China allows asset outsourcing for more insurance firms
The approval is expected to free up insurance assets for fund management companies.
The China Insurance Regulatory Commission (CIRC) has allowed three mid-ranking Chinese insurance firms to outsource investments to external asset managers. Great Wall Insurance will outsource its equity portfolio to Huatai Asset Management; Happy Life Insurance to Ping An Asset Management; and CCB-Cigna Life to a company yet to be determined.
Approvals were previously given to Pacific Antai Life Insurance, Sunshine Insurance, Anhua Agricultural Insurance and Allianz-China Life. These smaller players have not been allowed to invest directly into equities, however as they have yet to satisfy the CIRCÆs requirements of having an eight-year history and having more than Rmb10 billion ($1.43 billion) in assets.
The CIRC imposes a maximum 10% direct equity exposure of total assets for mainland insurers. It has not said if there is an overall quota applied to these outsourcing arrangements.
Peter Alexander, a principal at Z-Ben Advisors, says the direct equity exposure limit excludes QDII portfolio investments. He notes that many asset managers are expecting a windfall from assets of insurance companies even if many are still clueless about how the outsourcing will take shape.
According to Z-Ben Advisors, the domestic fund industry has seen a five-fold increase in fee income to Rmb28.2 billion ($4.03 billion) from Rmb5.7 billion ($820 million) last year. Despite competition from foreign fund management companies, local managers have a greater share of the fee income at Rmb16.1 billion ($2.3 billion).
Approvals were previously given to Pacific Antai Life Insurance, Sunshine Insurance, Anhua Agricultural Insurance and Allianz-China Life. These smaller players have not been allowed to invest directly into equities, however as they have yet to satisfy the CIRCÆs requirements of having an eight-year history and having more than Rmb10 billion ($1.43 billion) in assets.
The CIRC imposes a maximum 10% direct equity exposure of total assets for mainland insurers. It has not said if there is an overall quota applied to these outsourcing arrangements.
Peter Alexander, a principal at Z-Ben Advisors, says the direct equity exposure limit excludes QDII portfolio investments. He notes that many asset managers are expecting a windfall from assets of insurance companies even if many are still clueless about how the outsourcing will take shape.
According to Z-Ben Advisors, the domestic fund industry has seen a five-fold increase in fee income to Rmb28.2 billion ($4.03 billion) from Rmb5.7 billion ($820 million) last year. Despite competition from foreign fund management companies, local managers have a greater share of the fee income at Rmb16.1 billion ($2.3 billion).
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