Top Biz News

Taikang Life to bank on seniors

By Hu Yuanyuan (China Daily)
Updated: 2010-01-19 07:53

With 169 million Chinese estimated to be over the age of 60, the country's fourth-largest life insurer plans to invest 5 billion yuan ($732.36 million) in a retirement community for seniors in Beijing.

"We've got a 300 hectare site reserved in Changping district for the construction of this community," Taikang Life Insurance Co President Chen Dongsheng told China Daily. "Once the industry regulator releases investment details, we can get started on the project."

New revisions to the nation's insurance law, which went into effect on Oct 1 last year, allow insurance companies to invest in the property sector.

Towards that goal, Taikang Life has already established Taikang Home Management Co Ltd, which will provide management services for retirement facilities.

Taikang Life is currently hiring and training staff for the new enterprise.

Meanwhile, the company is in talks with the Ministry of Labor Resources and Social Security to build a national network for seniors. Organized under the State Council, the Ministry of Human Resources and Social Security is responsible for setting national labor polices, standards, regulations and managing the nation's social security system.

The company's premium revenue grew 16 percent year-on-year to 67 billion yuan at the end of 2009, with profits up 47 percent to 2.5 billion yuan. Its investment return ratio was above 10 percent, exceeding the industry average.

Taikang is not the only life insurer targeting the country's aging population. The investment arm of China Life has signed a deal with Mercantile Capital Corporation Real Estate Co Ltd to develop a plot of land in Langfang, Hebei province, for a senior retirement community.

According to Tao Lijun, an expert with the China Research Center on Aging, building communities retirement is a long-term investment, with annual returns forecast to be less than 10 percent. However, china's huge market potential is proving very attractive to capital investors.

Wang Zhenyao, director of the social welfare and charity department of the Ministry of Civil Affairs, said China has nearly 170 million seniors over age 60, which accounts for 12 percent of the total population. Moreover, an estimated 10 million people will be added to this group each year.

"The aging industry, ranging from medical services to property development, is valued at 1 trillion yuan annually," Wang said.