The need of China’s insurers to invest overseas looks set to swell in the coming year, offering international fund managers a vital potential avenue of opportunity. In August, Ping An, the country’s second-largest insurance group, told its shareholders that it planned to make foreign assets comprise Rmb120 billion ($17.8 billion) or 7% of its portfolio by the end of this year. It then intends to further increase this to up to 10% in the next three to five years.

It marked the first time a Chinese insurer had publicly set out a target for overseas investment. And, in a piece of good news for foreign asset managers, Ping An said it would seek the help of external managers to do so.

Where Ping An treads, others are sure to follow.

“Third party outsourcing in overseas investment is an undoubted trend [for insurers],” Helen Yang, Beijing-based managing director for offshore investment at Bohai Life Insurance, told AsianInvestor.

And it’s a sizeable one. All-told, China’s insurance industry had Rmb14.5 trillion, or $2.14 trillion in assets at the end of August, according to the China Insurance Regulatory Commission (CIRC). That was about 41% of the $5.2 trillion held by the US insurance sector at the end of 2015, according to the Insurance Information Institute. Insurers are allowed to invest up to 15% of this amount, or Rmb2.18 trillion, into overseas assets. To date, however, most have only utilised a fraction of this quota.

That’s set to change as insurers look to invest more outside of China’s borders. They have good reasons for doing so. Last year’s equity crash having shown the vulnerability of the local stock market, onshore bond yields have dropped sharply and credit default risks are rising. Add into this a depreciating renminbi, and it’s no surprise insurers keen to invest overseas.

But unlike sovereign wealth funds and foreign reserves managers, China’s insurance companies’ overseas experience is sharply limited.

“Insurers [in China] are in the early stage of developing their capability and offshore allocations,” Allen Wang, head of Asia institutional business at Standard Life Investments in Hong Kong, told AsianInvestor.

As they eye investing overseas, the insurance companies are taking a leaf out of the book of China’s three state-owned funds, and looking to invest overseas via outsourced mandates.

“We may need to pay some management fees for tuition, asking external managers to help us in [building our] overseas exposure first,” said a Beijing-based investment manager at a small-sized life insurer.