BEIJING: China’s finance ministry will lead a combined USD54 billion capital injections into state-owned insurers and banks, the companies said on Sunday, in a coordinated push by Beijing to shore up capital across its financial system.
China Life Insurance (Group) Co, the country’s largest life insurer, will receive 35 billion yuan (USD5.2 billion), while China Taiping Insurance Group will get 7 billion yuan, the two groups said in statements.
Separately People’s Insurance Company (Group) of China said it planned to raise up to 15 billion yuan through a private placement of A-shares to the Ministry of Finance, with the proceeds to be used to replenish its capital. The initiative could help bolster state insurers that were directed to support the stock market with medium- and long-term funds, while positioning them to help regulators manage smaller, higher-risk insurance companies.
FINANCIAL SECTOR STABILITY
The insurance sector has been grappling with eroding profitability due to persistently low interest rates, with numerous small and mid-sized insurers reporting deteriorating solvency ratios.
China Export and Credit Insurance Corp also said the finance ministry will inject 10 billion yuan to boost its core capital, and China Reinsurance (Group) said it will raise 3 billion yuan.
“The injection is an important step by the country to enhance the financial sector’s ability to serve the real economy and promote the high-quality development of the financial and insurance industries,” China Life said in its statement, adding that it would strengthen the group’s ability to withstand risks.
Taiping said the funds would bolster its solvency and other key indicators.
Separately, three state lenders on Sunday also announced they will receive a combined 290 billion yuan in capital injections.
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