Chinese Insurance Outbound Capital - Cushman & Wakefield

Chinese Insurance Outbound Capital

Chinese Insurance Outbound capital

This paper investigates the amount of future capital to be invested overseas by Chinese Insurance companies, including the geographies and types of assets that they will target.

  • Chinese insurance companies have only been allowed to invest in real estate since 2009. Further deregulation in 2012 allowed investment in overseas markets and today overseas investment can be up to 15% of total asset value.
  • Current holdings of investment properties for all Chinese insurance companies totals USD13.4bn, an allocation of 0.8%. Just under half of this (USD6bn) we estimate is held overseas. The top five insurers have an allocation of under 2% underscoring the potential for rapid growth.
  • Allowing a full allocation could see an additional USD240bn deployed. Practically we foresee average allocations rising to near 5% by 2019, equivalent to an additional USD73bn of investment. This could increase by a further USD75bn by 2024.
  • Whilst the initial wave will be led by the larger insurance companies, we expect smaller sized companies to follow as they build teams to invest directly.
  • With current premiums per capita in China well below those of established western economies, we foresee much of the growth coming through growing premiums and assets under management than pure increases in allocations.
  • Investment will spread from New York and London to leading gateway cities which regularly witness transactions in excess of USD100m including Berlin, Washington DC, Paris, San Francisco, Sydney, Singapore and Tokyo.
  • Reflecting their desire to grow holdings we see investment spreading to a broader range of geographies and assets as well as increased development.

Contact:

Cristine Lai
Capital Markets Research, APAC
cristine.yt.lai@cushwake.com