AIA, Ping An pour billions into Chinese commercial property as insurers seek long-term, stable yields
- AIA put US$1.3 billion into a Shanghai office-retail complex, while Ping An paid about US$7 billion for industrial and office assets in Shanghai and Beijing
- Investments in physical property are particularly suited to life insurers because they help with asset-liability management, say Moody’s analysts
Insurers including AIA and Ping An Life Insurance are investing billions of dollars in mainland China properties, which are expected to remain an attractive asset class for insurers despite the property-market downturn, analysts said.
Physical property can be a good match for life insurers in particular, which have been expanding their healthcare and retirement businesses, Moody’s analysts said in a note on April 12.
“Property investments offer life insurers long durations and generally adequate and stable yields, which are ideal for their asset-liability management,” they said. “Because of limited investment channels amid declining interest rates, life insurers have few options for long-duration assets besides property and government bonds.”
The new affinity for prudent investments in physical assets comes after some insurers incurred big losses on equity investments in developers amid China’s property-market crisis.
Last December, AIA Life Insurance Company pledged to invest up to 8.7 billion yuan (US$1.3 billion) in an office-retail complex in Shanghai’s North Bund area.
