(Yicai Global) July 8 -- Overseas investment by Chinese insurance companies fell 9.6 percent last year, according to a new report.
The amount was about USD70 billion at the end of 2019, compared with USD77.4 billion in the year earlier, according to the results of a survey by the Asset Management Association of China. That accounted for about 2.75 percent of the sector’s total assets at the end of the third quarter of last year.
Investment fell mainly because some insurers were overly aggressive in earlier years, while more recently the business itself, stricter regulation and the complex global economic situation have made them more rational and wary in their ventures abroad, one sector analyst said.
Equity products and investments constitute the bulk of Chinese insurers’ activity outside the home country, supplemented by money market and fixed income products and real estate. Venture areas have broadened, mainly in Hong Kong and the US, but also in other countries and regions, to encompass both developed and emerging markets.
The firms had invested more than USD28.5 billion in overseas equity products at the end of last year, over 40 percent of the total. Hong Kong, the key beneficiary of this largess, received 49 percent of that. Hong Kong stocks have also long been the biggest magnets for their overseas investment.
The coronavirus pandemic has crushed global production and demand. Insurance concerns must keep overseas assets safe when using funds in the complex and changing economic and financial situation at home and abroad, said Cao Deyun, the association’s executive vice president and secretary general.
Insurers must also strike the dynamic balance between domestic and foreign investment, safely and effectively allocate overseas assets, and soundly manage and control risks. They should also extend their business cooperation with top-quality international financial institutions on this basis, Cao added.
Editor: Ben Armour