Business insurance

China asks public insurers to review their exposure to Russia and Ukraine

(Reuters) – China has asked major state insurers to carry out urgent checks on their exposure to Russia and Ukraine amid concerns over damage to both economies amid intense fighting, according to two sources and documents seen by Reuters.

The move was also prompted by sweeping sanctions imposed by many countries on Russia, the sources said, after its invasion of Ukraine last Thursday in the biggest attack on a European state since World War II.

At least two large state-owned insurance companies have been asked by regulators to carry out internal checks on the exposure of their business and investment portfolios to Russia and Ukraine, the sources said.

The development underscores Beijing’s behind-the-scenes efforts to minimize risks to its own institutions even as it continues to maintain strong trade ties with Russia in the face of crippling Western sanctions on that country.

Western governments and others are cutting off the Russian economy from the global financial system, prompting international companies to suspend sales, sever ties and dump tens of billions of dollars in investments.

China, the world’s second-largest economy, has repeatedly voiced its opposition to the sanctions, calling them ineffective and insisting it will maintain normal economic and trade exchanges with Russia.

It was not immediately clear what action Beijing would take after the insurance companies carried out the examinations.

One of the regulators has asked a public insurer to ‘urgently’ verify and report projects ‘involved in Ukraine-Russia relations’, one of the sources with knowledge told Reuters. of the guideline.

Another insurance company this week received an urgent request from its regulator to verify the company’s exposure to both countries and submit a report by Friday, according to the second person familiar with the matter and documents seen by Reuters .

The insurer has been asked to report on its activities and investments in Russia as well as in Belarus, to assess the impact of the sanctions and to submit its contingency plan in response to these developments, in accordance with the source and to documents.

The China Banking and Insurance Regulatory Commission and the Public Assets Supervision and Administration Commission, the central body that oversees China’s public sector, did not respond to Reuters requests for comment.

State-owned companies China Life Insurance, China Pacific Insurance Group and People’s Insurance Company Group of China are among the largest in the country, each with hundreds of billions of dollars in assets.

The three insurers did not respond to Reuters’ request for comment on their business interests in Russia or Ukraine.

Another state-owned company, PICC Property and Casualty Co Ltd., said on Monday that it only provides insurance business to certain Chinese companies with assets in Russia and Ukraine, the scale of which is small. .

PICC P&C is one of eight Chinese financial institutions operating in Russia, according to a list published on the website of the Chinese Embassy in Russia.

The scope of the review by the insurers, according to the first source, also covers projects in the two breakaway regions of eastern Ukraine, Donetsk and Lugansk – collectively known as Donbass – and their links to Russian entities or individuals.

Public insurers’ exposure to Russian state-owned enterprise debt or sovereign debt, and to sensitive industries such as oil and gas, coal mining or processing should also be flagged, the source said.

Facing the toughest sanctions it has ever received, Russia has temporarily barred foreign investors from selling Russian assets starting this week as it struggles to respond to increasingly tough sanctions.

Offshore investment by Chinese insurers is low at less than 3%, according to the Insurance Asset Management Association of China, but it has grown rapidly. An official survey last June showed that offshore investments in 2020 increased by 38% compared to the previous year.