On September 17, 2002, the CIRC promulgated the Provisions for the Establishment of Reinsurance Companies (Reinsurance Provisions), creating a legal regime for foreign investment in China's reinsurance sector. This liberalization is consistent with China's WTO commitment that all geographic or quantitative restrictions on reinsurance licenses issued to foreign insurers end as of the date of accession. The new provisions apply equally to foreign and Chinese reinsurance companies. A foreign-funded reinsurance company may be formed as an equity joint venture, WFOE or a branch of a foreign insurance company, subject to CIRC approval. Under the Reinsurance Provisions, reinsurance companies may be:
(i) a general reinsurance company, offering life and non-life reinsurance;
(ii) a life reinsurance company; or
(iii) a non-life reinsurance company.
Reinsurance companies may engage in inbound, outbound or international reinsurance services. Statutory reinsurance is not included within this list of permissible business operations. Life and non-life reinsurance companies (Chinese or foreign) are to have a RMB200 million (USD24 million) capitalization; general reinsurance companies (Chinese or foreign) are to have a RMB300 million (USD36 million) capitalization. Any capital contribution by a foreign investor is to be made in convertible currency. Pursuant to the Reinsurance Provisions, reinsurance companies are to employ CIRC-approved actuaries and establish actuarial evaluation systems.
Chinese shareholders in reinsurance companies are to be a profitable corporate legal person in good standing with net assets equal to at least 30% of the reinsurance company's assets. Investment in a reinsurance company is to be approved by the Chinese company's directors. The CCP, governmental organs, People's Liberation Army units, social organizations, and other non-business units that receive funds from the state treasury may not be shareholders of a reinsurance company. In addition, banks and securities companies may not invest in a reinsurance company, unless specifically permitted.