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China Shadow-Bank Risks Prompt Push for Insurer Buffers

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China’s Premier Li Keqiang has told the world’s fastest-growing major insurance industry to boost capital as rating companies warn of shadow-banking investments.

Policy providers will need cushions commensurate with their risks rather than just size, the industry regulator said Feb. 17 without specifying an implementation date. That will encourage sales of securities that count behind regular bonds in a default, under rules formulated in Basel, Switzerland similar to those governing banks. Presaging such offerings, China Taiping Insurance Holdings Co. sold $600 million of 5.45 percent subordinated perpetual notes in September.