Ceiling of investment by China's insurers in the domestic capital market will most likely be raised from the current five percent to 10 percent of their gross assets, sources close to industry watchdog revealed on Monday.

But the ceiling for private equity investment will remain unchanged, at 20 percent, the sources added.

Meanwhile, the insurance companies will be allowed to invest 10 percent of their gross assets in mutual funds (excluding money market funds), down from the current ceiling of 15 percent, according to the sources.

Data from China Insurance Regulatory Commission show that by the end of last year, Chinese insurers had pumped 92.9 billion yuan (US$12.2 billion) into stocks, a surge of 484.9 percent from the beginning of the year. They had invested 91.2 billion yuan in mutual funds, down 17.6 percent.

According to the industry regulator, by the end of March this year, outstanding amount of insurance assets used stood at 2.04 trillion yuan, of which 373.3 billion yuan, or 18.3 percent, was invested in stocks and mutual funds.

Chinese insurers began to step into the capital market in 2005, and by the end of the year, their capital in the market made up for only one percent of their total assets.

Last year, the industry regulator raised the investment ceiling to five percent.

(Xinhua News Agency July 17, 2007)