Recently, with the successive disclosure of the operating data of the insurance industry in 2023 and the solvency report of insurance companies in the fourth quarter of 2023, the operating report cards of non-listed life insurance companies that have attracted much attention in the market have also been revealed.
From the perspective of liabilities, most life insurance companies have achieved positive growth in premium income under the comprehensive impact of the recovery of insurance consumption and the hot sales of increased life.
Compared with the stable recovery on the liability side, the performance of the investment side of insurance companies can be summarized as "unexpected": the return on investment has generally risen, but the net profit of many insurance companies has declined or even lost. According to the data, among the 60 non-listed life insurance companies that can be counted, 35 insurance companies will have a net loss in 2023.
Why is the return on investment of non-listed life insurance companies "acceptable" under the weak equity market? Since the return on investment is relatively considerable and the premium is generally increasing, why do non-listed life insurance companies lose more than half of their net profits?
The rate of return on comprehensive investment has generally risen
The bond allocation hit a 10-year high
2023 is the year of reopening after the pandemic.
In the face of a more complex economic situation, the capital market is also changing.
With the release of solvency reports for the fourth quarter of 2023, the investment returns of non-listed life insurers in 2023 have also surfaced.
According to incomplete statistics, 61 non-listed life insurance companies have recently disclosed the annual investment rate of return. According to the data, the average comprehensive investment return rate of non-listed life insurance companies included in the statistics in 2023 is 385%, and only Hengan Standard Pension has a negative comprehensive investment return, that is, -119%。
A Smart Insurance also noted that in 2023, there are 7 non-listed life insurance companies with a comprehensive investment return of more than 6%, namely Taikang Life 668%, Sino-British Life 642%, MetLife 634%, ICBC AXA 622%, 616%, Fosun Prudential 616%, Lujiazui Cathay 602%。
From an objective point of view, the equity market environment in 2023 is not friendly to the allocation of insurance funds. CSI 300 Index for the full year of 2023**1138%；The GEM index fell by 1941%。In such a market environment, many of the best and bank wealth management products have a negative return on investment, and it is not easy for the average comprehensive investment rate of return of insurance funds to achieve a general increase.
In 2023, the equity market will be weak, and the comprehensive investment return rate of non-listed life insurance companies will be generally unsatisfactory.
The operation of the insurance industry in 2023 recently released by the State Administration of Financial Supervision also shows that from the perspective of asset allocation, the proportion of insurance bond investment has increased againIn 2023, the proportion of bond investment will increase from 4093%, up 448 percentage points to 4541%, and the balance of bond allocation is about 1257 trillion yuan, a ten-year high.
On the other hand, it may be due to the fact that the insurance company will change the bonds held by the insurance company to be available for investment at maturity to be recorded according to the market value of the financial assets, and then the profit or loss will be included in other comprehensive income, resulting in an increase in comprehensive investment income.
In fact, even if the comprehensive investment return of non-listed life insurance companies in 2023 is acceptable, the industry has a deep understanding of the increasing pressure on insurance capital allocation.
Some people in the insurance asset management industry bluntly said that from the perspective of the average comprehensive investment rate of non-listed life insurance companies in the past three years, the three-year average comprehensive investment rate of more than seven ** life insurance companies is less than 5%, and the assumption of long-term investment return on the embedded value of life insurance companies has been challenged.
In this context, in order to better prevent the risk of interest rate loss, in 2023, the regulator will vigorously guide the industry to reduce the cost of assets and liabilities, and the upper limit of the predetermined interest rate of ordinary life insurance products will be increased from 35% to 3%, and the upper limit of the guaranteed interest rate for participating products and universal products has been lowered to 25% and 2%.
