Insurance Capital Investment is the practice of holding equity in private companies by insurance companies. This type of investment is subject to regulations that set requirements in terms of corporate governance, financial strength, and investment teams. The regulations also require that the insurance company have pre-investment approval. This involves assessing the company’s development prospect and credibility and assessing whether the investment is suitable for insurance purposes.
The proportion of listed insurance companies that invest in bonds has fallen over time, but is still stable at 50%. This type of investment helps insurers maintain their value and get a higher yield. In addition, China’s Insurance Regulatory Commission has allowed insurers to invest their funds directly in the stock market. This has caused many insurance companies to rush into stock investments.
The effective investment portfolio of listed insurance companies varies significantly every year, although it is stable overall. While government bonds account for 6.5% of investment, funds, and stocks make up the other 61.8%. By increasing the proportion of stock investment and capital, listed insurance companies can boost their investment efficiency. However, there are risks and benefits to investing in the stock market. Insurance funds can be higher in risk compared to bonds, which may result in higher returns.
Insurance capital can be in the form of foreign currency or domestic currency. These investments provide insurance companies with a liquidity buffer to pay claims and expenses. Insurance companies use this capital to invest in other assets, and they can even use it as collateral. This type of investment is very useful for hedging risks related to uncertain market conditions.
