Chinese language - Insurers' securities investment rises 53%

BIZCHINA / Center

Insurers' securities investment rises 53%

(South China Morning Post)
Updated: 2007-06-29 15:11

Cashed-up mainland insurers increased their investment in bonds and
equities by 53 per cent to 1.5 trillion yuan in the first five months of
the year, targeting higher returns in the domestic market.

Insurers including China Life Insurance and Ping An Insurance put more
than 62 per cent of their total assets, 2.4 trillion yuan, into bonds,
equities, property and infrastructure from January to May, according to
the China Insurance Regulatory Commission.

China Life and Ping An, which have raised huge amounts of capital from
the domestic market, are seeking better investment opportunities in the
mainland to keep their assets from depreciating.

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They have been buying stocks since the regulator lifted a ban on such
investments in February 2005. Compared with the 53 per cent increase in
stock and bond investments, bank deposits rose just 28 per cent to 700
billion yuan.

The mainland's insurance industry last year realised stock investment
gains of 8.92 billion yuan, accounting for almost 10 per cent of their
investment income, the regulator said earlier.

Though some insurers cut back on their equity investments this year due
to concern about the overheating market, they retain more than 10 per
cent of their assets in the domestic equity markets.

The companies are now eyeing overseas investments to diversify their
assets in case of a slump in the mainland economy.

Mainland insurers will be given the green light to invest in overseas
stocks under the qualified domestic institutional investors scheme within
three months, CIRC deputy chairman Li Kemu said earlier. The amount
insurers can invest is expected to be up to 15 per cent of their assets,
or about 364 billion yuan.

China Life, the nation's biggest life insurer, raised its investment in
equities, both publicly traded and private shares, and mutual funds to
13.9 per cent of its portfolio last year from 8 per cent in 2005.

It plans to step up its equity investment to support earnings growth, as
shares listed in the mainland market were not expensive, chief investment
officer Liu Lefei said in April.

China Life this week became the biggest shareholder in China Minsheng
Banking Corp, the mainland's first privately owned lender, and also
reportedly plans to buy stakes in provincial and city lenders.

Ping An, the second-largest, has said it may invest as much as 74 billion
yuan overseas, preferably in financial institutions in emerging markets
and infrastructure construction, after Beijing lifts the ban.

Total premiums in the first five months increased 28 per cent to 304
billion yuan, while claims rose 90 per cent to 99 billion yuan.

(For more biz stories, please visit Industry Updates)

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