Recently, a number of life insurance companies have disclosed their solvency reports for the latest three quarters. On the whole, a total of 77 life insurance companies have disclosed to the outside world, except for Cindat Life, which has not announced the specific amount of net profitThe remaining 76 life insurance companies achieved a cumulative net profit of 1,220 in the first three quarters9.4 billion yuan, although the sharp decline in the same period last year was swept away, but the overall increase in income of the industry is still very obvious
Among the ten pension insurance companies, six pension insurance companies have a comprehensive risk rating of A, and two of them have a comprehensive risk rating of B. In this disclosure, Ping An Pension, as the only pension insurance company whose solvency does not meet the standard, has attracted widespread attention from all parties
Solvency announcements for the first three quarters
According to regulatory requirements, insurance institutions must meet the three major indicators of "core solvency adequacy ratio of not less than 50%, comprehensive solvency adequacy ratio of not less than 100%, and comprehensive risk rating of grade B or above" in order to be regarded as a solvency company. Judging from the performance of life insurance companies in the first three quarters, a total of 7 insurance institutions have lit up the red light. Among them, the solvency adequacy ratios of Ping An Pension, Huahui Life Insurance and United Life Insurance all meet the regulatory requirements, but because the latest comprehensive risk rating is C, they are all solvency substandard enterprises.
In the first three quarters, the solvency of life insurance companies was not up to standard
Data**: The financial world.
In the past year, Ping An Pension's quarterly comprehensive risk ratings have been B, BB, BB and C。Ping An Pension explained in the solvency report that the main reason is that it is difficult to capitalize the risk and the score has declined. According to the relevant requirements of the Solvency Supervision Rules No. 13 - Liquidity Risk, the company's overall liquidity coverage ratio (LCR1) under the basic scenario, the company's overall liquidity coverage ratio (LCR2) under the stress scenario shall not be less than 100%, and the liquidity coverage ratio (LCR3) without considering the realization of assets under the stress scenario shall not be less than 50%, and Ping An Pension this year.
At the end of the second and third quarters, the liquidity coverage ratio (LCR3) without taking into account asset realisation under the 12-month stress scenario was respectively. 96%。
Ping An Pension Liquidity Coverage Ratio Data**: Insurance Cooperative.
The dilemma of pension companies
Looking back on 2023, the changes in a century continue to evolve, and external factors such as unabated global recession pressure and demand recovery are not as expected continue to impact the stability of the capital market.
Market positioning and competitive strategy need to be clarified
At the beginning of 2023, the Interim Measures for the Supervision and Administration of Pension Insurance Companies (Consultation Paper) (hereinafter referred to as the "Interim Measures") was launched to solicit opinions from the industry. The "Interim Measures" emphasize that pension insurance companies should focus on the main business of pension and better expand the pension insurance business to help China's pension system. Some people in the industry pointed out that in practice, some pension insurance companies mainly focus on health insurance business, which deviates from the original intention of development
The Interim Measures further highlight the "pension" characteristics of pension insurance companies. It is not only required to make an "oath" in the company's articles of association that "the company is a professional pension insurance operating institution, will focus on the main business of pension, develop commercial pension insurance, enterprise (occupational) annuity management and other businesses in accordance with laws and regulations, and strive to meet the diversified needs of the people for pension security", but also make requirements in the performance appraisal mechanism, pension insurance, commercial pension, pension management and other businesses of pension insurance companies should account for a total of not less than 70% in the performance appraisal. For insurance businesses that do not have obvious pension attributes, such as accident insurance, medical insurance, and illness insurance, the total premium scale is required to not exceed 40% of the total premium scale.
In addition, the "Interim Measures" encourage pension insurance companies to link insurance business, commercial pension business with pension communities, long-term care and other pension services in an appropriate way, so as to enrich the form of pension collection.
Mismatch in the duration of the company's investments
Mismatch in investment duration is a problem for many small and medium-sized insurance companies。During the rapid economic upswing in previous years, small and medium-sized insurance companies made large short-term investments in long-term liabilities in response to the promise of higher yields. However, with the economic downturn and further adjustment of interest rates, it is difficult for idle assets to find high-quality investment in the past, resulting in a duration mismatch between short-term assets and long-term liabilities.
On the one hand, with the transformation of the industry and the transformation of the times, the capital market has undergone in-depth adjustment, and the investment standards and methods of insurance funds under the new economy still need to be further improved. On the other hand, the mode of macroeconomic policy regulation and control is shifting from counter-cyclical adjustment to more emphasis on cross-cyclical adjustment. This will also further test the ability of insurance institutions to identify risks in the short term and the active management ability of long-term asset allocation.
For insurance funds that pursue long-term stable returns and pay attention to short-term cost management, the market with obvious differentiation characteristics puts forward higher requirements for insurance companies to accurately study and judge the general trend and the professionalism of investment research. At this time, the pension insurance company should establish a scientific development concept for the use of insurance funds with professional ability and reliable team, reverse the spatio-temporal mismatch between liabilities and assets, and find new value investment.
