Korean insurers’ overseas investments hit all-time high

[THE INVESTOR] South Korean insurance companies’ investments overseas rose to a record high in the first quarter in 2016 as they are branching out into higher-return foreign assets to combat falling yields at home.

Local insurers committed US$49.4 billion for foreign assets and companies during the January-March period, up 15.9 percent from a quarter earlier or up 50.9 percent on-year, according to data from financial investment industry.

The Q1 figure remarks the all-time high amount and has surged for the fourth quarter in a row since the second quarter last year. Their investment overseas stood at only 20 billion won (US$17.51 million) in 2011.

Investment managers at major private-sector insurers, are particularly focused on investing in foreign bonds as a safer option.

“The supply of long-term bonds in Korea has fallen short of demand for insurers who seek long-term investment vehicles amid the protracted low interest rates,” said Son Mi-ji, a researcher at Shinhan Investment.

They earmarked significantly high amount of money -- as much as 10 times -- into bonds than equities. Foreign bonds accounted for 60.2 percent of their total investment portfolio while equity-based products took up a smaller portion of 5.9 percent.

By Park Han-na (hnpark@heraldcorp.com)