China to allow insurers to invest in infrastructure
(Reuters)
Updated: 2006-02-18 15:06

China will issue regulations allowing domestic insurers to invest in infrastructure projects, as part of a broader drive to increase their investment options, the China Business Post reported on Saturday.

The China Insurance Regulatory Commission (CIRC) will issue the new rules next week, allowing insurers to invest no more than 15 percent of their total assets at the end of the previous year in infrastructure, the newspaper said, citing CIRC officials.

The country's No. 3 insurer, China Pacific Life Insurance Co., will be chosen as an experimental unit to invest via a trust company, it said.

Chinese insurers held over 1.52 trillion yuan ($189 billion) in assets at the end of 2005, but they are mostly limited to investing in low-yielding government bonds and savings accounts.

Annual returns from infrastructure projects, such as ports, highways and railways, can be as high as 6.2 percent, compared with an average return of 4.2 percent for domestic insurers over the past five years, said the paper.

It said the choice of China Pacific for the pilot programme indicated the regulator's intention to promote the company to float its share overseas.

China Pacific, China Life Insurance and Ping An Insurance (Group) are the country's three biggest life insurers.

The paper cited China Pacific Life President Wang Guoliang as saying it will invest in highways, ports and oil storage facilities as well as infrastructure projects in the country's northeast provinces.

In December, U.S. buyout firm Carlyle Group, one of the biggest foreign investors in China, led a $410 million investment for a quarter of China Pacific.