Overseas insurance institutions

Measures for the Administration of the Formation of Overseas Insurance Institutions by Insurance Companies (2015 Amendment)

Chapter I General Provisions

Article 1 To strengthen the administration of the formation of overseas insurance institutions by insurance companies, prevent risks, and protect the interests of the insured, these Measures are developed in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the “Insurance Law”) and other laws and administrative regulations.

Article 2 For the purposes of these Measures, “insurance companies” means commercial insurance companies formed with the approval of the China Insurance Regulatory Commission (“CIRC”) and registered according to the law.

Article 3 For the purposes of these Measures, “overseas insurance institutions” means the overseas branch offices of insurance companies and overseas insurance companies and insurance intermediary institutions.

For the purposes of these Measures, “insurance intermediary institutions” includes insurance agencies, insurance brokerage institutions, and claims adjusting institutions.

Article 4 For the purposes of these Measures, “formation of overseas insurance institutions” means the following activities of insurance companies:

(1)Formation of an overseas branch office or an overseas insurance company or insurance intermediary institution.

(2) Acquisition of an overseas insurance company or insurance intermediary institution.

Article 5 For the purposes of these Measures, “acquisition” means that an insurance company acquires the shares of an overseas insurance company or insurance intermediary institution so as to hold 20% or more of the total voting capital of the company or institution or, although its shareholding is less than 20%, have the actual control or joint control of or have a significant impact on the institution.

These Measures shall apply to an insurance company’s acquisition of a listed overseas insurance company or insurance intermediary institution, except as otherwise specified by the CIRC.

Article 6 In the formation of overseas insurance institutions, insurance companies shall comply with the laws and administrative regulations of China on insurance and foreign exchange administration, the relevant provisions issued by the CIRC, and the relevant foreign laws and provisions.

In the acquisition of an overseas insurance company or insurance intermediary institution, an insurance company shall comply with the current provisions on insurance foreign exchange funds.

Article 7 The CIRC shall, according to the law, supervise and administer the formation of overseas insurance institutions by insurance companies.

Article 8 These Measures shall apply to the formation of overseas representative offices, liaison offices, offices, and other not-for-profit institutions by insurance companies.

Chapter II Approval of Formation

Article 9 To form an overseas insurance institution, an insurance company shall meet the following conditions:

(1) It has operated for two years or more.

(2) Its total assets at the end of the prior year are not less than 5 billion yuan.

(3) Its foreign exchange funds at the end of the prior year are not less than 15 million U. S. dollars or an equivalent in freely convertible currency.

(4) Its solvency level is in compliance with the relevant provisions issued by the CIRC.

(5) Its internal control and risk management rules are in compliance with the relevant provisions issued by the CIRC.

(6) It has no record of receiving any major punishment in the last two years.

(7) The country or region where the overseas insurance institution is to be formed has a sound financial regulatory system and maintains an effective regulatory cooperation relationship with the insurance regulatory authority of China.

(8) Other conditions as set out by the CIRC.

Article 10 To apply for formation of an overseas branch office or an overseas insurance company or insurance intermediary institution, an insurance company shall submit the following materials to the CIRC:

(1) A written application.

(2) A photocopy of the decision of the State Administration of Foreign Exchange to confirm the source of foreign exchange funds.

(3) Its financial statements and foreign currency balance sheet for the prior year audited by an accounting firm.

(4) Its solvency status report for the prior year audited by an accounting firm.

(5) Its internal control and risk management rules.

(6) Basic information on the overseas insurance institution to be formed, including the name, domicile, bylaws, registered capital or working capital, equity structure, amount of contribution, scope of business, and resume and photocopy of identification of the person in charge of the formation preparation thereof.

(7) A feasibility study report, market analysis report, and formation preparation plan on the overseas insurance institution to be formed.

(8) A relevant explanation, if the laws of the place where the overseas insurance institution is to be located require the insurance company to assume joint and several liability with the overseas insurance institution formed by it.

(9) Other materials as set out by the CIRC.

Where there is any other promoter of an overseas insurance company or insurance intermediary institution to be formed by an insurance company, the insurance company shall also submit the name, photocopy of share subscription agreement, business license, and balance sheet for the prior year audited by an accounting firm of the promoter.

