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Decisions on Amending the Implementing Rules for the Regulatory Provisions on Foreign-invested Insurance Companies (Draft for Comments)

2021-01-07/ARTICLES/ Elsie SHIYU Hualiang(George)余华良
On December 31, 2020, CBIRC published the Decisions on Amending the Implementing Rules for the Regulatory Provisions on Foreign-invested Insurance Companies (Draft for Comments) to solicit public comments until February 15, 2021.  The Draft was intended to implement the relevant opening-up measures for the financial sectors and the relevant amendments to the Regulatory Provisions on Foreign-invested Insurance Companies, and has clarified the market access requirements for foreign insurance group companies and foreign financial institutions, and removed the provisions related to the 51% foreign ownership cap on life insurance companies that had been abolished.

A foreign insurance group company refers to a company that has been registered in accordance with the law in its home country and exercises control, joint control and significant influence over one or more insurance companies within the group.  According to the Draft, the qualification requirements for foreign insurance group companies to apply to establish an insurance company are as follows:

  • having total assets of no less than USD5 billion as of the end of the year prior to the application;

  • the home regulator of the applicant agrees to the application.

  • its home country or region has a sound system for insurance regulation, and the applicant or its main insurance subsidiary is under the effective supervision of its home regulator;

  • its foreign insurance group or its main insurance subsidiary meets the solvency requirements of its home country or region; and

  • any other prudent conditions required by CBIRC.

Main insurance subsidiaries refer to those insurance companies that are controlled or jointly controlled by the insurance group companies, that are among the largest in terms of total assets as of the year end before the application, and that account for no less than an aggregate of 60% of the consolidated insurance assets of the insurance groups.

When a foreign-invested company changes its shareholders, the proposed acquirer or successor who is a foreign insurance company or foreign insurance group company should meet the qualification requirements for establishing an insurance company.

A foreign financial institution refers to a financial institution registered outside of China and approved or licensed by the financial regulator of its home country or region.  If a foreign financial institution other than an insurance company or insurance group becomes a shareholder of a foreign-invested insurance company, the provisions of the Administrative Measures on Equities of Insurance Companies should apply.

If foreign insurance companies and foreign insurance group companies, as shareholders of insurance companies located in China, wish to establish an insurance group company, the regulatory rules on insurance group companies will apply.  Where the insurance group company rules are silent, the Regulatory Provisions on Foreign-invested Insurance Companies and relevant Implementing Rules should apply as a reference.

If an investment in a foreign-invested insurance company affects or may affect national security, a foreign investment security review should be conducted.

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