China insurers run huge risks for high returns

Hong Kong

YEARS of breakneck growth for China's top insurers has been partly fuelled by a splurge on risky investment products that could punch multi-billion-dollar holes in their balance sheets if the slowing economy triggers heavy debt defaults.

Industry premiums have increased by an average 13.4 per cent a year since 2010, according to the China Insurance Regulatory Commission (CIRC), but in an environment of low interest rates and unreliable stock markets, insurers have increasingly looked to alternative investments to make the returns that they need to service their growing business.