China's insurance regulator, in draft regulations soliciting public comment, is moving to curb fundraising by insurers, requiring that they seek regulatory approval first, state media said on Tuesday.
Under the draft rules, expected to be promulgated this year, insurers must prove their ability to pay out claims and that they have had no major regulatory breaches for at least three years before applying for initial public equity offers or follow-on equity offers, the official Shanghai Securities News said on Tuesday.
The new requirements came after Ping An Insurance, China's second-biggest insurer, announced a multibillion-dollar fundraising plan in mid-January that helped to push China's stock market down 34 percent in the first quarter -- the second-biggest quarterly fall in the market's 18-year history.
An official at the China Insurance Regulatory Commission denied, however, that there was any link between the new rules and Ping An's fund-raising plan, the Shanghai Securities News said.
The new rules would also ban foreign insurers that have invested in a Chinese counterpart from investing in a second company in the same category, although investing in a life insurer would not preclude investing in a property insurer, and vice versa, state media said.
A single party could hold no more than 20 percent of an insurance company, the China Securities Journal quoted the draft regulations as saying, and investors must use their own capital for investments. Use of bank loans to finance investments would be prohibited.