Shortly after the start of 2024, the market once again reported that from January 2024, the settlement interest rate of universal insurance of all insurance companies shall not exceed 4%; June must not start more than 38%, and some large-scale and risk disposal institutions need to be reduced to no more than 35%。
However, under the downward trend of interest rates, it is difficult to increase the absolute return of additional bonds, so insurance funds have also strengthened their multi-asset allocation in recent years. A wisdom insurance also pays attention to,Since 2023, life insurance companies have frequently launched "high-quality real estate in first-tier cities." From the perspective of projects that have entered the actual investment stage, in 2023, the leading life insurance companies represented by Ping An Life, Pacific Life and Taikang Life will mainly invest their funds in stock real estate projects in important areas of Beijing and Shanghai.
Net profit performance is the opposite of investment income
More than half of the insurers lost money
From the perspective of the specific operating performance of non-listed life insurance companies, in 2023, there will be a decline in interest rates, a downturn in the capital market, and a comprehensive net-worth transformation of bank wealth management, superimposed by 3Stimulated by the suspension of traditional life insurance products with a predetermined interest rate of 5%, life insurance companies will achieve rapid growth in premiums in 2023.
According to data released by the State Administration of Financial Regulation, the premium income of the insurance industry in 2023 will be 5,124.7 billion yuan, a year-on-year increase of 913%。Among them, life insurance companies achieved a total of 3,537.9 billion yuan in original premium income, a year-on-year increase of 1025%。Among them, life insurance, health insurance and accident insurance achieved original premium income of 2,764.6 billion yuan, 728.3 billion yuan and 45 billion yuan respectively, with a year-on-year growth rate of % and -98%。
The solvency report for the fourth quarter of 2023 disclosed by non-listed life insurance companies also shows that among the 69 non-listed life insurance companies that can be counted, 56 insurance companies will achieve positive growth in insurance business income in 2023, of which 40 insurance companies will achieve an increase of 10% or more in insurance business income.
The growth of life insurance companies' liabilities and investment returns on assets seems to be thriving, but judging from the net profit performance of most small and medium-sized life insurance companies, they will fail to achieve profitability in 2023.
According to the data, among the 60 non-listed life insurance companies that can be counted, 25 are profitable and 35 are loss-making. Among them, Bohai Life Insurance, Jianxin Life Insurance, and China Post Life Insurance Co., Ltd., three life insurance companies, all lost more than 3 billion yuan last year. Overall, the overall loss of non-listed life insurance companies in 2023 will exceed 14 billion yuan.
From the asset side, why is the net profit performance of life insurance companies "opposite" from the performance of investment income? Some market participants pointed out to the analysis of A Smart Insurance that this is not unrelated to the increase in reserves.
Generally speaking, the average yield to maturity of 750-day treasury bonds will affect the profits of insurance companies through the provision of reserves. Since the principle of optimal estimation is adopted for the assessment of insurance reserves under the accounting standard of affiliated enterprises, the discount rate of reserve assessment is generally based on the evaluation standard of "average yield to maturity of 750-day treasury bonds + a certain premium".
According to the 2023 financial market situation announced by the People's Bank of China, as of 2023, the yields of major maturities have decreased to varying degrees compared with the end of 2022.
According to the official website of the Ministry of Finance, as of the end of 2023, the yield on 2-year Chinese government bonds is 221%, up from 2.2 at the end of 202235% down 14 basis points. As a result, the downward trend in China's treasury bond yield curve has led to a decline in the discount rate of insurers, resulting in insurers needing to make more reserves for insurance contracts in accordance with the valuation standards, thereby reducing pre-tax profits for the current period.
In the view of industry insiders, the cost pressure on the liability side and the rapid growth of compensation expenses also have a greater impact on the profitability of insurance companies, which is also the basis for the supervision to strengthen the "integration of reporting and banking" of life insurance products in 2023, and guide insurance companies to strengthen expense management and pay attention to accounting operations.
In 2024, the transformation of the debt side will be accelerated
Improvement on the asset side can be expected
One day begins this year, and a year ago is empty.
