Insurers get more freedom in asset allocation

"We're likely to see companies moving more assets from fixed income into higher-yield products such as trusts and property," she said.

Insurers' assets are now classified as liquid assets, fixed-income assets, equity assets, real estate assets and other financial assets.

The ceilings for real estate investment, alternative financial investment and overseas investment are 30 percent, 25 percent and 15 percent, respectively, of total assets.

There are no restrictions on investment in liquid and fixed-income assets under the new rules.

"The short-term effect of the investment relaxation is unclear as actual investments are far below the current limit" at present, said Fanny Chen, a financial analyst with Haitong International.

Chen added that Chinese insurers have so far put only about 7 percent of their assets into the equity market. Most of their investment goes into fixed-income assets.

"But the market-driven approach from the Chinese insurance regulator is more than clear. It is very welcome to insurers and will have a long-term effect," said Chen.

Chinese insurers' actual overseas investment is less than 1 percent of their total assets, according to Zeng. He said that this category of investment is expected to grow as more insurers take a global view of asset allocation.

"We will keep urging insurers to reinforce their internal risk controls at the same time," added Zeng.

Zeng said that the regulatory framework for insurers' investment in futures and government debt is under discussion.

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