Chinese insurers defy deleveraging campaign by ramping up alternative asset allocation

Such assets offer higher returns of 9.42% than 5% on average offered by corporate bonds.

Reuters reports that some Chinese insurers have been channeling funds through shadow lenders to enjoy higher yields which usually clock in average returns of 9.42% than 5% offered by top-rated corporate bonds. 

The amount insurers have allocated to alternative assets like trusts, asset management plans and bank wealth management products, have surged rapidly in recent years, defying Beijing’s efforts to rein in shadow lending and regulate the country’s $15t asset management sector.

Also read: China's insurers remain flush with money

China Life more than doubled its debt investment products, including trust and asset management plans, to 301.8b yuan ($47.45b) last year from 2016.

Ping An Insurance Group’s investment in debt, trust plans and bank wealth management products reached 335.9b yuan in 2017, accounting for 14 percent of total investment, according to a Reuters calculation based on its annual report.

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