31/01/2017

Overseas Property Investments by Asian Insurers-Chinese Insurers Emerge as Global Main Players-

mamoru masumiya 

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1|Introduction

Asian insurers have noticeably increased property investments in recent years backed by their growing insurance markets1. Some insurers have even invested overseas while their respective domestic property investment markets have recently shrunk, affected by uncertain Chinese economic conditions.   

2|Property Investment Increase by Asian Insurers

2|Property Investment Increase by Asian Insurers

Asian insurers have noticeably increased property investments in recent years. For example, Cathay Life Insurance, the leading Taiwanese insurer, has become the largest property investor among Asian insurers, exceeding Nippon Life Insurance, and mainland Chinese insurers have also increased their property assets significantly (Chart-1).
Chart-1 Property Assets Owned by Major Asian Insurers
The increase of property investments by Asian insurers has been backed by growing insurance markets in Asia as shown by strong life insurance premium growth in 2014 and 2015 (Chart-2).
Chart-2 Life Insurance Premium Growth in Asian Countries in 2014 and 2015

3|Overseas Property Investments by Japanese, Taiwanese and South Korean Insurers

3|Overseas Property Investments by Japanese, Taiwanese and South Korean Insurers

Among Asian insurers, Taiwanese and South Korean insurers are particularly proactive about property investment, as their property-to-total asset ratios are considerably higher than those of Japanese insurers. Major Taiwanese and South Korean insurers have even invested overseas while their domestic property investment markets have recently shrunk, affected by uncertain Chinese economic conditions.

As actual cases show (Chart-3), the stance of Taiwanese and South Korean insurers regarding overseas property investment is categorically different from that of Japanese insurers. Although Tokio Marine & Nichido Fire Insurance acquired a self-occupied office building in Singapore, no other acquisitions by Japanese insurers have been seen recently2. On the contrary, Taiwanese and South Korean insurers have continuously acquired properties overseas for the purpose of investment.

Taiwanese insurers have invested in the traditional way, investing in office buildings in Europe, particularly in London, excluding an exceptional case in Shanghai. These insurers prefer to invest independently and do not acquire large buildings beyond their capacity. Meanwhile, Cathay Life Insurance, the exceptional leading player, has acquired very large buildings.

On the other hand, South Korean insurers have proactively invested not only in London but also in North America and Southern Europe. They often establish joint ventures with other investors to share the risk of individual cases, which makes it possible for them to invest mainly in skyscrapers and large-sized buildings. Life insurers even sometimes establish a joint venture with a competitor in the same industry.
Chart-3 Overseas Property Investments by Japanese, Taiwanese and South Korean Insurers
 
2 Excluding investment in indirect property investment products such as global property investment funds

mamoru masumiya

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