China allows pilot insurer to invest forex premiums overseas

China has approved Ping An Life Insurance Co. Ltd. as a pilot company to invest foreign exchange premiums in overseas markets.

An announcement from the State Administration of Foreign Exchange (SAFE) and the China Insurance Regulatory Commission (CIRC) said the insurer has been permitted to experiment with life insurance in foreign exchange, saying the premiums can be invested both at home and abroad.

Insiders say the decision shows SAFE has approved overseas investment of forex premiums, which will encourage insurers to invest more money into the overseas markets.

SAFE and CIRC have forbidden the company to change the forex premiums into Renminbi without being examined and approved.

The move aims to ease the pressure of an ever growing foreign exchange reserve as well as broadening investment channels, said an insurance expert.

Statistics show that the country had amassed a forex reserve of 987.9 billion U.S. dollars at the end of September, 28.46 percent up on the previous year, while experts believe the figure will exceed one trillion at the end of this month.

Wu Dingfu, vice chairman of the CIRC, said this April that the State Council, China's cabinet, had approved "in general" insurance companies purchasing foreign exchange with the yuan for overseas investment.

Insiders say the CIRC is revising regulations, which are expected to be publicized next month, to expand the available capital market and enrich investment portfolios for domestic insurers' overseas.

Source: Xinhua