Huagui Life Insurance shares, which have increased their "content", have failed to increase their profits. On January 30, Huagui Life released the solvency report for the fourth quarter of 2023, showing that in 2023, Huagui Life achieved insurance business income of 469.8 billion yuan, achieving a net loss of 37.8 billion yuan.
Huagui Life Insurance has proposed a three-step strategy of "six years of profitability, eight years of flat, and nine years of listing", but there is still a gap between the first step of "six years of profitability". Huagui Life's development strategy is "hard knock" term life insurance, focusing on online sales and agency channels. Industry experts said that the continuous decline in market interest rates in recent years may bring interest margin losses to the term life insurance business, and the widening of Huagui Life's losses may be related to its single product strategy.
Six-year profitability" failed to materialize as expected.
At present, various insurance companies are successively disclosing the solvency report for the fourth quarter of 2023, and through the data indicators, the operation of insurance companies in 2023 can be directly released. On January 30, Huagui Life released the solvency report for the fourth quarter of 2023, showing that in 2023, Huagui Life achieved insurance business income of 469.8 billion yuan, a year-on-year increase of 1983%, but achieved a net loss of 37.8 billion yuan, with a net loss of 36.1 billion yuan, the loss widened year-on-year.
2023 is the sixth anniversary of the opening of Huagui Life, and Huagui Life has proposed a three-step strategy of "six years of profitability, eight years of flattening, and nine years of listing", however, from the current situation, there is still a big gap from the first step of "six years of profitability".
From the perspective of the development law of the industry, life insurance companies generally need to go through "seven flats and eight profits", that is, they need to carry through a loss period of about seven years before they can enter the profit channel. Huagui Life's strategy of "making a profit in six years, tying in eight years, and going public in nine years" shows its ambition to break the convention and make profits in advance. Obviously, Huagui Life failed to do so.
In terms of overall operation, since its establishment, Huagui Life's insurance business income has grown steadily, from the initial 42.4 billion yuan increased to 469.8 billion yuan. But Huagui Life only achieved 03.1 billion yuan in profit, the rest of the time has been in the red. From 2017 to 2020, Huagui Life Insurance achieved a net loss of 07.8 billion yuan, 1200 million yuan, 07.9 billion yuan, 06.8 billion yuan. In 2022 and 2023, Huagui Life's losses will expand rapidly, achieving a net loss of 36.1 billion and 37.8 billion yuan. Since its establishment, Huagui Life Insurance has accumulated losses of more than 1 billion yuan.
A reporter from Beijing Business Daily sent a letter to Huagui Life Insurance for an interview on related insurance business issues, and the relevant person in charge of the company said that there was no information to reply to for the time being.
Kenny, the chief writer of actuarial cloud notes and a Chinese actuary, said that the main reason for the expansion of Huagui Life's losses may be limited by the downturn in the capital market, the decline in market interest rates in recent years, and the obvious decline in the investment yield of insurance companies, in addition, due to the downward trend of the 750-day moving average treasury bond yield curve, resulting in insurance companies increasing insurance contract reserve liabilities, so the decline in interest rates is a "mixed double" for insurance companies.
"Hard" term life insurance market.
As a subsidiary of China Kweichow Moutai Distillery (Group) Co., Ltd. (hereinafter referred to as "Moutai Group"), Huagui Life Insurance has attracted much attention from the market since its establishment in 2017. Not only because of its "content", but also because of the development strategy of Huagui Life's "hard knock" term life insurance. At the time of the fire of "Sauce Latte", there were insurance people who took advantage of the opportunity to market Huagui Life's term life insurance products.
However, it is different from other life insurance companies that rapidly expand their scale, lay out channels, and build teams. On the product side, Huagui Life focuses on term life insurance products with high sum assured and low premiums; In terms of channels, Huagui Life Insurance mainly sells products through Internet channels and agency channels, and does not attach importance to the cultivation of offline first-class teams.
Kenny said that term life insurance has low premiums, high leverage, low piece average and low commissions, and at present, the Internet life subscription** has reached the extreme, and it is difficult for new players to enter.
Other insurance companies do not pay much attention to term life insurance, except for Huagui Life, there are very few insurance companies that use term life insurance as their main product. Li Wenzhong, deputy director of the Rural Insurance Research Institute of Capital University of Economics and Business, said that on the one hand, term life insurance is a protection insurance product with limited market demand; On the other hand, term life insurance has a lower average premium and smaller profit margins, and most insurance companies are not interested in it.
Li Wenzhong further analyzed that in recent years, market interest rates have continued to fall, which may bring interest margin losses to the term life insurance business; Secondly, in recent years, the competition in the insurance market has intensified, and the "Matthew effect" has become stronger and stronger, which is even more unfavorable for small and medium-sized companies like Huagui Life, especially those with simple product strategies. Therefore, the widening of Huagui Life's losses may be related to its single-product strategy.
The board of directors has a "big change".
The solvency report shows that in the fourth quarter of 2023, Huagui Life Insurance completed a "major change" of the board of directors.
A reporter from Beijing Business Daily noticed that in the re-election of the board of directors of Huagui Life, 7 directors, including the former chairman Wang Zhenwu and the former vice chairman Wu Zhijun, left their posts, and 5 new directors were hired, including the current chairman of Huagui Life.
After the completion of the capital increase in 2023, Huagui Life's "Maotai content" will be increased, and Moutai Group will hold 33With 33% of the shares, it is the largest shareholder, and the secretary of the board of directors of Moutai Group has also become the chairman of Huagui Life. A reporter from Beijing Business Daily combed and found that in the current list of directors of Huagui Life, 4 of the 8 directors have a background in the performance of Moutai Group, in addition to **, Yang Jun, Liu Tong, and Wang Jianbo. At the 2023 mid-year work conference of Huagui Life, ** said that it would insist on returning to the origin of insurance, insisting on value management, and insisting on making sufficient articles around Moutai.
There is no doubt that after Moutai Group became the largest shareholder of Huagui Life, the relationship between the two companies has become closer. Li Wenzhong suggested that, first of all, Huagui Life can use Moutai's brand influence and market recognition to enhance its own brand value and popularity, and enhance consumers' trust and favorability towards Huagui Life. Secondly, Huagui Life can receive more financial support and technical assistance, which will help improve the company's solvency and operating efficiency. Moutai Group has a wide range of sales channels and distribution networks, and Huagui Life Insurance can also take advantage of this resource to expand its own sales channels and increase its business coverage and market share.
Beijing Business Daily reporter Li Xiumei.