Jonathan Zhao, EY’s Asia-Pacific Insurance Leader, told Insurance Business
that while Chinese insurers continue to look overseas several factors make the Australian market less attractive than global counterparts.
“We have seen Chinese insurers looking at the Australian market but we haven’t seen a real deal happen yet,” Zhao said.
“It has happened in the US and European market and part of that reason is that they will be able to utilise some of the assets to leverage off the quality of continental Europe of the US.
“A lot of it is still looking but I don’t know if this is going to be the market that we are actually going to see some of this investment come in in the very near future. It is still waiting for the right time for this to come in.
“It is difficult to predict when it will happen.”
Zhao noted that the Australian dollar continues to hamper the attractiveness of the Australian market as Chinese businesses look abroad.
“Recently there are a number of insurance transactions that have already happened or are happening in the Australian market. One of the recent transactions was with a Japanese buyer and more and more Chinese buyers are looking outbound globally, including the Australian market.
“With the depreciation of the Aussie currency, that makes things attractive but at the same time, if you look at the China market the renminbi also being depreciated, although not at the same magnitude of the Aussie dollar and also because of the potential future depreciation, a lot of the Chinese companies are trying to get their money outside of China.”
Zhao said that the expertise of Australian businesses, with their knowledge of dealing with catastrophes which strike the country, make businesses more attractive but the size and scale of Australian businesses could be off-putting.
“If you look at some of the Chinese investment in Europe, in selected markets for example in the Netherlands or Portugal, those are the very large size target that they are looking at.
“A lot of them have a big ambition in growing their business so unless they are the right size and fit into their business, even if they are looking to get into the Australian market, we just don’t see the synergy for them to put the money here unless a target becomes attractive.”
Chinese insurers are looking at the Australian market but it remains an unattractive space for investment, one business leader has said.