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UPDATE 1-China Life to focus reinvesting assets in alternative, fixed-income investments
March 24, 2017 / 7:10 AM / 8 months ago

UPDATE 1-China Life to focus reinvesting assets in alternative, fixed-income investments

* Insurer to re-invest $72.5 bln in 2017

* Will focus on fixed-income, alternative assets

* Overseas acquisitions also focal point (Adds details, quotes)

By Shu Zhang and Engen Tham

BEIJING, March 24 (Reuters) - China Life Insurance Co Ltd , the country’s largest insurer, said on Friday it will focus mainly on alternative and fixed-income investments when it reinvests more than $72.5 billion of assets this year.

The insurer’s comments come a day after the company reported a 45 percent drop in annual profits, the first decline in four years, due to an interest rate drag on investment income.

With a large volume of investment assets due to mature, China Life needs to re-invest more than 500 billion yuan ($72.53 billion) in assets in 2017, Lin Dairen, president of China Life, said at a press conference following the release of the company’s annual results.

The focus will be on fixed-income and alternative investments, Vice President Zhao Lijun told reporters, without elaborating.

“The rise in market interest rates currently provide a very good window for China Life to invest in fixed-income products,” Zhao said.

“Most importantly, we still need to increase investments in alternative and non-standard assets,” Zhao said, citing their longer duration and higher return compared with traditional investments.

The insurer is also seeking opportunities to increase its investments overseas, including entrusted investments and direct investments in financial assets, real estate and private firms, Zhao said.

But China’s restrictions of overseas investments as part of capital control efforts last year has had some impact on the insurer’s global allocations, Zhao added.

“We have a series of overseas investment projects in the pipeline and we are waiting for opportunities,” Zhao said.

China Life said net profit for 2016 fell 45 pct to 19.13 billion yuan ($2.8 billion) from 34.7 billion yuan a year earlier, due to a 22.8 percent drop in investment income partly caused by stock market volatility.

Zhao said China Life will maintain a “prudent” approach to stock market investments this year, as the Chinese stock markets “lack the foundation” for a sharp rise. ($1 = 6.8938 Chinese yuan renminbi) (Editing by Randy Fabi)

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