Circular of the China Insurance Regulatory Commission on Issues concerning the Implementation of the Monitoring of Insurance Companies by Category

Circular of the China Insurance Regulatory Commission on Issues concerning the Implementation of the Monitoring of Insurance Companies by Category

Bao Jian Fa [2008] No.120

December 30, 2008

To all insurance companies, insurance company preparatory teams and all local CIRC offices,

In order to implement science-based development, enhance the scientific nature, pertinence and effectiveness of insurance supervision and effectively take precautions against and resolve risks, the China Insurance Regulatory Commission (CIRC) has amended and improved the existing insurance regulatory regime by category. The revised system for monitoring insurance companies by category shall be formally implemented as of 1 January 2009. The CIRC shall conduct an evaluation of the classification for insurance companies for the first time based on these companies' information in late 2008. We hereby notify you of the relevant matters as follows:

I. Company Categories
According to the comprehensive level of risk, insurance companies are divided into A, B, C, D four categories by the CIRC;
Category A refers to the company found no problems in such areas as company solvency, corporate governance, the use of funds and market acts, etc.
Category B refers to that the company's solvency meets the requirement, but there is a certain risk in such areas as corporate governance, the use of funds and market acts, etc., of the company.
Category C means the company is non-compliance with solvency requirement, or there exists a greater risk in such areas as corporate governance, the use of funds and market acts, etc., of the company.
Category D means the company is non-compliance with solvency requirement significantly or there exist a serious risk in at least one of such areas as corporate governance, the use of funds and market acts, etc., of the company.

II.
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