange control.

Article 64:   In line with the non-retroactivity principle, a transition period is provided so as to ensure a smooth transition. The transition period shall run from the effective date hereof to December 31, 2020.

A Product newly offered by an insurance asset management institution during the transition period shall comply with these Measures. An insurance asset management institution may offer an old Product during the transition period linked to unmatured assets invested in by existing Products, but the same shall be strictly controlled within the overall scale of the existing Products and shall be diminished and progressively reduced in an orderly manner. An insurance asset management institution shall formulate a Product business rectification plan during the transition period, set out a clear timetable therefor and implement the same after submission to the CBIRC for recognition. The same shall additionally be filed with the People's Bank of China for the record.

Once the transition period ends, an insurance asset management institution shall make its Products fully compliant in accordance herewith, and may no longer offer or keep Products that are in violation hereof.

Article 65:   The CBIRC is charged with the interpretation and revision hereof.

Article 66:   These Measures shall be effective as of May 1, 2020.