China Pacific Insurance Company (CPIC) has brought in a long-standing employee of rival AIA as group chief investment officer, a role understood to be newly created. The aim is to help strengthen the Shanghai-based firm's asset-liability management and coordinate strategic initiatives, a well placed source told AsianInvestor.
Benjamin Deng, formerly head of group investment solutions and derivatives at AIA, started at CPIC on September 4 and has offices in both Shanghai and Hong Kong, said the source on condition of anonymity.
He left Hong Kong-based AIA in March after working there since 2000, according to his LinkedIn profile.
CPIC, China’s third largest insurer by assets with both life and property-and-casualty businesses, did not immediately respond to an emailed query from AsianInvestor. Deng declined to comment on the move.
The insurer did not have a group CIO before. Pan Yanhong, chief financial officer, was responsible for overseeing the investments of the group, AsianInvestor understands.
Deng will take on a swiftly growing investment portfolio, which stood at Rmb1.18 trillion ($172 billion) as of June 30, up 8.9% from end-2017, CPIC's latest interim report shows. As it happens, AIA also had $172 billion in AUM as of May 2018, spread across its Asian operations.
Deng’s appointment is subject to approval from the China Insurance and Banking Regulatory Commission (CBIRC), according to a regulatory filing on August 27.
AIA is not believed to have named a replacement for him, and it declined to comment on his departure.
CPIC’s appointment of an executive from a leading foreign insurance group comes as Beijing is keen to bring domestic insurers more in line with international standards in areas such as risk management, asset-liability management (ALM) and product development.
Deng’s experience will thus be valuable for CPIC, as he has dealt with advanced solvency and capital rules across some of AIA's businesses and has substantial expertise in risk management.
China released new ALM rules in March this year, which requires local insurance firms to set up committees to oversee this area of their business. Moreover, most financial institutions globally, including insurers, will have to adopt International Financial Reporting Standard 9 by 2021, and Ping An has led the way in China by doing so already.
Chinese insurers generally do not have dedicated ALM teams, unlike many of their foreign peers. Mainland regulators have been pushing local insurers to improve their risk management practices by learning from foreign insurers, an investment specialist at an international insurer told AsianInvestor.
Moreover, the China Risk-Oriented Solvency System (C-Ross), which sets new capital requirements for insurers, is set to enter its next phase soon. The CBIRC said in May that the next set of guidelines would be finalised by June 2020.
Deng's knowledge of alternative investments should also come in useful. Like other Chinese insurers, and asset owners globally, CPIC is steadily building its alternatives allocation. This category of assets – covering wealth management products, debt investment plans, other fixed income and equity investments, and investment properties – accounted for 28.7% of CPIC’s investment portfolio as of June 2018, up 1.8 percentage points compared with six months ago.
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