China Life vows bigger overseas investment, and to limit exposure to equities
Current US$7.6b offshore portfolio ‘too small’, says vice chairman. Focus likely to be property sector and stakes in unlisted companies
China Life, the nation’s biggest life insurer that backs car-hailing giant Uber Global, has vowed bigger investment into overseas markets, after reporting an 67 per cent plunge in interim profit, which officials blamed on the low-interest rate environment home and a volatile capital market.
Zhao Linjun, its vice president, said the group has currently allocated around US$7.6 billion onto offshore markets, mainly focused on the property sector, and stakes in unlisted companies.
“But the proportion is too low, and we expect to raise it and diversify our portfolio,” he told a press briefing on Friday morning, adding the company would work to raise its overseas investment ratio to 15 per cent, the cap set by the China Insurance Regulatory Commission.
China Life has teamed up with an many as seven US-based private equity funds, to actively seek opportunities in the US and Europe. It invested in Uber Global in 2015, but the stake and value was not disclosed.
Gross investment yield for the first half dropped to 4.36 per cent from 9.34 per cent in the same period last year, mainly due to losses from equity investment, compared with big gains in the same period last year, Zhao said.
Its biggest property investment has been two office buildings in London and one in New York city, carrying tenant contracts. The company is also interested in serviced apartments complexes, while target sectors logistics and retail operations, he added.
In June, it invested US$600 million into Didi Chuxing, China’s biggest car hailing app.
The company oversees an investment portfolio worth 2.4 trillion yuan.
Zhao said more than 70 per cent of that portfolio is on fixed-income products, while around 17 per cent went on equity investment in the first half year.
“We will continue to limit the exposure to equity investment based on a prudent investment style... we do not see the A-share market turning around its performance in the second half,” he added.
For the first half of 2015, China Life saw its gross investment income fall 49.1 per cent year on year to 50.84 billion yuan.
In its insurance business, net premiums earned in the first six months grew by 23.93 per cent to 284.24 billion yuan. The new business value of life insurance grew to 28.02 billion yuan, up 50.35 per cent year on year.
The company’s president Lin Dairen, said: “Some emerging insurers with smaller size are crunching into the market shares of the old big players by aggressively promoting the wealth-management style insurance products through bancassurance.”
“But China Life will stick to our strategy and focus on protection focused products,” he added.