Original title: 1/5 of insurance companies are not eligible for self-investment
Insurance fund investment public offering REITs has opened! On November 17, the China Banking and Insurance Regulatory Commission issued the “Notice on Issues Concerning the Investment of Insurance Funds in Publicly Raised Infrastructure Securities Investment Funds” (hereinafter referred to as the “Notice”), which clarified that insurance funds can be invested in publicly offered REITs, and at the same time, investment thresholds have been delineated.
Real estate investment trust funds (REITs) are mature financial products in the international financial market as the internationally accepted allocation assets. Publicly offered REITs have the characteristics of high liquidity, relatively stable returns, and strong security, which can effectively revitalize existing assets. Experts said that large life insurance companies have more long-term stable funds, and they can pay more attention to the profitability of the project when investing in public REITs.
What are the considerations for the supervision of insurance funds to invest in publicly offered REITs? The relevant person in charge of the China Banking and Insurance Regulatory Commission said that overall, the risk-return characteristics of infrastructure funds are consistent with the demand for insurance funds and can better match the investment characteristics of insurance institutions.
One is that the infrastructure fund uses infrastructure projects as the underlying assets. The project has a long operating cycle and compulsory distribution of dividends, which can provide long-term stable cash flow and match the long-term nature of insurance funds. Second, the correlation between infrastructure funds and major assets such as stocks and bonds is low, which is conducive to diversified investment of insurance funds. Third, the issuance standards of infrastructure funds are unified, the degree of information disclosure is relatively high, and they are subject to public supervision, which provides standardized investment products for insurance funds to participate in infrastructure projects. The investment of insurance funds in infrastructure funds can not only better meet the long-term allocation needs of insurance assets, but also broaden the investment channels for participating in my country’s infrastructure construction and serve the country’s strategic development.
The opening of investment gates means the expansion of the investment scope of insurance funds, but not all insurance companies can obtain investment qualifications. The “Notice” requires that insurance group (holding) companies and insurance companies that invest in infrastructure funds by themselves must manage their assets and liabilities in the latest year The result of the ability assessment shall not be less than 80 points, and the comprehensive solvency adequacy ratio at the end of the previous quarter shall not be less than 150%. If an insurance asset management company or other professional management agency is entrusted to invest in infrastructure funds, the assessment result of the asset and liability management capability in the most recent year shall not be less than 60 points, and the comprehensive solvency adequacy ratio at the end of the previous quarter shall not be less than 120%.
If an insurance asset management company is entrusted to manage insurance funds or invest in infrastructure funds through insurance asset management products, it shall have the ability to manage debt investment plans, and the company’s regulatory rating in the most recent year shall not be lower than Category C.
Incomplete statistics found that among 80 life insurance companies, 65 had a comprehensive solvency exceeding 150%, but 1 had a comprehensive risk rating of C; among 83 property insurance companies, 76 had a comprehensive solvency exceeding 150%. There is also a comprehensive risk rating of C. In other words, without considering the undisclosed assessment results of asset and liability management capabilities, about one-fifth of insurers are not qualified to invest on their own.
At the same time, in accordance with the requirements of the “Notice”, insurance institutions should carefully assess the major risks that may arise from investing in infrastructure funds and formulate corresponding risk disposal plans. In the event of a loss of 10% or more of the fund’s net assets, and major changes in infrastructure project operations, project cash flow, or cash flow generation capacity, the insurance institution shall report to the China Banking and Insurance Regulatory Commission in a timely manner.
After opening the gate, investment opportunities are oncoming. According to public reports, China Asset Management and CCB’s public offering REITs were officially approved on November 12, and the inquiry will begin on November 19.
In fact, in June of this year, among the strategic investors of the 9 publicly offered REITs issued for the first time, the number of asset management plans was the largest. In terms of insurance funds, Taikang Life, Ping An Life, China Property Reinsurance,China Life InsuranceReinsurance, Dajia Investment Holdings, China Insurance Investment Fund and other six insurance department funds appeared in the list.
So, how should insurance companies that have obtained investment qualifications seize investment opportunities? Li Wenzhong, deputy director of the Insurance Department of Capital University of Economics and Business, pointed out that investing in public REITs needs to be viewed from two aspects. One is whether the underlying project assets of public REITs are attractive for investment; the other is the trade-off between profitability and liquidity of insurance companies.
Li Wenzhong said that if insurance companies value the future profitability of a project, they can participate in strategic subscriptions; if they take into account profitability and liquidity, they can consider participating in offline subscriptions; if they pay attention to liquidity and give consideration to profitability, then You can participate in online subscription or invest in the secondary market. Generally speaking, large life insurance companies have more long-term stable funds and can pay more attention to the profitability of projects.
(Beijing Business Daily)
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