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On 30 December 2002, the Ministry of Finance announced amendments to the Guidelines for the Scope and Content of Overseas Investments by Insurance Companies. The main points are as follows:
Article 2 is amended to remove the provision that limited investments in foreign shares to shares in listed companies with average net profits after tax of at least 6% throughout the past three years.
The regime for the review of trading in de-rivative financial products to hedge risk on overseas investments is changed from case-by-case application to self-regulation by insurance companies.
The definition of foreign currency deposits is clarified to state that foreign currency deposits held by an insurance company for insurance business operational needs and not for in-vestment purposes, are excluded from the calculation of the amount of the insurer’s overseas investments.
The requirement that combined overseas and domestic investments in negotiable securities shall not exceed a certain proportion of in-vested funds is abolished.
The limits on investments in individual secu-rities are increased.
Limits are imposed on investments in foreign shares, corporate bonds, and beneficiary cer-tificates. Each is limited to 35% of the limit on total overseas investments imposed by Ar-ticle 146 of the Insurance Law (currently 20% of funds). An insurer that had already ex-ceeded this limit at the time of the amendment may not further increase its investment in the category concerned.
It is explicitly provided that "overseas" in-vestments do not include securities issued by mainland China government agencies or mainland China enterprises.
