February 14, 2017 / 3:42 AM / 5 months ago

UPDATE 1-China insurance sector's 2017 premium income growth to slow on tighter regulations

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BEIJING, Feb 14 (Reuters) - China's insurance industry premium income is expected to grow at a slower pace in 2017 due to tighter regulations, the country's top insurance regulator said on Tuesday.

Total premium income in 2016 rose 27.5 percent from a year earlier to 3.1 trillion yuan ($450.16 billion), marking the fastest pace of growth since 2008, Duan Haizhou, an official with the China Insurance Regulatory Commission (CIRC), said at a press conference in Beijing.

Total insurance industry assets stood at 15.12 trillion yuan at the end of 2016, representing a 22.3 percent increase from the start of the year.

The sector's rapid growth is likely to slow down this year as CIRC will impose tighter regulations for financial deleveraging and risk prevention, Duan said.

Authorities have rolled out a series of measures in recent weeks aimed at limiting risks in the industry, preventing asset-liabilities mismatches and speculative acquisitions.

The measures include the tightening of control over short- and mid-term life insurance products, the curbing of risks associated with property insurance products and the stepping up of compliance management for insurers.

In January, CIRC reimposed ceilings on funds that insurers can invest in the stock market, restricting equity investments to no more than 30 percent of total assets, while limiting investment in a single stock to no more than 5 percent of their total assets.

The insurance industry's investment income from the stock market and the fixed income market last year fell by 200 billion yuan from 2015 due to increased volatility, CIRC's Duan said.

Insurers' investment income yield was at 5.66 percent last year, Duan added. That compared with an average investment income yield of 7.56 percent in 2015.

The insurance industry's profit dropped by about 30 percent year on year to "close to" 200 billion yuan due to a low interest rate environment and capital market volatility, he said.

Duan didn't disclose the exact amount of the industry's investment income or profit. ($1 = 6.8864 Chinese yuan) (Reporting by Shu Zhang and Matthew Miller. Writing by Stella Qiu; Editing by Subhranshu Sahu)

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