Emerging trends for insurance fund investment in PE funds

Much meaningful exploration has been attempted by insurance companies since 2008 to participate in China’s healthcare service industry. For example, through its subordinate trust companies, Ping An invested in health screening and high-end medical institutions, including China’s largest non-public health examination institution, Ciming Health Checkup Management, and medical institutions jointly founded by Ping An Trust and Sun Yat-sen University.

Operating within the same industry chain, pharmaceutical companies have also invested successfully in the healthcare market, and their experience merits special consideration by insurance companies. For Fosun Pharmaceutical – a group with 30 pharmaceutical companies which is noted for its acquisition-oriented development model – its acquisition of shares in Chindex Medical in 2010 gave it indirect control of Chindex’s high-end for-profit hospital business and an overseas medical device company. Fosun mainly targets profit-oriented hospitals for investment in a bid to directly share in their revenues.

During the national insurance regulation conference held on 26 January 2015, Xiang Junbo, the chairman of the China Insurance Regulatory Commission (CIRC), released a “report card” showing a five-year record-breaking performance in investment yields and overall investment returns of insurance assets. According to Xiang, the operating efficiency of the insurance industry improved significantly in 2014, with total profit projected to reach RMB204.6 billion (US$33.2 billion), up 106.4% year over year. There is no doubt that investment has contributed greatly to the overall profitability of insurance companies.

Sun Jian is a senior partner and Wang Junlu is a lawyer at Zhong Yin Lawyer