China says to expand insurers' investment options

China plans to give insurance firms more investment options, the industry watchdog said on Tuesday, as it disclosed that insurers still hold nearly 80 percent of their assets in bonds and bank deposits.

Beijing has been cautiously allowing insurers to diversify their portfolios, launching a pilot programme to let them invest in infrastructure projects and letting them buy overseas equities.

"We will steadily expand the investment channels and issue policies at an appropriate time to widen the pilot programme of infrastructure investment and overseas investment," Yuan Li, spokesman for the China Insurance Regulatory Commission (CIRC), told a news conference. He did not elaborate.

Regulatory and industry sources told Reuters earlier this month that authorities may allow some insurers to invest up to 8 percent of their assets in infrastructure projects so they can diversify out of shares and bonds.

Insurers had 10.7 percent of their assets in equities and 53.6 percent in bonds at the end of June, the regulator said.

At the end of 2007, the proportions were 17.7 percent and 44.0 percent respectively. The Shanghai stock market .SSEC fell about 48 percent in the first half of the year, dragging down the share of equities.

Providing a breakdown of the main investment categories, the agency said bank deposits accounted for 25.8 percent of insurers' assets at the end of June, up from 24.4 percent at the end of 2007. The share of mutual funds fell to 6.9 percent, from 9.5 percent.

Source: Reuters