Regulations Governing Foreign Investments by Insurance Companies Article 11

For insurer's investment in real estates overseas and those in the Mainland China area, such investment shall be limited to those that have been legally utilized and have generated profits at the time of investment and shall be subject to the following restrictions:1. The ratio of total adjusted net capital to risk-based capital for the most recent period reaches the regulatory standard.2. There are no major sanctions and penalties for violations of the Act in relation to the usage of insurer’s funds in the most recent two years and there are no major violations of the internal control procedures governing various applications of funds in the most recent two years, or rectification of those violations has been carried out and affirmed by the competent authority.3. The board of directors shall establish a risk management committee or the company shall set up a risk management department and a chief risk officer in charge of overall risk management.Total amount of investment under the preceding paragraph may not exceed 1% of the insurer's funds nor 10% of its owners' equity. Notwithstanding the foregoing, in cases where an insurer’s ratio of total adjusted net capital to risk-based capital for the most recent period is above 125% of the regulatory standard, such total amount of investment may not exceed 2.5% of the insurer's funds nor 40% of its owners' equity; in cases where an insurer’s ratio of total adjusted net capital to risk-based capital for the most recent period is above 150% of the regulatory standard, such total amount of investment may not exceed 3% of the insurer's funds nor 40% of its owners' equity.The requirement that the real estate has been legally utilized and generated profits at the time of investment as set forth in paragraph 1 means that rent ratio is above 60% and meets the return on investment corresponding to the local economy.