Source: Business Insurance

September 09, 2019 (Reuters) — China’s banking and insurance regulator on Monday capped how much insurance firms can invest in their shareholders, aiming to curb risks linked to the misuse of financial resources. China is sharpening its scrutiny of insurers’ and small banks’ shareholders amid fears that loans and investment given to big investors could prove a weak point in the country’s financial system. Under the revised rules, which took effect on Monday, an insurance company’s combined investments in its shareholders or their related parties must not exceed 30% of the insurer’s total assets or net assets in the previous year, the CBIRC said. An insurer’s investment in any single shareholder is capped at 15% of the insurance firm’s total assets, the regulator said, under the new rules which aim to improve corporate governance in the sector. The board of each insurer will also have to set up a committee to routinely control and assess the risks of related transactions, according to the revised regulations. In February last year, Anbang Insurance Group Co., once among China’s most aggressive overseas dealmakers, was seized by the state. In May 2018, ex-chairman Wu Xiaohui was found guilty of fraud and embezzlement and sentenced to 18 years in prison.