THE chairman of China’s insurance regulator said Tuesday that domestic insurers should be long-term money providers and not short-term capital market “savages,” according to a notice posted on the regulator’s website.

    The China Insurance Regulatory Commission (CIRC) has been trying to reduce risks from insurers investing in stocks and long-term assets using short-term funds that could lead to a sudden tightening of liquidity in the event of market volatility.

    “Becoming a friendly player in capital markets should not allow insurers to become hateful savages, and also should not allow insurance capital to become a nightmare for capital markets,” said Xiang Junbo, chairman of the CIRC.

    On-site inspection should be strengthened, especially in relation to insurance firms who have a “quick-buy, quick-sell” attitude to stock investment, Xiang added.

    The CIRC must strengthen asset and liability matching regulation, said Xiang.

    Last Monday, China’s blue-chip index posted its biggest drop in six months after the top securities regulator warned against “barbaric” share acquisitions.

    Domestic media Caixin reported Tuesday that the CIRC will soon announce new rules to tighten control over insurance companies’ stock market investment activities.

    Without specifying its source of information, Caixin said that the insurance regulator is expected to publish a new notice that will, for the first time, set some boundaries for insurers’ parties acting in concert when they acquire public firms.

    The CIRC’s new rules will require insurers’ parties acting in concert to apply for regulatory approval before acquiring listed companies and their purchases must be funded by their own capital, according to the Caixin report.

    The regulator will also ban insurance firms from acquiring public firms in concert with any non-insurance parties, according to the report.

    The move comes amid an intensifying regulatory crackdown on risky activities by some aggressive players in the insurance sector, particularly those seen to be engaging in financial market speculation using expensive short-term funds. (SD-Agencies)