China to scrap foreign insurers’ ownership caps in asset management

China will eliminate the caps on foreign insurers’ ownership of insurance asset management firms, according to a new regulation announced on Friday, as the country opens its financial markets further to foreign investors.

The latest sign of deregulation was unveiled as part of rules on insurance asset management firms that are to take effect on September 1.

In an effort to advance a push of the State Council, China’s cabinet, to lift ownership limits in insurance asset management firms, foreign insurers will no longer be subject to caps on their stakes in such firms, the China Banking and Insurance Regulatory Commission (CBIRC) said in a question-and-answer document on its website, while introducing the new regulation.

The State Council’s financial committee office has advocated the revocation of a mandatory minimum 72 percent stake in insurance asset management businesses on the part of domestic insurers and the permission of overseas investors to hold stakes of more than 25 percent.

Meanwhile, the new regulation set investor qualification criteria universally applied to domestic and overseas shareholders. This will help attract international premium insurers and asset managers into

China’s insurance management industry, the CBIRC said.

The new rules pave the way for foreign insurers to set up wholly owned insurance asset management entities in the country, building on the country’s wide-ranging financial opening-up, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Friday.

The removal of shareholding limits for insurance asset management firms follows previous deregulation moves covering brokerages, fund and futures houses, said Dong.

Dong said that insurance asset management would involve a larger number of people, and would consequently be put on the back burner of the shareholding lifting push.