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	MEASURES FOR THE ADMINISTRATION OF INSURANCE COMPANIES' INVESTMENT IN CORPORATE BONDS (TRAIL)

	(Circular of China Insurance Regulatory Commission on Distributing the Measures for the Administration of Insurance Companies' Investment in Corporate Bonds (Trial) (No.74 [2003] of China Insurance Regulatory Commission), May 30, 2003: In order to adapt to the actual situations of continual and rapid increase of insurance fund, and the increasing expansion of the fund use scale, and to keep the continual, rapid and healthy development of the insurance industry, upon deliberation and approval of the State Council, the limits on insurance companies' investing in enterprise bonds shall be eased appropriately, the insurance companies are allowed to select on their own accord the enterprise bonds issued upon approval of the state authority and rated as AA or the above level by the credit rating agencies accredited by the regulatory department, and the proportion of the insurance fund invested in enterprise bonds is raised at the same time. In order to strengthen the administration of this business, to ensure the security of the fund, and to earnestly prevent the risks, this Commission has enacted the Interim Measures for the Administration of Insurance Companies' Investing in Enterprise Bonds)


SUBJECT : INVESTMENT; CORPORATE BONDS
ISSUING DEPARTMENT : CHINA INSURANCE REGULATORY COMMISSION
ISSUE DATE : 05/30/2003
IMPLEMENT DATE : 05/30/2003
LENGTH : 582 words
TEXT :

Article 1. According to the relevant provisions of Article 105 of the Insurance Law of the People's Republic of China and upon approval of the State Council, insurance companies may invest in enterprise bonds. The present Measures are enacted in order to ensure the liquidity, security and profitability of the fund use of insurance companies.

Article 2. Enterprise bonds mentioned herein refer to the enterprise bonds issued upon approval of the state authority and rated as AA or the above level by the credit rating agencies accredited by the regulatory department. At the present time, the credit rating agencies accredited by China Insurance Regulatory Commission (CIRC) are China Chengxin International Credit Rating Co., Ltd, and Dagong Global Credit Rating Co., Ltd. Other credit rating companies shall be subject to future accreditation.

Article 3. Insurance companies shall operate independently and assume the risks, and the profit and loss by themselves in trading enterprise bonds pursuant to the present Measures.

Article 4. Enterprise bonds shall be traded in a unified way by the head offices of the insurance companies and by the insurance assets management companies, the branches of insurance companies may not trade any enterprise bonds.

Article 5. Proportion control shall be applied to insurance companies' investing in enterprise bonds. The balance of the various types of enterprise bonds purchased by an insurance company may not exceed 20% of the total assets, calculated at the cost price, of the company at the end of last month. The amount of enterprise bonds of a single type and of a period held by an insurance company may not exceed 15% of the issued amount of the enterprise bonds of that type and that period, or 2% of the total assets of the insurance company at the end of last month, the lower one shall be accorded with.

Article 6. Insurance companies shall abide by the relevant laws, regulations, and business rules when trading bonds in the securities exchanges of Shanghai and Shenzhen, and on the inter-bank bonds market of the whole country.

Article 7. With respect to the investment-linked life insurance provided by an insurance company upon approval, an investment account may be established of which the maximum proportion of investment in enterprise bonds is 100% of the total assets in that account, and with respect to universal life insurance, an investment account may be established of which the maximum proportion of investment in enterprise bonds is 80% of the total assets in that account. The establishment, combination, cancellation, and alteration of investment account shall comply with the relevant provisions of this Commission. With respect to the participating insurance or other insurance products of independent accounting, the proportion of the investment in enterprise bonds may not exceed 20% of the assets of that product at the end of the previous month.

Article 8. Where an insurance company fails to comply with the present Measures in trading enterprise bonds, CIRC may give administrative punishment to that company in accordance with the Insurance Law of the People's Republic of China and the relevant laws and regulations.

Article 9. The branch companies of foreign insurance companies shall be governed by the present Measures.

Article 10. The power to interpret and revise the present Measures shall remain with CIRC.

Article 11. The present Measures shall take effect as of the day of promulgation. The Measures for the Administration of Insurance Companies' Purchase of the Bonds of Central Enterprises (No.9 [2003] of CIRC) shall be abolished at the same time.