CHINESE INSURERS COULD FACE TOUGH 2008, SAYS REGULATOR

A stronger yuan, increases in interest rates and stockmarket volatility were cited are three reasons that insurers in China could find the going tougher in 2008 than they did last year, according to China Insurance Regulatory Commission (CIRC) chairman Wu Dingfu. Speaking to senior insurance officials last week, he said that the return on investment generated last year was “abnormal” and that such conditions could not be expected to continue. Mr Wu warned life assurers to remain aware of risks and to be careful when launching any equity-linked savings products. Although he accepted that the rising yuan could devalue some insurers’ investments abroad, Mr Wu said that the CIRC would still encourage insurers to invest in other countries, because this was a means of diversifying risk. Insurers’ investments totalled 2.7tn yuan ($374bn) by the end of last year, of which 43% was in bonds, 24% in bank deposits and 18% in equities. He did not say where the other 15% was. Premiums rose 25% year on year to 703.6bn yuan. Mr Wu noted that still only 4% of China’s 1.3bn population had any kind of life assurance product.