Chapter I General Provisions

Article 1 To regulate and develop the reinsurance market, strengthen the administration of the reinsurance business, and realize the sound, coordinated, and sustainable development of the insurance sector, these Provisions are developed in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the “Insurance Law”), the Regulation of the People's Republic of China on the Administration of Foreign-Funded Insurance Companies, and other relevant laws and administrative regulations.

Article 2 For the purposes of these Provisions, “reinsurance” means an insurer's operations of transferring part of its underwritten insurance business to another insurer;

For the purposes of these Provisions, “direct insurance,” also known as primary insurance, means insurance where an insurance applicant directly enters into an insurance contract with an insurer, relative to reinsurance.

For the purposes of these Provisions, “retrocession” means a reinsurer's operations of transferring any insurance business ceded to it to another insurer.

For the purposes of these Provisions, “treaty reinsurance” means an insurer's operations of reinsuring part of its underwritten insurance business within a certain period with another insurer by entering into a contract with the other insurer in advance.

For the purposes of these Provisions, “facultative reinsurance” means an insurer's operations of reinsuring part of its underwritten insurance business with another insurer by temporarily agreeing with the other insurer.

For the purposes of these Provisions, “proportional reinsurance” means the manner of reinsurance in which the retention of the cedant and the reinsured amount of the reinsurer are determined on the basis of the insured amount.

For the purposes of these Provisions, “non-proportional reinsurance” means the manner of reinsurance in which the liability assumed by the cedant itself and the reinsurance liability of the reinsurer are determined on the basis of the amount of indemnity.

Article 3 For the purposes of these Provisions, “cedant” means an insurer which transfers part of its underwritten insurance business to another insurer; and “reinsurer” means an insurer which underwrites the insurance business transferred from another insurer.

For the purposes of these Provisions, “outward business” means the insurance business which is ceded by a cedant; and “inward business” means the ceded insurance business which is accepted by a reinsurer.

For the purposes of these Provisions, “direct insurance company,” also known as primary insurance company, relative to reinsurer, means an insurer which directly enters into an insurance contract with an insurance applicant.

For the purposes of these Provisions, “insurance syndicate” means an organization comprising two or more insurers which jointly engage in insurance business in accordance with the constitution of the organization, as formed in order to handle some special risks or any insurance business with a huge amount which cannot be undertaken by a single insurer or is formed pursuant to international practices.

For the purposes of these Provisions, “insurance broker” means an insurance brokerage institution which provides intermediary services for a cedant and a reinsurer to conduct reinsurance business as authorized by and for the benefit of the cedant and charges a commission as agreed upon.

Article 4 Insurers, insurance syndicates, insurance brokers, and other insurance institutions formed within the territory of the People's Republic of China (excluding Hong Kong, Macao, and Taiwan) shall comply with these Provisions in conducting the reinsurance business.

Article 5 Insurers, insurance syndicates, and insurance brokers shall adhere to the principle of prudence and utmost good faith in conducting the reinsurance business.

Article 6 Cedants, reinsurers, and insurance brokers shall have the obligation to keep confidential the trade secrets to which they have access in conducting the reinsurance business.

Article 7 The China Insurance Regulatory Commission (hereinafter referred to as the “CIRC”) shall encourage insurers, insurance syndicates, and insurance brokers to actively provide insurance and reinsurance services for agricultural insurance and insurance against earthquake, typhoon, flood, and other catastrophes.

Article 8 The CIRC shall supervise and administer the reinsurance business according to the law.

Chapter II Reinsurance Operations

Article 9 The reinsurance business shall be divided into life reinsurance and non-life reinsurance. An insurer shall maintain separate accounts and conduct separate accounting for life reinsurance and non-life reinsurance.

Article 10 An insurer shall, in accordance with the Insurance Law, determine its total premium retained and its retained liability for each risk unit for the current year; and the excess shall be reinsured.

Article 11 Except for aerospace insurance, nuclear insurance, petroleum insurance, and credit insurance, a direct insurance company shall comply with the following provisions in conducting treaty reinsurance or facultative reinsurance:

(1) Where any direct property insurance business is ceded in the manner of proportional reinsurance, the proportion of business ceded to a reinsurer for each risk unit shall not exceed 80% of the insured amount or the limit of liability in the direct insurance contract underwritten by the cedant.

