Insurers' investments in trust products unlikely to accelerate: Fitch

Source: Xinhua| 2019-07-13 21:26:42|Editor: xuxin
Video PlayerClose

BEIJING, July 13 (Xinhua) -- Chinese insurers' investments in trust products are unlikely to accelerate in the near term despite being allowed to deal with more trust companies under the regulator's new rules, according to a report by Fitch Ratings.

The China Banking and Insurance Regulatory Commission has recently revised rules to permit greater interaction between insurers and trust companies, while also imposing tighter measures to control potential risks associated with trust products.

While the revisions will benefit the industry, they are unlikely to dramatically increase insurers' appetites for the products, the ratings agency said.

Trust products normally offer yields that are higher than conventional debt, but the urgency of insurers to seek higher yields to offset the cost of insurance liabilities has been reduced from two to three years after a structural shift in their liability profiles, according to Fitch.

Insurers' liability burdens have eased because most of them have consistently cut their exposure to short-term single-premium savings-type products in the last two years.

They instead emphasised the distribution of long-term regular premium-type life insurance policies with more protection features through their agency forces.

"As a result, insurers have greater flexibility to select investment instruments that better match their insurance liabilities," the agency noted.

Fitch expects insurers to formulate their asset-allocation strategy based on their risk-management framework and insurance-liability profiles. Key factors in investment decisions include not just investment returns, but also capital requirements, length of investment horizon and liquidity.

TOP STORIES
EDITOR’S CHOICE
MOST VIEWED
EXPLORE XINHUANET
010020070750000000000000011100001382242101