Ping An Life ups alternatives exposure

The $300bn Chinese insurer boosted its allocation to alternatives by as much as $5.5bn and dropped its exposure to bonds, stocks and debt investments.

China’s second largest insurer Ping An Life Insurance increased its allocation to alternative assets in 2016, continuing its strategy of diversifying its asset base away from fixed income investments.

Ping An Life’s exposure to private equity, infrastructure projects and non-listed equity investments saw a marginal increase of 0.8 percent point increase, from 1.1 percent in 2015 to 1.9 percent in 2016, amounting to approximately 38 billion yuan ($5.5 billion; €5.1 billion). The company did not provide a breakdown of allocations for the individual strategies but according to previous annual reports, the company's private equity investments have been increasing in recent years, from 25.9 billion yuan in 2013 to 33.2 billion yuan in 2015.

Meanwhile the insurer’s real estate allocation increased from 1.5 percent in 2015 to 2.2 percent last year, according to its latest annual report released on 23 March.

The 2 trillion-yuan insurer began its plans to move into alternatives as early as 2013, when slower economic growth in China and the low interest rate environment posed challenges against Ping An Life fully utilising its insurance funds. According to the report, Ping An Life gradually starting emphasising on products such as government bonds, railway bonds and bank preferred shares with sound security and stable yield, while actively seeking alternatives investments overseas.

From 2011 to 2016, the insurer has backed several private equity funds including Qiming Venture Partners’ 1.5 billion yuan Qiming RMB Fund IV, Primavera Capital Group’s $2 billion Primavera Capital Fund I (Chunhua Fund I), and Fosun Capital Group’s 8 billion yuan Zhe Shang Growth Fund, according to PEI data.

Meanwhile in December 2016 Ping An Asset Management Company, Ping An Life’s asset management arm, signed an agreement with the Queensland Investment Corporation, the investment arm of the state of Queensland, to pursue more cross-border collaboration.

The company has also been one of the biggest cross-border buyers of real estate. In December last year it teamed up Mitsubishi Estate to finance the $1 billion Circular Quay Tower project of Sydney-based property group Lendlease, and in July invested over $300 million in a logistics development partnership with e-Shang Redwood (ESR) in Japan.

Over the course of 2016, the insurer continued to collectively decrease its fixed income investments by another 3.1 percent, from 77.1 percent in 2015 to 74.6 percent in 2016. Ping An’s fixed income investments include term deposits, bond investments, debt plan investment and wealth management products.

Ping An, whose businesses includes life insurance, banking, internet finance and asset managements, also saw its overall revenue grow by 11.7 percent. The company also saw a 20 percent growth in its customer base in 2016, and now counts 346 million internet users and 131 million individual customers.