Article 11 To apply for acquisition of an overseas insurance company or insurance intermediary institution, an insurance company shall submit the following materials to the CIRC:

(1) A written application.

(2) A photocopy of the decision of the State Administration of Foreign Exchange to confirm the source of foreign exchange funds.

(3) Its financial statements and foreign currency balance sheet for the prior year audited by an accounting firm.

(4) Its solvency status reports and explanations thereof for the prior year and for the prior quarter audited by an accounting firm.

(5) Its internal control and risk management rules.

(6) Basic information on the overseas insurance institution to be acquired, including the name, domicile, bylaws, registered capital or working capital, scope of business, and person in charge thereof.

(7) The financial statements of the overseas insurance institution to be acquired for the prior year audited by an accounting firm.

(8) A feasibility study report, market analysis report, and acquisition plan on the acquisition of the overseas insurance institution.

(9) Other materials as set out by the CIRC.

If the overseas insurance institution to be acquired is an insurance company, its solvency status reports and explanations thereof for the prior year and the prior quarter audited by an accounting firm shall also be submitted.

Article 12 The CIRC shall, according to the law, examine an application for formation of an oversea insurance institution, and make a decision to approve or disapprove the application within 20 days of acceptance of the application. In the case of disapproval, the CIRC shall notify the applicant in writing of the decision, with an explanation of the reasons for the disapproval.

Article 13 An insurance company shall, within 20 days after an overseas insurance institution formed by it obtains a permit or its acquisition transactions are completed, submit to the CIRC a written report on the following information on the overseas insurance institution:

(1) A photocopy of the permit.

(2) The name and domicile of the institution.

(3) The bylaws of the institution.

(4) The organizational form, scope of business, registered capital or working capital, and amounts of contribution and proportion of contribution of other shareholders or partners of the institution.

(5) The name and contact methods of the person in charge of the institution.

(6) Other materials as set out by the CIRC.

Article 14 An insurance company shall, within 20 days of the formation of an overseas not-for-profit institution such as an overseas representative office, liaison office, or office, submit to the CIRC a written report on the following information on the overseas representative office, liaison office, or office or other overseas not-for-profit institution:

(1) A photocopy of the certificate of registration.

(2) The name and domicile of the institution.

(3) The name and contact methods of the person in charge of the institution.

(4) Other materials as set out by the CIRC.

Chapter III Management of Overseas Insurance Institutions

Article 15 An insurance company shall conduct effective risk management of an overseas insurance institution formed by it, and supervise the institution in establishing and improving risk management rules according to the laws of and the relevant provisions issued by the regulatory authority of the country where the institution is located.

Article 16 An insurance company shall strictly control the security provided externally by an overseas insurance institution formed by it.

Where an overseas branch office formed by an insurance company really needs to provide security externally, it shall obtain a credit rating certificate of the debtor, and enter into a legally binding counter guarantee agreement. If, under the counter guarantee agreement, counter guarantee is provided in a manner such as property mortgage or pledge, the amount secured shall not exceed 60% of the revaluation amount of the mortgaged or pledged property.

Article 17 An overseas branch office formed by an insurance company shall not provide loans externally, except for policy pledge loans.

Article 18 An insurance company shall establish performance evaluation, interim audit, and exit audit rules for the chairman of the board of directors and senior executives assigned to an overseas insurance institution formed by it.

Article 19 After the liquidation of an overseas insurance institution formed by an insurance company is completed, a liquidation report issued by the liquidation group and attested by the local certified public accountants shall be submitted to the CIRC.

Chapter IV Supervisory Inspection

Article 20 An insurance company shall, according to the accounting system of China and the provisions issued by the CIRC, separately disclose the operation results, financial condition, and solvency status of an overseas insurance institution formed by it in its financial report and solvency report.

Article 21 Where an overseas insurance institution formed by an insurance company prepares a solvency report according to the requirements of the local insurance regulatory authority, the insurance company shall send a copy thereof to the CIRC.

Article 22 An insurance company shall, within five months after the end of each fiscal year of an overseas insurance institution formed by it, submit to the CIRC the financial statements of the overseas insurance institution for the prior year.