(2) The insured amount or the limit of liability ceded by a facultative reinsurance contract to an enterprise affiliated to the insurance applicant shall not exceed 20% of the insured amount or the limit of liability of the direct insurance business.

Article 12 An insurer shall classify risk units according to the relevant provisions issued by the CIRC, and report the risk unit classification methods to the CIRC before March 31 each year for recordation.

Article 13 An insurer shall, according to the actual circumstances, arrange catastrophe reinsurance scientifically and rationally, and report its catastrophe risk arrangement plan to the CIRC before June 30 each year.

Article 14 An insurer shall conduct reinsurance according to the provisions issued by the CIRC, and prudently select a reinsurer according to the relevant provisions issued by the CIRC.

Article 15 A cedant shall inform in writing a reinsurer of the important information affecting reinsurance pricing and ceding conditions. After a reinsurance contract is formed, the cedant shall, in a timely manner, provide the reinsurer with information which has a significant impact on the reinsurer’s creation of reserves and expected payment of claims such as information on major claims and claim reserves.

Article 16 An insurer and an insurance broker may develop and design new types of risk transfer products by utilizing financial instruments. An insurer shall report to the CIRC according to the relevant provisions.

Article 17 A professional reinsurer within China shall be staffed with full-time reinsurance underwriters and reinsurance claim adjusters who are domiciled within China.

Chapter III Reinsurance Brokerage Business

Article 18 No insurance broker shall engage in any reinsurance brokerage business detrimental to the credit and lawful rights and interests of an insurer.

Article 19 An insurance broker may, according to its business needs, introduce or design a reinsurance contract.

Article 20 An insurance broker shall, as agreed upon with a cedant, send account statements, settle reinsurance payments, and perform other obligations in a timely manner, and shall not embezzle or withhold reinsurance premiums, recovered claims, recovered commissions, and recovered expenses.

An insurance broker shall in a timely and accurate manner, inform the cedant of the relevant reinsurer information.

Article 21 At the request of a reinsurer, an insurance broker shall, as agreed upon with the cedant, inform in writing the reinsurer of the liability retained by the cedant and the relevant direct insurance information known by the insurance broker.

Article 22 At the request of a cedant or a reinsurer, an insurance broker shall cooperate in the settlement of claims according to the contractual provisions.

Chapter IV Supervision and Administration

Article 23 A foreign-funded insurance company shall submit the following materials to the CIRC on a regular basis:

(1) Where the foreign-funded insurance company enters into a treaty reinsurance contract with any enterprise affiliated to it, it shall, within one month after the contract takes effect, submit to the CIRC a slip of the reinsurance contract; and, within one month after the end of each quarter, submit to the CIRC a slip of any effective facultative reinsurance contract entered into in the prior quarter by it with any enterprise affiliated to it.

(2) The foreign-funded insurance company shall separately collect statistics on its reinsurance transactions with each enterprise affiliated to it, and submit the relevant materials according to the requirements of the CIRC.

Article 24 In conducting the reinsurance business, an insurer shall assess various reserves according to the actuarial theory and methods, and accurately and fully maintain and carry over various reserves according to the relevant provisions issued by the CIRC.

For the same life insurance business, under the statutory liability reserves, the reinsurer and cedant shall adopt consistent assessment methods and assumptions in assessing the reserves.

Article 25 The content involving the reinsurance business of the solvency report of an insurer shall satisfy the requirements of the rules for the preparation of solvency reports of insurance companies.

Article 26 The solvency status of a branch of a foreign reinsurance company shall be determined according to the solvency status of the foreign reinsurance company.

The premiums retained by a branch of a foreign reinsurance company shall be subject to a quota directly authorized by the foreign reinsurance company.

Article 27 A direct insurance company shall submit the following materials to the CIRC before April 30 each year:

(1) Where any direct property insurance business is ceded in the manner of proportional reinsurance, except for aerospace insurance, nuclear insurance, petroleum insurance, and credit insurance, if the company conducts treaty reinsurance and facultative reinsurance in the prior fiscal year, it shall submit information on its transactions in which the business ceded to the same reinsurer for each risk unit exceeds 50% of the insured amount or the limit of liability in the direct insurance contract underwritten by the cedant.

(2) For treaties signed after April 30 in treaty reinsurance of the current fiscal year, it shall submit the following materials within one month after a treaty takes effect:

(a) The name and period of validity of the treaty.

(b) Information on renewal or a new treaty.

