China’s second largest insurer Ping An Life Insurance increased its allocation to alternative assets in 2016, continuing its strategy of diversifying its asset base away from fixed income investments, PERE's sister publication, Private Equity International, reported Monday.
The Shenzhen-based insurer’s real estate allocation increased from 1.5 percent in 2015 to 2.2 percent last year, according to its latest annual report released on March 23.
Ping An Life’s exposure to private equity, infrastructure projects and non-listed equity investments saw a marginal increase of 0.8 percent point increase, from 1.1 percent in 2015 to 1.9 percent in 2016, amounting to approximately 38 billion yuan ($5.5 billion; €5.1 billion). The company did not provide a breakdown of allocations for the individual strategies but according to previous annual reports, the company's private equity investments have been increasing in recent years, from 25.9 billion yuan in 2013 to 33.2 billion yuan in 2015.
The 2 trillion-yuan insurer began its plans to move into alternatives as early as 2013, when slower economic growth in China and the low interest rate environment posed challenges against Ping An Life fully utilizing its insurance funds. According to the report, Ping An Life gradually starting emphasizing on products such as government bonds, railway bonds and bank preferred shares with sound security and stable yield, while actively seeking alternatives investments overseas.
The company has been one of the biggest cross-border buyers of real estate. In December, it teamed up Mitsubishi Estate to finance the $1 billion Circular Quay Tower project of Sydney-based property group Lendlease, and in July invested over $300 million in a logistics development partnership with e-Shang Redwood (ESR) in Japan.
In the same month, Ping An Asset Management Company, Ping An Life’s asset management arm, signed an agreement with the Queensland Investment Corporation, the investment arm of the state of Queensland, to pursue more cross-border collaboration.
Over the course of 2016, the insurer continued to collectively decrease its fixed income investments by another 3.1 percent, from 77.1 percent in 2015 to 74.6 percent in 2016. Ping An’s fixed income investments include term deposits, bond investments, debt plan investment and wealth management products.
Ping An, whose businesses includes life insurance, banking, internet finance and asset managements, also saw its overall revenue grow by 11.7 percent. The company also saw a 20 percent growth in its customer base in 2016, and now counts 346 million internet users and 131 million individual customers.