China's insurers to adjust investment risk controls

Big state insurers will be directed to raise both the size and proportion of their investments.

China's insurers are expected to tighten investment risk controls following the implementation of a new stock directive aimed at boosting market participation, according to S&P Global Ratings.

Regulators are encouraging insurers to allocate a portion of their incremental premiums to the stock market, aligning with broader strategies to promote participating life policies, where policyholders share in both risks and rewards.

According to a report by S&P Global Ratings, the gradual increase in equity allocations could heighten market risk, narrow capital buffers, and lead to greater earnings volatility for insurers.

The directive reflects a strategic shift in China's insurance sector, balancing growth opportunities with potential financial challenges.