(c) Photocopies of the text of the reinsurance treaty. However, for a personal insurance company, only photocopies of the text of a new or modified reinsurance treaty are required.

(d) Information on direct outward business: the names (indicating the principal reinsurer or the reinsurer accepting the largest share), shares, capital, capital reserves, and credit ratings of the reinsurers as well as the countries or regions where the contracting reinsurers are located.

(e) Information on broker arrangements: the name and share of a broker, the country or region where the broker is located, and the information on the reinsurers to which the business is ceded through the broker, including the names (indicating the principal reinsurer or the reinsurer accepting the largest share), shares, capital, capital reserves, and credit ratings of the reinsurers as well as the countries or regions where the contracting reinsurers are located.

(3) The maximum net retained lines for each risk unit in the prior and current fiscal years, if it is a property insurance company.

(4) The changes in the reinsurance arrangements in the current fiscal year, if it is a property insurance company or a personal insurance company, mainly including the increase or decrease of reinsurance treaties and changes of the principal reinsurer or the reinsurer accepting the largest share of treaty reinsurance.

Article 28 A property insurance company shall establish a regular reinsurance information reporting system, and report the relevant information for the prior quarter to the CIRC within one week after the end of each quarter according to the relevant provisions issued by the CIRC.

Article 29 An insurance company shall, before April 30 each year, submit the following reports to the CIRC:

(1) Information on its reinsurance operations in the prior fiscal year, which is presented mainly from the inward and outward aspects in terms of scale of reinsurance business, commissions and recovery, and indemnities and recovery, among others.

(2) The methods for maintaining, and the amounts of, various reserves involving the reinsurance business, which are endorsed by the chief actuary or the person in charge of actuarial affairs.

Article 30 A direct insurance company shall report, in a timely manner, any major insurance claim and major adjustment of its reinsurance arrangements and reinsurance policies, among others, to the CIRC.

“Major insurance claim” as mentioned in the preceding paragraph means an insurance claim involving compensation for property losses of 50 million yuan or more or compensation for human casualties of 30 million yuan or more in a single insurance accident.

Article 31 A branch of a foreign reinsurance company shall submit the relevant reports to the CIRC according to the following requirements:

(1) Before July 31 each year, submitting an opinion on the solvency status or operation status of the foreign reinsurance company, which is issued by the insurance regulatory authority at the place of registration of the foreign reinsurance company according to the local laws.

(2) Before December 31 each year, submitting a report on its underwriting power and amount of retained premiums for the next year as authorized by the foreign reinsurance company.

(3) Before January 31 and July 31 respectively each year, submitting a report on its retrocession business, including but not limited to the name of the inward company in retrocession, business type, form of contract, ceded premiums, recovered claims, and recovered commissions.

Article 32 An insurance syndicate shall, before April 30 each year, submit to the CIRC a financial report, a business analysis report, and information on overseas reinsurance transactions for the prior year.

Chapter V Legal Liability

Article 33 Where an insurance company or insurance broker conducts any outward business of reinsurance in violation of these Provisions, the CIRC shall order it to take corrective action and impose a fine of not less than 50,000 yuan nor more than 300,000 yuan on it; and if the circumstances are serious, may restrict its scope of business, order it to stop accepting new business, or revoke its insurance business permit.

The CIRC shall issue a warning to and impose a fine of not less than 10,000 yuan nor more than 100,000 yuan on the supervising executive directly liable for a violation of these Provisions in conducting reinsurance business or any other directly liable person; and if the circumstances are serious, shall disqualify him or her from holding the corresponding office or practicing in the relevant sector, and may prohibit a relevant liable person from access to the insurance sector for a certain period or even for life.

Chapter VI Supplemental Provisions

Article 34 These Provisions shall apply, mutatis mutandis, to policy-based insurance companies conducting the reinsurance business. If these Provisions cannot be applied, a policy-based insurance company shall submit a relevant report to the CIRC within three months.

Article 35 These Provisions shall be subject to interpretation by the CIRC.

Article 36 These Provisions shall come into force on July 1, 2010, upon which the Provisions on the Administration of the Reinsurance Business (No. 2 [2005] of the CIRC) issued by the CIRC on October 14, 2005, shall be repealed.

The English translation is provided by the China Insurance Regulatory Commission and may only be used as a reference. In case a different interpretation arises, the original Chinese shall prevail.