The insurance industry has several investment channels. Many companies invest in bonds. These are an attractive form of investment because they offer stable investment income while reducing the risk of stock investments. A listed insurance company can invest up to 50% of its funds in bonds. This will give them a greater return on their investment.
As the market continues to evolve, insurers will be looking for better returns. Besides, insurers must also meet their regulatory obligations and commitments to policyholders. Hence, they are likely to accelerate the growth of their permanent capital in the coming years. But what do they look for in an investment opportunity?
Direct equity investment in insurance companies involves investments in non-public companies. These investments are permitted by regulators and are subject to rigorous requirements for corporate governance, professional staffing, net assets, and solvency. Besides, insurance companies must meet pre-investment approval requirements and demonstrate their credibility as shareholders and senior management.
The China Insurance Regulatory Commission recently announced a venture capital fund scheme that will support the use of insurance capital by small businesses and start-ups. The fund will invest in company stocks, convertible securities, and preferred stock to help finance small enterprises.