【Financial Str. Release】China optimizes solvency supervision of insurers to better support the economy

BEIJING, Sept. 11 (Xinhua) -- China's top financial regulator issued a circular, effective from September 10, to optimize solvency supervision requirements for insurance companies to better serve the real economy, reported Xinhua Finance on Sunday.

National Administration of Financial Regulation (NAFR) adjusted differentiatedly minimum capital requirements for insurers in the circular and guided them to provide more supports to the capital market and sci-tech innovation in China.

While keeping the 100 percent of comprehensive solvency adequacy ratio and 50 percent of core solvency adequacy ratio requirements unchanged for insurers, NAFR allows in the circular insurers of different asset sizes to calculate their solvency adequacy ratios with 95 percent or 90 percent of minimum capital.

For property insurers and reinsurance companies with more than 10 billion yuan but less than 200 billion yuan of total assets and personal insurance firms with over 50 billion yuan but less than 500 billion yuan of total assets, their solvency adequacy ratios are permitted to be calculated with 95 percent of minimum capital.

For property insurers and reinsurance firms with less than 10 billion yuan of total assets and personal insurance companies with less than 50 billion yuan of total assets, their solvency adequacy ratios are allowed to be calculated with 90 percent of minimum capital.

By adjusting down risk factors of investment in component stocks of CSI 300 Index, common stocks on STAR Market and others, the circular aims to boost the capital market with more capital from insurers.

For insurers which invest in the underlying stocks of CSI 300 Index, their related risk factor is adjusted to 0.3 from 0.35 and for those which invest in common stocks of STAR Market-listed companies, their related risk factor is cut from 0.45 to 0.4.

To bolster sci-tech innovation, insurance companies which invest in equities of unlisted companies engaged in strategically emerging industries can enjoy related investment risk factor of 0.4.

Sci-tech insurance applicable to using property insurance risk factor to calculate minimum capital is allowed to calculate solvency adequacy ratio with 90 percent of minimum capital. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)