Article 23 An insurance company shall, before the end of January each year, submit to the CIRC an annual work report of its overseas not-for-profit institution such as an overseas representative office, liaison office, or office.

The annual work report of its overseas not-for-profit institution such as an overseas representative office, liaison office, or office shall include the main work of the institution and information on any modification of the institution.

Article 24 Where any of the following events occurs to an overseas insurance institution formed by an insurance company, the insurance company shall submit a written report to the CIRC within 20 days after the occurrence of the event:

(1) Investment in or formation of a company by the institution.

(2) Division, combination, dissolution, abolition, or bankruptcy of the institution.

(3) Modification of the name or place of registration of the institution.

(4) Change of the chairman of the board of directors or a senior executive of the institution.

(5) Major modification of the registered capital or shareholder structure of the institution.

(6) Adjustment of the scope of business of the institution.

(7) Major operation or financial problem.

(8) Involvement in any significant lawsuit or receipt of any major punishment.

(9) Issuance of a regulatory report or an inspection report by the local insurance regulatory authority.

(10) Other events reported as the CIRC deems necessary.

Article 25 Where an insurance company transfers its shares in an overseas insurance institution formed by it, the transfer shall be subject to the approval of the CIRC.

Article 26 An insurance company shall report the following conduct involving an overseas insurance institution formed by it to the CIRC for approval, and submit materials according to the provisions of Article 11 of these Measures:

(1) Increasing its shareholding in the overseas insurance institution.

(2) Increasing the capital or working capital of the overseas insurance institution.

Article 27 An insurance company shall establish rules on the control and management of affiliated transactions. Any significant affiliated transaction between an insurance company and an overseas insurance company or insurance intermediary institution formed by it shall be reported to the CIRC within 15 days after the transaction is completed.

“Significant affiliated transaction” as mentioned in the preceding paragraph means any of the following trading activities between an insurance company and an overseas insurance company or insurance intermediary institution formed by it:

(1) Outward or inward reinsurance business.

(2) Asset management, provision of security, and agency.

(3) Purchase and sale of fixed assets or transfer of rights and debts.

(4) High-value borrowing.

(5) Other significant trading activities.

Article 28 All the materials on an overseas insurance institution submitted by an insurance company to the CIRC shall be complete, true, and accurate.

Chapter V Legal Liability

Article 29 Where an overseas insurance institution is formed without the approval of the CIRC, the CIRC shall order the violator to take corrective action and impose a fine of not less than 50,000 yuan up nor more than 300,000 yuan on it; and if the circumstances are serious, may restrict its scope of business , order it to stop accepting new business, or revoke its insurance business permit.

Article 30 Where the relevant reports, statements, documents, and materials are not submitted according to the provisions of these Measures, the CIRC shall order the violator to take corrective action, and if it fails to do so during a specified period, impose a fine of not less than 10,000 yuan nor more than 100,000 yuan on it.

Article 31 Where any false report, statement, document, or material is provided, the CIRC shall order the violator to take corrective action and impose a fine of not less than 100,000 yuan nor more than 500,000 yuan on it; and if the circumstances are serious, may restrict its scope of business, order it to stop accepting new business, or revoke its insurance business permit.

Chapter VI Supplemental Provisions

Article 32 These Measures shall apply to an insurance group company’s or an insurance holding company’s formation of an overseas insurance institution or an overseas not-for-profit institution such as an overseas representative office, liaison office, or office, except as otherwise specified by the CIRC.

Article 33 These Measures shall apply to an insurance company’s formation of an overseas insurance institution or an overseas not-for-profit institution such as an overseas representative office, liaison office, or office in Hong Kong, Macao, or Taiwan region.

Article 34 All the reports, statements, documents, and materials submitted by an insurance company to the CIRC under these Measures shall be in Chinese. Any original in a foreign language shall be accompanied with a Chinese translation. For any discrepancy between the Chinese and the foreign versions, the Chinese version shall prevail.

Article 35 “Days” as mentioned in these Measures means working days, excluding legal holidays.

Article 36 These Measures shall be subject to interpretation by the CIRC.

Article 37 These Measures shall come into force on September 1, 2006.

The English translation is provided by the China Insurance Regulatory Commission and may only be used as a reference. In case a different interpretation arises, the original Chinese shall prevail.