Several Chinese insurers have already begun their studies and preparations before joining the debt-to-equity swap programs at home, said a report of China Securities Journal on Wednesday.
Early this week, a circular was jointly released by the National Development and Reform Commission, the People’s Bank of China, the Ministry of Finance, the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission, which encouraged Chinese insurers to set up special entities tasked with investing in debt-to-equity swap programs at home.
Funds from the insurance sector can be an important source of financing in the efforts to handle non-performing assets, according to Zhu Junsheng, a researcher with the Development Research Center of the State Council.
The debt maturity in insurance agencies, especially life insurance companies, is long and fits with the handling of non-performing assets, which also take an extended period to complete, he said.
Studies and preparations had already begun in a number of insurance companies, said several insurance professionals.
Large insurers are likely to take the initiative by setting up special agencies or private equity funds to participate in these programs, while the small and medium-sized ones may get involved by investing in such funds or purchasing related securitized assets, said Li Qian, a senior analyst of Golden Credit Rating International Co., Ltd.
She also expected that due to a lack of related governing and operating experience, insurers would be treading cautiously at the early stage of their operations in the debt-to-equity swap market.
Currently, China’s debt-to-equity swap market is dominated by commercial banks, seeing the participation of only two Chinese insurers, namely China Life Insurance (Group) Company and China Pacific Insurance(group) Co., Ltd.
As of now, China Life Insurance (Group) Company has joined five debt-to-equity swap projects worth a total of 50 billion yuan (7.2 billion U.S. dollars).
Early this week, a circular was jointly released by the National Development and Reform Commission, the People’s Bank of China, the Ministry of Finance, the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission, which encouraged Chinese insurers to set up special entities tasked with investing in debt-to-equity swap programs at home.
Funds from the insurance sector can be an important source of financing in the efforts to handle non-performing assets, according to Zhu Junsheng, a researcher with the Development Research Center of the State Council.
The debt maturity in insurance agencies, especially life insurance companies, is long and fits with the handling of non-performing assets, which also take an extended period to complete, he said.
Studies and preparations had already begun in a number of insurance companies, said several insurance professionals.
Large insurers are likely to take the initiative by setting up special agencies or private equity funds to participate in these programs, while the small and medium-sized ones may get involved by investing in such funds or purchasing related securitized assets, said Li Qian, a senior analyst of Golden Credit Rating International Co., Ltd.
She also expected that due to a lack of related governing and operating experience, insurers would be treading cautiously at the early stage of their operations in the debt-to-equity swap market.
Currently, China’s debt-to-equity swap market is dominated by commercial banks, seeing the participation of only two Chinese insurers, namely China Life Insurance (Group) Company and China Pacific Insurance(group) Co., Ltd.
As of now, China Life Insurance (Group) Company has joined five debt-to-equity swap projects worth a total of 50 billion yuan (7.2 billion U.S. dollars).
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