CHINA may further expand the investment options of domestic insurers by allowing them to use yuan raised overseas to invest in the domestic capital market.

Securities and insurance regulators are discussing plans to allow the Hong Kong subsidiaries of Chinese mainland-based insurers to participate in the Renminbi Qualified Foreign Institutional Investors program, which is now only open to fund houses and brokerages, Shanghai Securities News reported yesterday, citing unidentified authorities.

The RQFII program, which started in December, is the only channel for overseas investors to use yuan raised offshore to trade mainland stocks and bonds.

The quota for the first group of insurers may be limited, but it will expand their investment options and returns, the report said.

The mainland's biggest insurers, including China Life Insurance Co, Ping An Insurance Co and China Pacific Insurance Co, already operate asset management units in Hong Kong.

Domestic insurers and brokerages will also be allowed to take each other's business. Insurers' asset management units will be allowed to manage mutual funds after gaining approval from authorities while brokerages will be allowed to manage premium income for insurers, the report said.

The plan is part of the China Securities Regulatory Commission's recent moves in expanding investment options and increasing competitiveness for insurers.

Insurance firms have suffered losses recently from the weak domestic stock market and the inability to launch more products due to capital limits.

Chinese insurers may be allowed to invest in 13 more financial products, including derivatives, asset-backed securities, bank wealth management products and trusts, analysts said last week, citing a document the insurance regulator had circulated for feedback.