Looking back at the 2023 report card of non-listed life insurance companies, there are joys and loneliness, but in any case, it is a thing of the past, and what is more important is how to do well and stabilize in 2024.
First of all, from the perspective of liabilities, a number of industry exchange data show that in the first month of 2024, the individual insurance channel has generally made a good start beyond expectations. In contrast, the bancassurance channel started the year slightly lower than expected. In the bancassurance channel under the "integration of newspapers and banks", the enthusiasm of bank sales staff has decreased due to the reduction of commissions, resulting in a slowdown in the business development of the bancassurance channel.
However, people in the industry are generally happy about the long-term development of the bancassurance channel. In addition, under the premise of the overall fluctuation of ** and ** investment income in the past two years, even if the life insurance 3The 5% predetermined interest rate product has been reduced to 3%, which is still very attractive to the average investor.
A number of brokerage reports also believe that the pressure on the liability side of the life insurance industry will be limited in 2024, and the trend of steady recovery in the medium and long term is obvious. Catalyzed by policies such as the decline in scheduled interest rates and the integration of newspapers and banks, insurance companies will also accelerate their transformation.
Looking at the asset side, from the macro policy perspective, the RRR cut in February released about 1 trillion yuan of long-term liquidity funds to the market, bringing some space for insurance companies to compete on the asset side.
Boosting the confidence of the capital market" is also the leading trend of the current policy. The Politburo meeting held on July 24, 2023 proposed to "activate the capital market and boost investor confidence", and the ** financial work conference held at the end of October once again proposed to "activate the capital market".
At the beginning of 2024, insurance capital will break the silence and "raise" A-share listed banks. On January 11, Wuxi Bank announced that from December 29, 2023 to January 9, 2024, Great Wall Life increased its stake in Wuxi Bank by 999 in the secondary market through the Shanghai ** Exchange trading system990,000 shares, accounting for 046%。As of the disclosure date of the announcement, Great Wall Life held 107646274 shares of Wuxi Bank, accounting for 5% of the total share capital.
Following the listing of Wuxi Bank, Great Wall Life Insurance increased its holdings in Wuxi Bank again through share transfer. On the evening of January 22, Wuxi Bank announced that on January 19, Great Wall Life Insurance converted its 132130,000 convertible bonds were converted into A-share ordinary shares of the Bank, and the number of converted shares was 2,433330,000 shares. On the same day, Great Wall Life increased its holdings of the bank's convertible bonds by 38390,000 sheets.
The listing of bank stocks by insurance capital at the beginning of the year may be just the beginning of an increase in equity investment. According to the "2024 and 2024 Q1 Insurance Asset Management Industry Investment Confidence Index Survey" recently released by the Insurance Asset Management Association of China, the insurance equity investment confidence index has risen for two consecutive quarters.
Fitch Bohua, a wholly-owned subsidiary of Fitch Ratings, the world's third largest rating agency, recently released a research report predicting that the macro economy will show a recovery trend in 2024On the investment side, insurance companies will maintain a stable income level by adding long-term interest rate bonds, low-valuation blue-chip stocks and new infrastructure assets.
Overall, despite the continuous favorable policies, the current equity market is still not strong from the "body feeling"**, and looking forward to 2024, life insurance companies still face challenges on the investment side.
The road is tortuous, but the future is bright. With the stabilization of the economic recovery and the release of policy dividends, it is still expected for insurance companies to strengthen their multi-asset allocation capabilities and maintain a long-term stable level of investment returns. On the liability side, benefiting from the further strengthening of the "integration of reporting and banking" policy in 2024 to guide insurance companies to reduce the cost of assets and liabilities, the operating quality of life insurance companies will gradually improve.
What is the insurance industry like, we will see in the full Year of the Dragon!
Here,All the staff of Azhibao, the think tank team, and the Dingfeng 108 of China Insurance will wish Ahuibao fans and insurance people a good year in the Year of the Dragon: the dragon and the tiger, the spirit of the dragon and the horse, and the step forward!