HONG KONG - China has told top state insurers to perform urgent checks on their exposure to Russia and Ukraine, as concerns swirl about the damage to the two economies amid intense fighting, according to two sources and documents seen by Reuters.
The move was also triggered by sweeping sanctions that have been imposed by many countries on Russia, the sources said, after its invasion of Ukraine last Thursday in the biggest attack on a European state since World War Two.
At least two large state-owned insurance firms have been asked by regulators to conduct internal checks on their business and investment portfolios' exposure to Russia and Ukraine, said the sources.
The development underscores Beijing's efforts behind the scenes to minimise risk to its own institutions even as it continues to maintain strong trade ties with Russia in the face of crippling sanctions imposed by the West on that country.
Western governments and others are shutting off Russia's economy from the global financial system, pushing international companies to halt sales, cut ties and dump tens of billions of dollars' worth of investments.
China, the world's second-largest economy, has repeatedly voiced opposition to the sanctions, calling them ineffective and insisting it will maintain normal economic and trade exchanges with Russia.
It was not immediately clear what action Beijing will take after the insurance companies have performed the reviews.
One of the regulatory authorities has asked a state-owned insurer to "urgently" check and report projects "involved in dealings between Ukraine and Russia", one of the sources with knowledge of the directive told Reuters.
Another insurance company received an urgent request from its regulator this week to check the firm's exposure to the two countries and submit a report by Friday, according to the second person familiar with the matter and documents seen by Reuters.
The insurer has been asked to report its business and investments in Russia and also in Belarus, gauge the impact of the sanctions, and submit their contingency plan in response to those developments, as per the source and the documents.
The China Banking and Insurance Regulatory Commission and the State-owned Assets Supervision and Administration Commission, the central body that oversees China's state sector, did not respond to Reuters requests for comment.
State-owned China Life Insurance, China Pacific Insurance Group, and People's Insurance Company Group of China are among the biggest in the country with each owning hundreds of billions of dollars in assets.
The three insurers did not respond to Reuters request for comment on their Russia or Ukraine business interests.
Another state-owned firm, PICC Property and Casualty Co Ltd , said on Monday it only undertook insurance business from some Chinese companies with assets in Russia and Ukraine, the scale of which was small.
PICC P&C is one of the eight Chinese financial institutions with operations in Russia, according to a list on the website of Embassy of China in Russia.
The scope of the review by insurers, according to the first source, also covers projects in the two breakaway regions in eastern Ukraine, Donetsk and Luhansk - collectively known as the Donbass - and their ties with Russian entities or individuals.
State insurers' exposure to debts of Russian state-owned enterprises or sovereign debt, and sensitive industries such as oil and gas, coal mining or processing should also be reported, said the source.
Facing the toughest sanctions it has ever received, Russia has temporarily stopped foreign investors from selling Russian assets from this week, as it scrambles to respond to increasingly harsh sanctions.
Offshore investment by Chinese insurers is small at less than 3%, according to the Insurance Asset Management Association of China, but it has been growing rapidly. An official survey in last June showed offshore investment in 2020 rose 38% from a year before.
(Reporting by Xie Yu and Selena Li in Hong Kong; Editing by Sumeet Chatterjee and Kim Coghill)