PICC Life Insurance has signed an agreement to set up a CNY100m ($14.1m) insurance trust with Beijing-based China Credit Trust Co, one of the biggest trust companies in China.
The agreement was signed on 26 May 2023 with China Credit Trust whose largest shareholder is the PICC Group which has a 32.35% stake in the trust company.
The agreement followed a move on 18 May in which Taiping Life entered into a cooperation pact with Shenzhen-headquartered China Resources SZITIC Trust Co. The two parties said that they would cooperate on insurance trusts.
The last two years have seen a boom in the establishment of insurance trusts, several of which involve funds of at least CNY100m. Life insurers have been seeking new avenues for growth because of a slowdown in the sector in the wake of the COVID-19 pandemic.
An insurance trust combines the features of a trust and life insurance. The arrangement is that the insurance trust is both the owner and beneficiary of one or more insurance policies. On the death of the insured, the insurance company pays out the benefits due from the insurance policies which become the assets of the trust and are managed by a trustee. The trustee distributes investment proceeds to the beneficiaries of the trust in line with instructions from the trustee (the policyholder).
Insurance trust business has grown with rising affluence in China and the need among the wealthy to manage their assets and their desire to pass on a financial legacy.
For insurance companies, insurance trust services allow them to increase sales and acquire high-net-worth customers.
