China’s insurance regulator, China Insurance Regulatory Commission (CIRC), has restricted the stock trading operations of Evergrande Life as part of punishment due to the insurer’s irregular investment operations.
The CIRC said in a statement that the imposed measures will be for one year after investigators found irregularities in the Evergrande Life’s stock investment trust business and internal management profile.
“The company’s speculative trading activities in certain stocks between September and November has caused grave social consequences,” the CIRC said.
The insurance regulator has deployed investigators to check the operations of China’s insurance companies as part of efforts to contain possible financial risks.
The regulator required that the insurer’s total equity investment should be no more than 20 percent of its total assets. The country’s insurers are allowed to invest up to 40 percent of their total assets in equity market.
CIRC Warns Anew Against Insurers’ Market Speculations
China’s insurance regulator reiterated its stance against use of insurance capital for market speculations and will continue the campaign towards mitigating risks and enhancing supervision on insurers.
CIRC chairman Xiang Junbo said the commission will strictly impose sanctions on insurance firms that repeatedly violate rules on risk management.
CIRC’s punitive measures include banning insurers from launching new services, penalising senior managers, and even canceling insurance license, said Xiang.
He maintained that the insurance industry is not for the rich people who take advantage of insurance regulations.
Another CIRC official, Chen Wenhui, the commission’s vice chairman, said that insurance capital should be utilised conservatively and serve the insurer’s core operations.
While insurers are allowed to participate in shareholding activities, they should not take controlling interest in another company, said Chen.
The CIRC has been limiting single shareholder’s stake in an insurance firm at one third and suspended Internet business of at least seven violating companies. – BusinessNewsAsia.com