ICBC and Huatai Property Insurance Company of China Limited Signed Custody Agreement on Full Procedure and Full Amount of Insurance Fund

Recently, ICBC and Huatai Property Insurance Company of China Limited signed Custody Agreement on Full Procedure and Full Amount of Insurance Fund in Beijing. Mr. Yang Kaisheng, president of ICBC, attended the signing ceremony and delivered a speech there. This was the second insurance assets custody agreement that ICBC signed with Huatai Property Insurance Company of China Limited after signing the Insurance Shares Assets Custody Agreement last year, and was also the first custody agreement on full procedure and full amount of insurance fund signed in China.

According to the agreement, Huatai Insurance Company will centralize the management of all the insurance income from branch companies through ICBC Internet Banking system and Cash Management service. All working capitals (total assets fixed assets) the company will be placed in the custody of ICBC.

After two successive moves of starting shares assets custody last year and promoting custody on full amount of small-to-medium insurance companies this year by Insurance Regulatory Commission, signing of the agreement marked the third official move for insurance funds custody, a pilot in full procedural and full amount custody.

This was one major reform item in insurance fund operation system. Therefore, both Insurance Regulatory Commission and Banking Regulatory Commission placed their regards highly on this move. Mr. Wu Xiaoping, Deputy Chairman of Insurance Regulatory Commission and Mr. Che Yingxin, Chairman Assistant of Banking Regulatory Commission, attended the signing ceremony and delivered speeches respectively.

Leaders from Fund Operation Supervisory Department of Insurance Regulatory Commission and First Banking Supervisory Department of Banking Regulatory Commission also presented at the ceremony.

Custody on full procedure and full amount refers to a kind of insurance assets custody, of which insurance companies consolidate all funds in levels, open individual accounts according to different insurance products, consolidate all funds in levels and custody all assets to commercial bank from insurance collection till the end of insurance fund investment and payment of insurance. It will fundamentally change the fund management method in insurance industry and pose significant impact to the cooperation mode between commercial bank and insurance company as well.

Establishment of fully custody system is not only a practical move in the reform of insurance fund management system, but also an internal need to complete the internal control mechanism in insurance companies. It is a choice bound to improve the supervision way of the industry. Implementation of such custody system will promote steady, sustainable, healthy and rapid growth of the insurance industry and produce real drastic influences and far-reaching strategic meanings.

This completely new management mechanism helps insurance companies to complete their fund consolidation and management system. It controls the risk in operating the fund right from the beginning and establishes the mutual balance of control and mutual monitoring among trustor, trustee and custodian.

It helps trustor to dutifully fulfill the role of strategic configuration for commissioned assets, helps trustee to standardize the management of investment of commissioned assets and helps custodian to strictly follow the supervisory system of insurance assets custody. Meanwhile, the implementation of full custody system will also promote the business cooperation and technical exchanges between insurance and banking industries and hasten the development of intermediary services of commercial banks.