Ping An Insurance increased its exposure to alternatives last year, but said it was staying focused on maintaining risk controls.

Chinese insurers have been looking to ramp up their alternatives investments over the past year in order to boost portfolio returns, but analysts have said caution is needed due to the slowing economy.

Ping An, the second-largest Chinese life insurer, saw its investment portfolio assets grow by 19.5% last year to Rmb1.47 trillion ($237.5 billion), from Rmb1.23 trillion in 2013. The portfolio generated returns of 5.1% last year, according to its annual report.

The most notable part of its 2014 portfolio, details of which were released last Thursday, was Ping An’s increased allocation to alternatives. The insurer allocated 13.5% of its AUM to alternatives last year, up from 8.7% in 2013.

Ping An said that such alternative assets tended to be high-yield and low-risk with long maturity periods, which matched its investment needs.

Chinese insurers expressed greater interest in alternatives last year but generally limited them to onshore investments in order to secure higher yields and meet their liabilities, as reported.

However, Chinese insurers do not have a clear definition of such alternatives, and these investments mostly go into non-standard assets such as debt investment plans, trust products and commercial banks’ wealth management products. Fitch has estimated that 5-15% of Chinese insurers’ assets were invested in such alternatives in the first half of 2014. Comparable figures were not available for the first half of 2013.

These alternatives provided a superior yield income than that of government bonds. For example, China’s five-year government bond was yielding 3.29% last Friday, but property-backed trust products provided an average yield of 9.47%, according to Use Trust, a trust product distributor.

Tao Dong, China economist at Credit Suisse, has warned that a larger default risk in the Chinese trust industry was looming this year. Bigger trust loan repayments are likely as a result of downward pressure on economic growth, the property market and commodity prices, he said.

Ping An stressed that its risk controls, which have been part of its investment strategy since 2013, were necessary.

“Most counterparties of the invested debt schemes and trust products are mainly large state-owned enterprises, local government bodies and entities with guarantees from banks, because they will have better cash flow and the ability to pay debt,” said Timothy Chan, the group’s chief investment officer.

Joyce Huang, director of the Asia-Pacific insurance team at rating agency Fitch, said that as China’s growth was slowing down, insurers would need to exercise more caution over alternatives and perform greater due diligence.

The insurers’ regulatory body, the China Insurance Regulatory Commission, warned about insurers’ exposure to trust products last September, saying they needed more risk controls with such assets.