Picture Worm Creative Photo courtesy of Liu Jingyuan, Deng Xiongying, Tabulation, Zhai Chao, Cartography**Times reporter, Liu Jingyuan, Deng Xiongying.
Interest rate spreads are becoming the "life and death line" that determines the profitability of insurance companies, which has attracted much attention from the industry.
The return on investment of an insurance company is one of the core indicators to measure the current financial performance of an insurance company. Recently, 135 non-listed insurance companies disclosed their investment performance for the year in their solvency reports for the fourth quarter of 2023. **The Times reporter counted the investment performance of these institutions in 2023 and the average investment return rate in the past 3 years based on the above data.
From the perspective of the investment return rate indicator that affects the income statement, there will be a certain differentiation of insurance companies in 2023, with 7 companies exceeding 5%, but the overall investment performance of the industry is under pressure. From the perspective of the longer period in the past three years, the investment performance of insurance companies has a certain degree of stability.
Divergence in investment performance.
According to the ** Times reporter, as of now, a total of 135 insurance companies have disclosed the 2023 investment return data.
Among the 62 life insurance companies that disclosed solvency reports, except for Cindat Life, which did not disclose the investment yield in the report, the other 61 life insurance companies had an average investment return of 3 last year22%, with an average comprehensive return on investment of 385%；Among the 75 property insurance companies that disclosed the report, in addition to Anxin Property Insurance, 74 companies disclosed the return on investment, with an average return on investment of 261%, with an average comprehensive return on investment of 369%。
Specifically, in terms of life insurance companies, the highest return on investment last year was 543% with a minimum of -143%。Among them, there are 4 companies with an investment yield higher than 5%, including Hengan Standard Life Insurance, Caixin Jixiang Life Insurance, Guofu Life Insurance, and Lujiazui (600663) Cathay Life Insurance. Another 18 companies have investment yields in the 4% to 5% range, and 9 companies have investment returns in the 3 range5% to 4%, while 21 companies are below 3%, accounting for a third.
From the perspective of the comprehensive investment return rate of life insurance companies, half of the life insurance companies are lower than 3At the same time, there are companies that have achieved comprehensive investment income that exceeds expectations. There are 15 life insurance companies with a comprehensive investment return rate of more than 5%, of which 7 have a comprehensive investment return rate of more than 6%, and the highest is Taikang Life's 668%。Above 6% also include Sino-British Life Insurance, Sino-US Luen Thai MetLife, ICBC AXA Life Insurance, Zhongyi Life Insurance, Fosun Prudential Life Insurance and Lujiazui Cathay Life Insurance.
From the perspective of property insurance companies, the highest return on investment last year was 622%, obtained by Guangdong Energy Captive Insurance Company; The highest comprehensive investment rate of return is 743%；The minimum return on investment is -578%, with a minimum comprehensive return on investment of -502%。The investment performance of different property and casualty insurance companies varies greatly.
There are only 3 property insurance companies with an investment rate of return higher than 5%, namely Guangdong Energy Captive Insurance, Guoyuan Agricultural Insurance, and Zijin Property Insurance; There are 4 companies with a comprehensive investment return rate of more than 5%, including Huiyou Mutual Insurance, Guangdong Energy Captive Insurance, Guoyuan Agricultural Insurance, and Yongan Insurance.
There are differences between the old and new guidelines.
The calculation of the return on investment of insurance companies is relatively complex, and there are many different sets of standards. Generally speaking, the investment return disclosed in the solvency report of an insurance company can be simply regarded as the "financial investment return rate", that is, the relevant income is included in the current profit, which affects the net profit performance. Comprehensive investment income includes all investment income excluding the floating profit or floating loss, although this part of the floating profit or loss does not affect the net profit, but is included in other comprehensive income and affects net assets.
The investment performance of insurance companies is significantly differentiated, mostly due to the different allocation strategies and different investment preferences of different companies. The investment person in charge of an insurance company told the **Times reporter that for companies with a relatively heavy proportion of equity assets, they have been greatly affected by the market in recent years, and the investment performance is likely to be poor. According to an insurance company's chief investment officer, even if an insurance company allocates a lot to fixed income assets, if credit risk management is not appropriate, investment performance will fluctuate. For example, in the past few years, some small and medium-sized insurance companies have invested in real estate bonds and urban investment bonds through credit sinking, which may have previously obtained credit spreads, but may have encountered bond defaults in the past two years, which will also directly affect investment returns.
In addition, a number of insurance investors mentioned that there are differences in the accounting standards of non-listed insurance companies in 2023, and some companies have adopted new accounting standards. Among them, under the new financial instruments standard (IFRS9), more financial assets are classified as fair value measurement, and market volatility will directly lead to an increase in investment performance volatility. At the same time, the amortized cost method of bond assets from holding to maturity has been adjusted to "fair value change gains and losses through other comprehensive income", which makes the comprehensive investment return of some insurance companies higher. Last year, the bond market was bullish, the fair value of bonds increased, and the holding of long-term bonds obtained a floating profit in the market value of assets, which was particularly good for the comprehensive investment income of life insurance companies.
Return on investment.
Experienced multiple fluctuations.
Since the third quarter of last year, insurance companies have begun to disclose the average investment return rate and average comprehensive investment return in the past three years in the solvency report, showing relatively long-term investment performance.
According to the reporter's statistics, 58 life insurance companies have disclosed their investment performance in the past three years, of which the average investment return rate in the past three years is the highest 703% with a minimum of 136% and a simple average of 472%；In the past 3 years, the average comprehensive investment rate of return is the highest 735%, minimum 045% and a simple average of 434%。In terms of property insurance, according to the data disclosed by 72 property insurance companies, the average investment return in the past three years was 390%, and the average comprehensive investment return rate in the past 3 years is 351%。
From the perspective of the industry, the data previously released by the State Administration of Financial Supervision and Administration shows that the overall investment return rate of insurance companies in 2020, 2021, and 2022 will be in order76%；The comprehensive investment return rate is83%。Even in 2022, when other long-term funds such as enterprise annuities and social security** have negative returns, the investment income of insurance companies has maintained a certain degree of stability.
At present, the official investment performance data of the insurance industry for the whole year of 2023 has not been released. According to the ** Times reporter learned from the industry, in 2023, the two important indicators of the insurance industry's financial investment rate of return and comprehensive investment rate of return may be at a historical low. Previously, according to data released by the State Administration of Financial Supervision and Administration, in the first three quarters of 2023, 27The annualized rate of return on financial investment of 5 trillion yuan of insurance funds is 292% with an annualized comprehensive rate of return of 328%, and the return on financial investment has rarely fallen below 3%.
Looking back, insurance companies' investment returns have experienced many significant fluctuations. For example, from 2010 to 2012, it was below 5% for three consecutive years, when the actuarial assumption of investment return was mostly 55%。In 2008, when the situation was more extreme, the return on investment of insurance companies was even as low as 199%。More often than not, however, insurance companies' returns on investment are above 5 percent, exceeding 12 percent in 2007.
Volatility is an unavoidable part of investing. After the baptism of many market cycles, among various investment institutions, insurance companies have shown a good ability to obtain absolute returns and long-term stability. However, since 2021, the return on investment of insurance companies has been below 5% for consecutive years. In this regard, some people in the industry believe that this should attract the attention of insurance companies, and try to clearly judge whether this is a phased pressure on investment performance or a trend decline, and if it is the latter, it is necessary to study and deal with it as soon as possible.