January 22, 2018 / 9:27 AM / a year ago

UPDATE 1-China insurers' 2017 universal life insurance funds halve amid crackdown

* Chinese insurers’ 2017 universal life insurance funds fall 50.3 pct

* Total premium income up 18 pct on-year vs 27.5 pct in 2016

* CIRC pledges to continue regulatory scrutiny (Recast, adds details)

BEIJING, Jan 22 (Reuters) - China’s universal life insurance fund assets dropped 50.3 percent in 2017 from a year earlier, the insurance regulator said on Monday, after a crackdown on financial risks led to a slower pace of growth.

The decline comes as authorities intensify a widespread crackdown on risks and foul play in the sector, from the use of short-term high-yield life insurance funds to finance long-term projects to executive corruption.

Universal life insurance funds fell 50.3 percent in 2017 to 636.3 billion yuan, said the regulator.

A handful of insurance firms, which have issued higher-yielding products such as universal life insurance to raise funds to acquire stakes in market-listed companies, were punished last year.

The China Insurance Regulatory Commission (CIRC) has pledged to focus on equity ownership, capital and investment, adding that it will take three years to resolve risks in the insurance industry.

Total premium income for China’s insurance industry rose 18 percent in 2017 to 3.66 trillion yuan ($571.33 billion), the CIRC also said on Monday.

This compares to an increase of 27.5 percent in 2016 from a year earlier.

Total assets for the insurance sector were at 16.75 trillion yuan at the end of December, up 10.8 percent for the year, CIRC said in a press release.

The regulator also said total investment income in 2017 reached 835.2 billion yuan, up 18.12 percent on-year, while the investment yield was 5.77 percent, rising 1.11 percentage points from 2016.

The insurance industry’s total profit hit 256.7 billion yuan in 2017, up almost 30 percent on-year. Return on stock investment in 2017 hit 118.4 billion yuan, up 355.5 percent, while return on bonds reached 208.7 billion yuan over the same period, up 11.07 percent on-year.

$1 = 6.4061 Chinese yuan Reporting by Shu Zhang and Matthew Miller in Beijing; Writing by Engen Tham in Shanghai; Editing by Shri Navaratnam and Sam Holmes

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