New China Life Insurance Co., Ltd. recently completed the acquisition of 5.45% of the equity of Hangzhou Bank, with a total transaction amount of 4.32 billion yuan. This share purchase was carried out by the Commonwealth Bank of Australia and was officially completed on June 10th after being approved by the State Financial Supervision and Administration Commission and other regulatory authorities. Analysis points out that this move marks the adjustment of the investment portfolio by New China Life Insurance under the background of relaxed regulatory policies, shifting towards long-term equity investment.
In May this year, China lowered the capital requirements for insurance companies’ shareholdings to encourage participation in the long-term capital market. Fitch Ratings believes that although this move eases capital pressure, it may not necessarily prompt insurance companies to significantly increase their holdings of stocks. By the end of 2024, the proportion of stock investment by Chinese life insurance companies was 15.3%, while that of non-life insurance companies was 13.5%. Despite the relaxation of policies, insurance companies may still remain cautious. In addition, Fitch upgraded the ratings of some Chinese insurers in April, but the industry still faces the pressure of tight international trade and premium growth.
Affected by factors such as the additional tariffs imposed by the United States, China’s insurance industry is under pressure, especially auto insurance and export-related insurance types. Regulatory authorities allow insurance companies to increase the proportion of stock investment in order to enhance market liquidity. In the short term, property insurance companies may focus on cost control to cope with the upward trend of claim ratios.
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