China to curb insurer fundraising

The insurance watchdog is seeking public opinion on draft regulations that will force insurers to get regulatory approval before raising funds.

The insurance watchdog is seeking public opinion on  draft regulations that will force insurers to get  regulatory approval before raising funds.

This means insurers will need to prove that they are able to pay out claims. And that they have had no major regulatory breaches for at least 3 years before applying for equity offers. The new requirements came after Ping An Insurance Group, China's second-largest insurer, announced a multi-billion-dollar fundraising plan in mid-January.

Analysts say the plan helped push the domestic stock market down 34 percent in the first quarter, its second-biggest quarterly fall in the market's 18-year history. The new rules will also ban foreign insurers that have invested in a Chinese counterpart from putting more money into a second company in the same category. Investors will be required to use their own capital with the new rules banning bank loans to finance investments.

Regulations are expected to come into effect by the end of this year.