Huatai Insurance Group has signed a cooperation agreement with the Commercial Aircraft Corporation of China (COMAC), pledging to invest RMB15 billion (US$2.25 billion) in the domestic aircraft manufacturer.
Under the agreement, signed Wednesday, the investment will be made through a 10-year renewable debt investment plan. This is the first such insurer investment in COMAC, and the aviation firm can choose to renew the plan after 10 years, once the investment matures, reported state media arm Xinhua.
Shanghai-based COMAC is the maker of the C919, China’s first home-grown large passenger plane.
The funds provided by Huatai Insurance Group through Huatai Asset Management, its investment arm, will be used to fund R&D, investment, construction and operation of COMAC's civil aviation projects, the agreement stated.
COMAC chairman He Dongfeng said that the debt investment plan is an important step in getting insurance funds to support the real economy and other emerging strategic industries.
Meanwhile,
Chen Wenhui, vice chairman of China Insurance Regulatory Commission (
CIRC) said that R&D and production of passenger jets need long-term and persistent input of personnel, technology, and funds, and the insurance sector can meet these demands due to large funds that are stable in supply.
The CIRC has recommended that insurers use their funds to invest in projects that will boost the real economy, instead of risking it on short-term speculation which exposes the insurance sector to systemic risk.
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