The product and service experience is low
Due to the long redemption period of pension products and the low overall service experience, the popularization of products still has a long way to go。All parties involved in the market need to form a joint force of pension financial investor education, and carry out more vivid and down-to-earth security education according to the financial literacy, knowledge structure and investment needs of different investors, so as to help everyone realize the importance of doing a good job in pension financial planning and enhance the experience of products and services.
At the policy level, with the help of preferential tax policies, we should deal with the problem of the flexible system of personal pension accounts and enhance the attractiveness of personal pension products。At the product level, we draw on the experience of overseas representative products to achieve asset diversification, globalization of allocation, and the combination of active and passive, and tailor pension products suitable for investors according to the actual needs of domestic investors in health and pension.
Pension company development proposals
In the face of changes in the external environment and stricter regulatory policies, pension companies need to face many challenges such as pressure on profitability and declining investment returns. In the author's opinionPension companies should comply with regulatory requirements and actively return to their main business;Actively explore investment opportunities and deal with solvency pressures head-on;At the same time, we should pay close attention to digital transformation, improve the quality and efficiency of services from the perspective of customers, and reduce the impact of negative consultations
Comply with regulatory requirements and actively return to the main business
Extending the long term, it can be seen that in recent years, supervision has repeatedly guided the development of pension insurance companies, promoted pension insurance companies to take the path of professional development, and better served the construction of the third pillar.
In 2021, the China Banking and Insurance Regulatory Commission (CBIRC) issued the Notice on Regulating and Promoting the Development of Pension Insurance Institutions, which requires pension insurance institutions to further highlight the characteristics of pension insurance. In December 2022, the China Banking and Insurance Regulatory Commission (CBIRC) issued the "Notice on Carrying out the Pilot Project of Commercial Pension Business of Pension Insurance Companies", allowing four pension insurance companies, including Chinese Life Pension Insurance Co., Ltd., Chinese Minmin Pension Insurance Co., Ltd., Taiping Pension Insurance Co., Ltd. and National Pension Insurance Co., Ltd., to carry out commercial pension business pilots in 10 provinces (cities) including Beijing, Shanghai, Jiangsu, Zhejiang, Shandong, Henan, Guangdong, Sichuan and Shaanxi.
Due to the increasing base of the elderly population and the continuous extension of the average life expectancy, the requirements of the old-age security system are getting higher and higherIt is inevitable to supervise and strengthen the pension attributes and risk management of pension insurance companies under the trend of aging。Although China has achieved phased results in the social pension security system, in areas with low levels of economic development, some residents have a low level of understanding, low trust and low participation rate of personal pension insurance. As the main body of the full-time pension business, pension institutions should firmly return to their main business, actively promote and guide, realize product expansion and promotion, and occupy a place in the third pillar.
Focus on investment returns and face solvency pressures head-on
Under the new economic situation, insurance institutions should accelerate the construction of a multi-asset portfolio system, create a valuation system with the characteristics of insurance funds and suitable for the development, transformation and upgrading of emerging industries, improve the return on investment in the asset shortage and long recession cycle, and consolidate the risk management and active allocation capabilities of insurance institutions as long-term fund managers.
Due to the relatively low scale of funds and weak anti-risk ability, pension companies need to accelerate the construction of digital transformation and empower the scientific management of assets and liabilities。By effectively strengthening the quantitative management of insurance companies, building a multi-dimensional pricing evaluation system, and strengthening the ability to deal with key issues such as stress testing. Promote the high-quality operation of insurance funds with digital investment and research, and effectively prevent and resolve financial risks.
Leverage digital transformation to improve efficiency, experience, and service quality
In the face of operational pressure to reduce costs and increase efficiency, pension companies need to take customers as the core and build three capability systems of digital customer insight, digital product innovation, and digital operation risk control through transformation.
Digital customer insights are at the heart of the list。Through in-depth portrayal of customer attributes, we can grasp the pain points of customer needs, formulate a closed-loop system of digital operation covering product services, content operations, and marketing activities, and accelerate customer expansion.
In terms of product innovation, relying on the health resource advantages of insurance companies, it integrates remote medical treatment, home care and other services to provide annuity customers with a variety of project services covering family doctor consultation, drug purchase, hospitalization green pass, home sports and healthEnhance the sense of acquisition of annuity customers with health services and create differentiated competitive advantages.
In terms of operation risk control, we optimize business processes based on customer needs, and transform operation management to online, automated, and intelligent. Based on the big data risk identification model, it improves the risk control capabilities of key businesses such as risk identification and pricing, claims settlement, anti-fraud, and anti-money laundering. By building a closed loop of the whole process of accurate service and operation, customers can feel a warm service experience.
ConclusionSince the beginning of this year, some problematic insurers have ushered in significant and substantial progress in their risk management. It is believed that as the risks are gradually cleared and the operation is on the right track, the latest repayment situation and operational progress of various insurance companies will also be further improved, and we will wait and see.