媒体报道

产量下降,中国缩紧了对保险公司的规定

时间:2016-10-24 来源:WSJ

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A man carrying a kite in the shape of the Chinese flag walks along the Bund in Shanghai. BLOOMBERG NEWS

 

A low-interest-rate environment is hurting Chinese insurers that have promised high returns to policy holders. Recent moves by the country’s regulators attempt to relieve some of that pressure.

At issue are domestic insurance policies that have morphed into risky short-term investment products. Many of them are marketed as “universal life” products and can offer yields as high as 6%, plus get money back to policy holders in as little as one month. Insurers, faced with having to boost their own returns to pay out these aggressive rates, have turned to everything from overseas corporate investments to domestic stocks and real estate. With interest rates moving lower around the world, there is reason for Chinese regulators to be even more concerned about the risk their insurers have taken on in recent years.

The China Insurance Regulatory Commission has been trying to cover risks posed by insurers since late 2015, but this month stepped up detailed measures that seek to limit sales of high-return products. The rules are designed to target especially aggressive small to midsize domestic insurers. The regulator also said Chinese insurers will be able to begin investing in Hong Kong stocks through the city’s trading link with Shanghai, giving them access to returns outside the domestic market.

Taken together, the moves will hurt some insurers but will ultimately reduce liabilities in the industry and even help some firms boost their own returns.

The regulator said that if insurers’ own returns are lower than their promised returns for three straight months, they should be paying policy holders the former, not more. It also lowered the reserve discount rate cap for universal life products to 3.0% from 3.5%, meaning that insurers have to hold more reserves, thereby lowering the yields they can guarantee to policy holders. Insurers were also prohibited from selling whole life insurance, annuities and care insurance as short-term policies starting in 2017, and face new caps on sales.

These policies stand in contrast to a key relaxation last year: In February 2015, the regulator did away with a 2.5% return limit that insurers could guarantee for universal life policies, saying that the industry could determine its own caps. That move helped spur premiums from universal life products to grow by 147% in the first half of 2016 and 95.2% in 2015, from a year earlier.

But by then, global yields were already on their way to historic lows, making it difficult for insurers to deliver the high returns they promised policy holders.

Another move by the regulator allows insurers direct access to an international market that some analysts say is undervalued.

Insurers will be able to pick up dividend-paying stocks like HSBC Holdings, as well as dual-listed firms with shares trading for less in Hong Kong than the mainland. Investors could also benefit from an appreciating Hong Kong dollar, relative to further weakening in the yuan.

The Hong Kong market isn’t going to make the kind of returns that maverick insurers have promised to policy holders, said Sam Radwan, founder of Enhance International LLC, an insurance consultancy based in Chicago. But, it adds to insurers’ list of options as yields in China are expected to drop further, he said.

 

By Chao Deng

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