On March 25, the China Banking and Insurance Regulatory Commission officially issued the "Interim Measures for the Administration of Insurance Asset Management Products" (hereinafter referred to as the "Measures"), which include clarifying product positioning and form, product issuance mechanism, consolidating product issuer responsibilities, and implementing penetrating supervision.

In other aspects, regulatory measures for insurance asset management products have been clarified.

The China Banking and Insurance Regulatory Commission pointed out that insurance asset management products have long maturities, low leverage ratios, and basically do not have problems such as multi-layer nesting and capital pools.

However, various types of insurance asset management products lack unified institutional arrangements, and there are differences between the regulatory rules and standards for the asset management business of other financial institutions.

The "Measures" are issued this time under the guidance of the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" to unify the rules for insurance asset management products, further fill the regulatory gaps, fill in the regulatory shortcomings, strengthen business supervision, and promote the insurance asset management industry.

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The content of the document shows that the "Measures" will come into effect on May 1, 2020. Insurance asset management institutions are required to formulate rectification plans for products that do not meet the current requirements before the end of 2020, and submit them to the China Banking and Insurance Regulatory Commission for approval before implementation.

In the future, the China Banking and Insurance Regulatory Commission will gradually introduce detailed requirements for debt investment plans, equity investment plans and portfolio insurance asset management products to form a "1+3" supporting management measures.

Overall, the "Measures" contains eight chapters and sixty-six articles, including general principles, product parties, product issuance, existence and termination, product investment and management, information disclosure and reporting, risk management, supervision and management, and supplementary provisions.

Standardized management shall be carried out by adhering to the private equity positioning of insurance asset management products, adhering to the bottom-line thinking of strictly controlling risks, adhering to the mid- to long-term characteristics of insurance asset management products, and adhering to the principle of combining principle orientation and rule refinement.

As early as November 2019, the China Banking and Insurance Regulatory Commission publicly solicited opinions from the public on the "Measures" (Draft for Comments).

Compared with the consultation draft, the Measures have added exclusion clauses in terms of nested requirements. There are two main changes: In terms of investor qualifications, basic pensions, social security funds, enterprise annuities, etc. are explicitly stated as product investors.

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According to the China Banking and Insurance Regulatory Commission, as of the end of 2019, the balance of insurance asset management products was 2.76 trillion yuan, including 1.27 trillion yuan of debt investment plans, 0.12 trillion yuan of equity investment plans, and 1.37 trillion yuan of portfolio insurance asset management products.

Debt investment plans and equity investment plans are mainly invested in infrastructure projects such as transportation, energy, and water conservancy, and have become important tools for long-term funds such as insurance funds to connect with the real economy. Basic pensions, social security funds, corporate annuities, etc. are explicitly stated as product investors.

Better reflect the orientation of insurance asset management products to serve long-term funds.

In terms of agency sales agencies, in addition to insurance asset management companies' own sales, the "banking and insurance institutions" that can be entrusted will be expanded to "qualified financial institutions and other institutions recognized by the China Banking and Insurance Regulatory Commission", appropriately broadening the scope of agency sales agencies.

The China Banking and Insurance Regulatory Commission said this move reserved space for subsequent business development.

In conjunction with this, the "Measures" also deleted "Investors should open accounts in their own names in the unified account system established by the registration and trading platform."

At present, insurance asset management products are mainly sold by themselves. If institutions such as banks, funds, trusts and even insurance intermediaries are extended to participate in agency sales, the establishment of sales channels and the management of sales behavior will become problems that need to be faced directly.

The "Measures" require that insurance asset management institutions and agency sales agencies should be honest, trustworthy, diligent and responsible, prevent conflicts of interest, perform explanation obligations, anti-money laundering obligations and other related obligations, and undertake investor suitability review, product promotion and qualified investor confirmation, etc.

related responsibilities.

In 2018, the new large asset management regulations "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" were officially released, providing unified guidance for the formulation of asset management measures in various subdivisions.

The more typical ones are breaking the rigid redemption and strictly controlling non-standard investment risks.

In the "Measures", the management of insurance asset management products strictly abides by the new regulations on large asset management, does not promise capital-guaranteed returns, and strictly controls the 35% upper limit for non-standard investments.

Article 7 of the "Measures" stipulates that insurance asset management institutions carrying out insurance asset management product business shall strengthen investor suitability management, fully disclose information and risks to investors, and shall not promise to guarantee principal or return.

The so-called appropriateness means that the customer's financial status, risk tolerance, investment objectives, etc. must match the financial products or services.

This not only requires insurance asset management institutions to break from rigid redemptions, but also to demonstrate risks to investors in advance.

Once investors make a decision, they are responsible for the results of their profits and losses, which places higher demands on both parties.

Similarly, the new regulations on large asset management also set an upper limit for non-standard investment ratios that "should not exceed 35% of the net assets of all asset management plans managed by the securities and futures operating institution."

Article 31 of the "Measures" stipulates that the balance of all portfolio products managed by the same insurance asset management institution invested in non-standardized debt assets shall not exceed 35% of the net assets of all portfolio products managed by it at any point in time.