Ping An reveals $25bn infra debt portfolio

The Chinese life insurer remains cautious about overseas investments, but could invest up to 15 percent of its $333bn assets in overseas markets.

Ping An Life Insurance, China’s second biggest insurer, said it had invested about $25 billion in infrastructure debt, as it revealed what it called its “non-standard debts” portfolio last week.

Of Ping An’s 2.22 trillion yuan ($333 billion; €284 billion) total investment assets, the non-standard debts account for 13.1 percent, or 290 billion yuan, as of 30 June, according to the Hong Kong-listed company’s interim presentation.

About 56.9 percent of the non-standard debts, or 165.4 billion yuan, is invested in infrastructure, which covers urban construction, expressways, electric power, coal mining and others. This portfolio offers an average nominal yield of 5.93 percent, with average remaining years of 5.29 to maturity.

Timothy Chan, chief investment officer of Ping An, said the infrastructure debt securities were issued by corporates from first-tier regions with good credit profiles such as Beijing, Shanghai and Guangdong. “No defaults have happened before,” he said, adding that this is the first time the group has disclosed the structure of its non-standard debt portfolio. About 12.3 percent of the portfolio is invested in real estate debt.

The group intends to maintain the current investment allocation for the insurance funds, Chan said during a press conference in Hong Kong.

Ping An has 73 percent of total investment assets invested in fixed-income products, including non-standard debts, term deposits, and bond investments. More than 20 percent of the assets are equity investments, including 1.9 percent in unlisted equity. It increased investments in stocks and equity funds by 3.5 percent over the past six months. Investment properties account for 2.2 percent of the portfolio, while the group holds 4.4 percent in cash.

Over the first half of 2017, Ping An recorded an annualised total investment yield of 4.9 percent.

Peter Ma, Ping An’s chairman, said the group has been, and will continue to be, cautious about overseas investments. While the group can invest up to 15 percent of its investment assets in overseas opportunities under regulations, its current overseas portfolio stands at 2 percent.

In December 2016, Ping An, through its asset management arm, signed a memorandum of understanding with QIC for more cross-border collaboration, with a focus on alternative investments.