China’s Ping An—the world’s largest life insurer by market capitalization—has indicated that it plans to boost its allocation to real assets in the Chinese market.
According to a weekend report in AsianInvestor following the insurer’s 2020 half-year earnings announcement, Ping An will increase its domestic real assets exposure in response to a government-sanctioned push for more infrastructure building in China, as well as to refine its own asset-liability management through longer-duration investments.
AsianInvestor quoted Ping An Insurance Chief Investment Officer Timothy Chan, saying the company would be gradually increasing its exposure to “newer types of real estate and infrastructure assets,” pointing to health care and residential rentals as areas of focus.
According to that publication, infrastructure and real estate together make up approximately 53% of Ping An’s total exposure to non-standard loans, which in turn compose around 11% of Ping An’s total RMB 3.4 trillion ($502 billion) investment portfolio.
“In addition, as the government calls for more modern infrastructure, urban development, transportation and water facility construction, these projects provide us with opportunities, including railway and PPP highway assets,” Chan told AsianInvestor.
Fin-tech transformation
In the earnings announcement, Ping An Group chairman and co-founder Peter Ma Mingzhe referred to 2020 as a “year of reform” for its life insurance business, as it continues to pivot toward toward “high-value protection products” against a broader market backdrop of complex and rapid macro-environment change, the impact of covid-19, and volatile global markets.
In recent years, Ping An has executed an ambitious digital transformation—said to have re-invested 1% of its annual revenue into research and development over the past several years, some of it funded by Japan’s SoftBank–in a turbulent quest to become a fin-tech powerhouse through rollouts of digital real estate, smart city, automotive and healthcare products.
Smart city, ESG updates
In its earnings announcement, Ping An provided a status update on the Ping An Smart City initiative, a high-tech, cloud-based urban management platform unveiled in 2018 that provides diverse services to local governments and companies. During the first six months of 2020, the company reported that Ping An Smart City served 118 cities, nearly 600,000 businesses, and more than 87 million Chinese citizens.
Ping An added that its MSCI ESG rating was upgraded to “A” level during the reporting period. In June, it completed development of its AI-ESG platform, a China-specific ESG rating system that uses artificial intelligence to promote “responsible investment” in CSI 300 companies. As of June 30, 2020, Ping An’s responsible investment allocation totaled RMB 1.18 trillion ($172 billion).