New | China Insurance Investment set up to serve Beijing’s strategic goals in ports, other projects
Scores of Chinese insurance companies and insurance premium managers establish direct investment vehicle through its maiden fund
Dozens of mainland Chinese insurance companies and insurance premium managers have set up a direct investment vehicle to pour 40 billion yuan towards government policy and national strategic projects through its maiden fund, as part of the industry’s asset allocation diversification.
China Insurance Investment, which is registered in Shanghai’s free-trade zone, was officially set up on Monday with a registered capital of 1.2 billion yuan, the China Insurance Regulatory Commission (CIRC) said in a statement on Tuesday.
The new company will focus its investment activities on “serving national strategic needs and the real economy,” it said, adding the insurance sector’s long-term investment horizon is conducive to meet such goals. Some 27 insurance firms, 15 insurance asset management firms, four private firms make up the 45 initial shareholders of the new firm.
Daiwa Securities analyst Leon Qi said although China Insurance Investment’s investments have national strategic significance, they should not be seen as “national service” since they need to also meet return expectations of the insurers and that of other private investors.
“As interest rates are declining and insurers’ premium collection are rising rapidly, the CIRC has spearheaded the formation of China Insurance Investment to invest in assets other than bonds, shares and deposits to provide extra diversification,” he said. “Long term direct investments also meet insurers’ desire to have more exposure in investments with longer term investment horizon and return profile.”
The 40 billion yuan first-phase fund will be deployed to finance port acquisitions and construction in Sri Lanka, Turkey and the Republic of Djibouti in East Africa by state-backed China Merchants Steam Navigation, and the building of liquefied natural gas vessels to meet the needs of the US$27 billion Yamal LNG project in Russia, a gas development joint venture by Russia’s Novatek, France’s Total and China National Petroleum Corp.