China to Inject $54 Billion into State-Owned Insurers and Banks

China’s finance ministry said on Sunday it will inject a combined $54 billion into state-owned insurers and banks, as Beijing moves to reinforce capital strength across the financial system.

According to statements from the two companies, China Life Insurance (Group) Co, the country’s largest life insurer, is set to receive 35 billion yuan ($5.2 billion), while China Taiping Insurance Group will receive 7 billion yuan.

People’s Insurance Company (Group) of China (SSE:601319) announced plans to raise up to 15 billion yuan through a private placement of A-shares to the Ministry of Finance, saying the proceeds would be used to replenish its capital.

China Export and Credit Insurance Corp said the finance ministry would inject 10 billion yuan to strengthen its core capital, while China Reinsurance (Group) said it would raise 3 billion yuan.

The capital injection could assist state insurers that were instructed to channel medium- and long-term funds into the stock market, and would position them to help regulators manage smaller, higher-risk insurance companies.

The insurance industry has faced eroding profitability as a result of persistently low interest rates, and numerous small and mid-sized insurers have reported worsening solvency ratios.

China Life said in a statement that the injection was an important national step toward improving the financial sector’s ability to serve the real economy and fostering high-quality development of finance and insurance, adding that it would strengthen the group’s ability to withstand risks.

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