The alternative investment business of insurance funds has shown some signs of problems, which have attracted the attention of the regulatory authorities.
Recently, the official website of the State Administration of Financial Supervision announced for the first time the administrative penalty decisions on four insurance asset management companies. The violations of the four penalized insurance asset management companies are different and have certain commonalities, and they are mainly related to alternative investment business.
A number of industry insiders said that as the main management institution of more than 20 trillion yuan of insurance funds, insurance asset management companies have maintained strong robustness and standardization over the years. However, in recent years, with the increasingly severe market situation, intensified business competition, and the increase of market players, coupled with the tightening of supervision, insurance asset management institutions also need to pay more attention to compliance management, and strengthen risk management and control capabilities through problem exposure and improvement.
It involves debt plans, equity investments, and trust plans
The violations of the four penalized insurance asset management companies mainly involved alternative business areas, including debt investment plans, equity investment plans, equity investment**, trust plans, etc.
Three of the companies were fined for the debt investment plan business, and the relevant violations included "non-standard post-investment management of the capital of the debt investment plan project", "false statements in the follow-up management report of the debt investment plan submitted to the regulatory authorities", and "violation of the relevant regulatory provisions on the use of insurance funds in the management and use of the debt investment plan funds".
Investment in trust plans is also a business area where several insurance asset management companies have violated the rules. The fine shows that the relevant violations of laws and regulations of the insurance asset management company include: the investment trust plan did not use the funds in accordance with the contract, the investment in non-actively managed trust products, the pre-investment risk control of trust investment was not prudent, and the investment in non-financing collective trust was not compliant.
In terms of equity investment, a leading insurance asset management company was pointed out by the regulatory authorities that there were problems of "non-standard post-investment management of equity investment plans" and "investment in commercial housing through equity investment". Equity investment is a business with a long term, and post-investment management is an important part of the investment, while commercial housing is an area in which insurance funds cannot be invested. These two problems may represent typical problems in the process of rapid growth of equity investment by insurance institutions.
In addition to the above problems, an insurance asset management company also has the problem of "the use of insurance funds does not adhere to independent operation, and the shareholders interfere in the use of insurance funds". It is reported that the background of the shareholders of this insurance asset management company is real estate, and the insurance company is one of several major companies in the industry that have violated the rules of "mutual investment".
Alternative businesses are an important area
At present, about one-third of the 27 trillion yuan of insurance funds have been invested in alternatives, which is a business area other than bank deposits, bond investment and investment, and it is also an important variety that has made a stable contribution to insurance investment income in recent years. At the same time, alternative business is also one of the main businesses of insurance asset management companies.
Among them, the insurance funds have invested in the debt investment plan and the insurance asset management company has initiated the establishment of the debt investment plan for more than ten years. The debt investment plan is one of the main alternative tools for insurance funds to invest in infrastructure and other physical projects, and the investment period is relatively long, which better matches the characteristics of insurance funds.
Since 2020, the scale of debt investment plans registered by insurance asset management companies has reached more than 800 billion yuan for many years. According to data from the Insurance Asset Management Association, as of the end of 2022, insurance asset management institutions have registered (registered) a total of 2,698 debt investment plans, with a scale of 534 trillion yuan.
Debt investment plan business is also a common business carried out by insurance asset management companies. According to industry information, as of the end of the first quarter of 2021, 23 of the 28 insurance asset management companies had the ability to manage debt investment plan products.
Trust plans are one of the main types of insurance funds invested in alternative businesses. According to the Report on the Development of China's Insurance Asset Management Industry (2023), as of the end of 2022, the scale of the collective fund trust plan for insurance capital investment is 134 trillion yuan, which has shrunk by about 300 billion yuan from the peak in 2020. However, trust plans are still the first major category of non-standard financial products in the allocation of insurance funds.
Equity investment is a business area that insurance funds have paid more attention to and have been encouraged to carry out in an orderly manner in recent years. In 2020, the regulatory authorities issued new regulations on financial equity investment of insurance funds, relaxed the restrictions on the industry scope of direct equity investment by insurance funds, encouraged insurance funds to give full play to their long-term capital advantages, and provided multi-level financial support for entities and strategic emerging industries through equity investment and other forms.
However, with the relaxation of equity investment policies, there are also signs of chaos in the market. It is understood that through the form of equity investment, individual insurance institutions have broken through the existing regulatory provisions on the use of insurance funds, invested in assets that could not be invested, or disguised to achieve the purpose of arbitraging insurance funds, covering up investment losses, and transferring benefits, burying hidden risks. Just last month, regulators organized insurance companies to investigate equity investments.
Pay more attention to compliance management
The four insurance asset management companies were collectively punished, which attracted high attention from the industry. Some insurance investors said that insurance asset management companies are still relatively stable among various types of asset management institutions, and there are fewer risks and chaos in recent years, but this does not mean that the industry is completely free of problems.
The fine imposed on the insurance asset management company this time has also made the industry aware of the trend of stricter supervision. This is the first time that the regulatory authorities have imposed penalties on insurance asset management companies in batches, and there are many leading state-owned insurance asset management companies that have been punished, and the overall penalty amount is relatively high.
Previously, Li Yunze, Secretary of the Party Committee and Director of the State Administration of Financial Regulation, said in an exclusive interview with Xinhua News Agency that he would closely focus on strong supervision and strict supervision, resolutely achieve "long teeth and thorns", and continue to improve the forward-looking, accurate, effective and collaborative nature of supervision. He mentioned that he will strictly enforce the law and dare to show his sword. We should thoroughly rectify the chaos in the financial market, and ensure that we adhere to principles, dare to face tough problems, treat everyone equally, and be fair and just. Focus on the "key things" that affect financial stability, the "key people" that cause major financial risks, and the "key behaviors" that undermine the market order, and really hit the board accurately and painfully.
In addition, people in the asset management industry also noted that the first financial work conference requires that the excellent traditional Chinese culture should be vigorously promoted in the financial system, adhere to honesty and trustworthiness, seek profit by righteousness, be prudent, be honest and innovative, and comply with laws and regulations.
Relevant people in the insurance asset management industry said that in the financial regulatory environment of strict supervision and risk prevention and control, the insurance asset management industry should pay more attention to compliance construction, adhere to compliance with laws and regulations, and strengthen the industry's risk management and control capabilities.
*:* Times Author: Liu Jingyuan, Brokerage China.