Fast-growing Chinese insurance companies are poised to become a substantial business opportunity for foreign asset management firms in the coming year or two, according to an analysis Tuesday by Shanghai-based consulting firm Z-Ben Advisors.
With China's largest insurers reporting their latest annual results over the past week, the industry's combined assets under management at year's end amounted to 7.35 trillion yuan ($1.19 trillion), up 22% from the year before.
Francois Guilloux, Z-Ben's director, regional sales, said in a telephone interview that the biggest Chinese insurers continued to merely dip their toes in offshore waters over the past year, with roughly 2% of their assets invested outside China — well short of the 15% limit set by Chinese regulators.
However, with regulators over the past year filling in many of the details for guidelines governing insurers' investments overseas, offshore allocations could grow “quite dramatically over the next 18 months,” noted Mr. Guilloux.
Z-Ben's analysis also noted alternative investments by insurers, which came to 6.23% of assets as of Dec. 31, could be substantially increased.
With the tailwind of strong regulatory support for more overseas investment, Chinese insurers “are set to be the new kid on the global institutional investor playground,” according to Z-Ben's analysis.
In pursuit of that business, Mr. Guilloux said money managers prepared to offer “solutions” tailored to each insurer's needs should have a competitive edge over those offering products.