The China Insurance Regulatory Commission will allow insurers to invest in privately held companies to diversify risk, Bloomberg reported. The policy will allow insurers to hold direct stakes in private companies as well as invest in their property assets. Insurers are seeking alternative routes to higher returns given the poor performance of the stock market. China Life Insurance (LFC.NYSE, 601628.SH, 2628.HK) lost 50% on its portfolio in the first half of 2010. The benchmark Shanghai Composite Index has dropped 19% this year, driven downward by fears that Beijing’s crackdown on real estate speculation will slow growth. The new policy therefore has a caveat: Insurers cannot invest in commercial property or be directly involved in real estate development. Nor can they buy stakes in venture capital firms, or firms involved in polluting or energy-intensive industries.
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