BEIJING/SHANGHAI (Reuters) - China’s insurance regulator plans to restrict the business of insurers which have a low rating for asset liability management, the official Xinhua news agency reported late on Sunday.
The move comes amid a sector-wide clampdown on risk and graft, which has led to new ownership rules for insurers and the fall of the country’s chief insurance regulator among other things.
Insurance firms will be rated from A to D by the regulator on their ability to ensure the matching of maturity, cash flow and cost on both sides of their balance sheet, said Xinhua, citing draft rules.
Those with poor ratings will be prohibited from certain investment activities.
Companies with the rating of D, the lowest, will be banned from launching new products within a certain period. Salaries of the top management of these firms will also be limited.
Insurers rated highly will be able to use their funds more freely and have greater freedom to launch new products.
The rules are currently in draft form and will come into effect next year.
Reporting by Ben Blanchard in Beijing and Engen Tham in Shanghai; Editing by Edmund Blair and Michael Perry