Dissertation > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Trust

An Analysis on Insurance Fund Investment in REITs in China

Author LiHaiChao
Tutor LiuJinZhang
School Tianjin University of Finance and Economics
Course Finance
Keywords insurance fund investment insurance fund application Real Estate Investment Trusts(REITs)
CLC F832.49
Type Master's thesis
Year 2010
Downloads 112
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The insurance industry in China has gained prominent achievement in past few decades. The premium income of the whole country reached 1.11373 trillion yuan and the total assets reached 4.1 trillion yuan in 2009. Meantime, the insurance industry also had to bear tremendous pressure in the application of the insurance fund. From legal aspect, the newly promulgated and implemented Insurance Law of People’s Republic of China first clarified that the insurance fund can be invested in real estate and it also marked the breakthrough which made the investment of insurance fund in real estate come true. The real estate industry entails not only high profit but also high risk. Therefore, the insurance fund needs to find suitable investment tool in order to involve in real estate industry. REITs, as a newly emerged tool in real estate market, are characterized by non-relevance, high mobility and high return. All the above characteristics of REITs corresponding to those of insurance management, which include strong externality, the hysteretic nature of cost, the aleatory feature of the transaction, and the long running period of capital, provides an excellent platform for the investment of insurance fund in real estate market. Meantime, as institutional investors, the insurance companies invest their premium in real estate and trust fund. Consequently, it can relieve the lack of fund in real estate and prevent the risk in real estate accumulating in bank system.The paper introduced to the present situation of insurance fund application and the theory of REITs by the standard analysis method and the data analysis method. Then, on the foundation of foreign experience, the paper was attempted to combine insurance fund application with REITs to expound the feasibility of insurance fund investment in REITs. Moreover, this paper provided relevant policy suggestions on how to handle with the encountering risk.

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