China’s National Administration of Financial Regulation (NAFR) is raising equity allocation ratios for certain assets and increasing the cap on venture capital fund investments to direct more insurance funds into the real economy.
According to the NAFR, the changes aim to improve asset allocation and make better use of the long-term investment potential of insurance capital.
The adjustments are also expected to raise the overall quality and efficiency of the funding source.
The updated rules link equity investment limits to solvency adequacy ratios. Insurers with a solvency ratio below 100 may invest up to 10% of total assets from the previous quarter in equity-type assets.
For those with a ratio between 100 and 150, the limit rises to 20%. Insurers with ratios above 350 can allocate up to 50% of total assets to these investments.
The NAFR also increased the limit on single venture capital fund investments. The book value of an individual investment may now reach 30% of the fund’s paid-in capital.
Insurers must continue to follow basic requirements related to safety, liquidity, profitability, and asset-liability alignment.
The NAFR emphasized the importance of maintaining risk-return assessments and strengthening internal systems for monitoring, control, and reporting.
The announcement coincides with ongoing trade tensions between China and the U.S., marked by tariffs that have prompted China to take steps to support its capital markets and economic stability.
While the U.S. administration’s tariffs have pressured Chinese policymakers, they also pose challenges for American insurers and policyholders.
The American Property Casualty Insurance Association noted that the tariffs could raise claims costs across various insurance segments, with personal auto insurance expected to experience the largest impact.
