China Banking and Insurance Regulatory Commission adjusts insurers’ solvency risk factors for selected equity investments and export credit related business

The China Banking and Insurance Regulatory Commission issued a notice adjusting solvency risk factors for certain insurance company activities, introducing holding period based differentiation for specified equity holdings and revising risk factors applied to export credit insurance and related overseas investment insurance business. For investments in CSI 300 index constituents, CSI Dividend Low Volatility 100 index constituents, and STAR Market listed ordinary shares, the notice applies different risk factors by holding time, with adjustments made through changes to the characteristic coefficient K2 while keeping the base factors and characteristic coefficient K1 under the market risk minimum capital rules unchanged. Holding time is calculated at quarter end using a FIFO approach and a weighted average over the past four years (capped at four years); for STAR Market ordinary shares held for more than two years, the risk factor is set at 0.36. For export credit insurance and China Export & Credit Insurance Corporation’s overseas investment insurance business, the notice adjusts the premium and reserve risk base factors under the non life insurance risk minimum capital rules while keeping the relevant characteristic coefficients unchanged, and the solvency supervision information system will be updated accordingly.