The insurers in China can now have the opportunity to expand their investment in real estate after China's insurance regulator allowed them. The small return on assets in the sector has become one of the reasons.
Previously has also a combined return on assets of 1.93%, or CNY75.5 billion in country's insurance sector in the six months. The expansion of insurers investment scope will begin to steadily in the second half which will include the real estate sector and equity in unlisted companies.
Although the China's insurance premiums has increased 33.6% in the first half from a year earlier but insurers still face the challenges in allocating assets to produce a good return. The insurance products also have some resistance factor such as a potential slowdown in auto sales growth and fixed-asset investment as well as a possible decline in export tax rebates. The yuan's exchange rate added risk to insurers' foreign-currency assets.
The regulator will step up its supervision of insurers in the second half and that it has urged some to improve their solvency.
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