Insto roundup: EPF and Khazanah’s contrast; Anbang remains in Beijing’s hands

China's financial regulator will run Anbang for another year; six Chinese provinces are failing to cover pension payments; Korea Post commits $200 million to distressed debt funds; EPF looks to add international investments but Khazanah is seeking to reduce them, and more.
Insto roundup: EPF and Khazanah’s contrast; Anbang remains in Beijing’s hands


LGIAsuper has tapped the health trend and invested in fresh food production in North America via Equilibrium Capital Group’s newest fund.

The Australian superannuation fund was the first institutional investor from the country to invest in a strategy that supplies produce across the US as it committed A$112 million ($80 million) to the fund.

Kate Farrar, chief executive officer of LGIAsuper, said, “Consumers today are demanding a higher standard of freshness and flavour and unique varieties that can only be grown in greenhouses. With more than 325 million residents in the US, this represents a huge growth opportunity for investors.”

The investment fund has also announced a partnership with The Houweling’s Group, a vegetable grower in the US that grows sustainable tomatoes and cucumber year-round. 

Source: Super Review

Allianz’s property and casualty arm in Australia reported A$685 million in operating profit last year, which rose almost four-fold form A$144 million in 2017.

The German insurer also reported a 3.7% increase in its overall operating profit as it reached A$18.2 billion last year, partly due to the strong performance of the insurer’s Australian arm.

The increase in operating profit of the group’s property and casualty arm, which was up 13.3% to A$9 billion, can be attributed to an improved expense ratio, fewer natural catastrophe claims and premium growth.

Source: Insurance News


Chinese investment in foreign real estate fell 63% to a four-year low of $15.7 billion last year, with insurance firms indicating the biggest pullback from such assets, according to research released last Thursday.

The vast majority (84%) of investors in China surveyed indicated that they had either frozen or reduced their overseas real estate allocations over the past year in comparison to 2017, said property services firm Cushman & Wakefield in its 2019 Outbound Investor Intention Survey. That was the case for all insurance companies polled.

The decrease in outbound property investment was driven by factors including weakening mainland sentiment, tighter policy control and growing economic headwinds. The report added that Chinese outbound investment into property was forecast to remain flat this year.

Source: Cushman & Wakefield

The China Banking and Insurance Regulatory Commission said it will keep control of Anbang Insurance Group for another year until February 22 next year. The same working group will be in charge of the takeover and everything will stay the same.

On February 23 last year, the insurance regulator announced it would lead a working group to seize control of Anbang for the next 12 months, saying “there are illegal operations at Anbang, which may seriously endanger its solvency capability".

Source: CBIRC

Pension contributions in six Chinese provinces were insufficient to meet payments in 2015, and this will rise to 13 or 14 provinces by 2022 unless they can lean on fiscal expenditure, according to a report released by the Chinese Academy of Social Sciences.

The government’s financial support to the pension system has increased by 332.5 times from Rmb2.4 billion to Rmb800.4 billion ($359 million to $119.74 billion) between 1998 and 2017. The subsidy amounts are set to increase as its population continues ageing fast, noted the report.

Source: Caijing


Korea Post intends to commit $200 million to two distressed debt funds. The asset owner is targeting returns of 8% or above from the two distressed commingled funds, according to its request for proposal, posted on February 20. 

Both the savings and insurance units of the agency will invest $100 million respectively in the distressed strategy for control and non-control, which may include special situation investment. It posted the RFP on the Korea Financial Investment Association.

Source: Korean Investors

The Korean Teachers’ Credit Union will aggressively seek equity-type investments such as stocks and private equities for extra returns, said its new chief investment officer, Kim Ho Hyun. The move comes to bolster returns.

“We are interested in opportunistic investments, participating as an anchor investor from the early stages of investment in partnership with asset managers. We prefer infrastructure to real estate,” Kim said.

The $23 billion retirement fund is targeting returns of 4.5 to 4.7% in 2019, up slightly from last year’s target of 4.1%, according to Kim.

Source: Korean Investors

Korea Investment Corporation (KIC) and Korea Post reached a tentative agreement to strengthen cooperation in global investment. The move comes as KIC, South Korea’s sovereign wealth fund, is seeking to expand its client base made up of only the public sector.

“As part of the effort for Korea Post to allocate part of global investment assets to KIC, both agencies agreed to discuss details during the first half of this year, including the manner in which joint investment and asset allocation will be made,” KIC said in a statement. The two asset owners will also work together on a number of areas, such as investment-related training and research.

KIC was founded in 2005 and manages over $100 billion assets entrusted by the finance ministry, the Bank of Korea and public funds for overseas investment. The net asset value of its portfolios came to $134 billion as of the end of 2017. Korea Post manages $111 billion in assets for savings and insurance arms combined.

Source: Korean Investors


Malaysia's Employees Provident Fund (EPF) is too heavily invested in the domestic market so any move to raise its foreign exposure will help to diversify investments and boost returns, say fund managers. 

Alizakri Alias, the EPF’s chief executive officer, hinted earlier this week that the fund may increase its foreign exposure when it reviews its asset allocation plan. At the end of 2018, Malaysia’s largest pension fund had invested MYR611.14 billion ($149.62 billion) of its MYR833.76 billion in assets under management in its local market.

Source: Asia Asset

Khazanah intends to scale back on its international investments, even as it prepared a MYR1 billion dividend for the Malaysian government in 2019.

The sovereign wealth fund is conducting a shift in strategy under its new chief executive Shahril Ridzuan to focus more on domestic assets and is divesting from venture technology investments, overseas real estate, fund investments, and other non-strategic assets. It is also scaling back its presence in markets such as London and San Francisco.

Source: Sovereign Wealth Fund Institute


The Philippines’ Insurance Commission (IC) has issued an order allowing insurers to invest in projects under the government’s infrastructure development initiative.

The order allows insurance and reinsurance companies to invest in debt or equity security instruments for infrastructure projects under the Philippine Development Plan (PDP). IC chief Dennis Funa said the move will open up a new investment channel for re/insurers to gain better returns, as well as boost the country’s economic growth.

Insurance companies can invest in projects in a number of roles – such as proponents, financiers, sponsors, or operation and maintenance contractors, as long as they meet the capital requirements and receive approval from the IC. 

Source: Insurance Business Magazine


Maryland State Retirement & Pension System committed $205 million to Asia-focused strategies in the fourth quarter of 2018. This includes $100 million for Bain Capital’s fourth Asia fund, Bain Capital Asia Fund IV, which is said to have closed in December at $4.65 billion, according to a Reuters report.

Source: DealStreetAsia

The 100 biggest defined-benefit public pension plans in the US suffered an aggregate 6.39% loss in the fourth quarter of 2018, according to consulting firm Milliman. This led to a funding loss of $306 billion, the largest quarterly funding decrease in over two years.

Estimated investment losses for plans during the quarter ranged from 10.27% to 2.18%, meaning the funding ratio of the pension plans fell to 67.2% as of the end of December, from 72.9% at the end of September, as tracked by the Milliman Public Pension Funding Index (PPFI).

As of December 31, the PPFI deficit was $1.693 trillion, compared to $1.387 trillion at the end of September. The total pension liability also continued to expand to an estimated $5.164 trillion at the end of the fourth quarter, up from $5.123 trillion at the end of the previous quarter.

Source: Chief Investment Officer


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