13 Research Report No. 268 using the latest data:
2023 Policy Future Earnings Ranking of Non-listed Life Insurance Companies: The industry increased by 5% year-on-year7%, the foundation of the cycle is still very thick! Taikang Life Insurance took the lead, more than 6 times ahead of the second place!
Let's start with the conclusion
The future surplus of the policy refers to the actual capital recognized in the current period corresponding to the remaining term of the current life insurance policy of the insurance company.
Insurer Solvency Rule No. 1: Real Capital gives an approximate formula for the future earnings of a policy.
Policy Future Surplus = Book Value of Life Insurance Contract Liabilities under Financial Statements - Recognized Value of Life Insurance Contract Liabilities under Solvency Report - Cash Value Guarantee - Income Tax Provision
To simplify, this article does not consider the cash value guarantee and assumes an income tax provision of 10%.
In addition, it should be noted that the above formula is only an approximate formula, and due to the limitation of capital classification, the future surplus of the policy calculated by some large companies according to the approximate formula is higher than the future surplus of the policy that is actually recognized as capital in the current period. Unless otherwise specified, the future surpluses of the policy shown below are the result of the calculation of the approximate formula, rather than the actual recognition of capital in the solvency report.
In 2023, the future policy surplus of 62 non-listed life insurance companies will be 458.7 billion yuan, an increase of 57%, which is 50 percent of the actual capital scale2%, a year-on-year decrease of 5 percentage points.
Last year, the issuance of perpetual bonds by the bottom branch also increased the scale of actual capital, which had a certain impact on the decline in the proportion of future surpluses in real capital.
According to the statistics of "13 fine", in 2023, the non-listed life company will increase its capital by 14.2 billion yuan and issue capital supplementary bonds of 19.4 billion yuan, and if the impact of these two items is excluded, the proportion of the future surplus of the policy to the actual capital will be 521%, down 32 percentage points.
It is worth mentioning that in 2023, the net profit of non-listed life insurance companies will turn from profit to loss, with a loss of 14.2 billion yuan, a year-on-year decrease of 440%!
So, why is the net profit declining in 2023, but the future surplus of the policy is still 5What about a 7% increase?
This is because the future surplus of the policy is calculated based on the parameters of the pricing assumptions and is an estimate of the future based on actuarial assumptions. When calculating the net profit for the financial year, it is necessary to take into account various actual operating deviations and investment fluctuations. In 2023, for example, many non-listed life insurance companies have negative triple differential yields. This is also the reason why the two move in opposite directions.
In 2023, Taikang Life's future policy surplus will be 194.8 billion yuan, which is the largest among all non-listed life insurance companies and more than six times higher than that of the second-ranked company.
However, there are also some companies whose policy surpluses have entered a loss situation, with a maximum loss of 3.3 billion yuan, and similarly, a total of eight companies have negative future surpluses of their policies.
From the figure, it is not difficult to find that there are 11 non-listed life insurance companies with a future surplus of more than 10 billion yuan, including Taikang Life!
"13 Fine" lists the top 10 non-listed life insurance companies in 2023 in terms of future policy surplus:
"13 Fine" also gives a ranking of the future surplus scale of policies of non-listed life insurance companies in 2023, which is detailed in the text.
Body:
Previously, "13 Fine" had issued a document to look at the equity value of life insurance companies from four perspectives: net assets, embedded value, residual margin, and actual capital.
There are few other industries like the life insurance industry, where there are so many other meanings of "net worth" besides net worth!
For specific definitions of embedded value, residual margin, and real capital, you can find the "13 Fines" previous article from the links.
The main difference between them and "net worth" is the consideration of the future surplus of the policy.
This article focuses on the analysis of the future surplus of the policy under the C-ROSS II and II policies.
What is Policy Future Surplus?
Compared with the C-ROSS II, C-ROSS II has some more detailed adjustments in the actual capital calculation, which are mainly reflected in three aspects: risk margin estimation, capital classification of future surpluses of insurance policies, and income tax provisions.
Article 35 of the Solvency Reporting Rules No. 1: Real Capital of Insurance Companies specifically provides definitions and estimation formulas.
The future surplus of the policy refers to the actual capital recognized in the current period corresponding to the remaining term of the current life insurance policy of the insurance company.
Approximate formula for calculating the future surplus of the policy:
From the above formula, the future surplus of the policy is mainly the difference between the recognized value of the financial report liability reserve and the reimbursement liability reserve, and further deducts the cash value guarantee and income tax provision.
In fact, the future surplus of the policy is mainly due to the difference between the financial reserve and the C-ROSS reserve. These differences are mainly reflected in:
1.the time value of options and guaranteed benefits;
2.residual margin;
3.Differences in the estimation methods of the risk margin. The first phase of the C-ROSS used the scenario method, but the second phase of the C-ROSS was changed to the quantile method.
C-ROSS RESERVE = Present Value of Cash Flow (PV) + Time Value of Options and Guaranteed Benefits (TVOG) + Margin of Risk.
Accounting Reserve = Present Value of Cash Flow (PV) + Risk Margin + Residual Margin.
In the subsequent estimation of the future surplus of the life insurance company's policy, based on the availability of data, we mainly consider the difference between the book value of the life insurance contract liability and the recognized value under the claim, and the income tax provision uses the approximate estimate of 10% of the former, and the cash value guarantee is not considered for the time being. The approximate estimation formula is as follows:
Future Surplus of Life Insurance Company's Policy = (Book Value of Life Insurance Contract Liabilities under Financial Statements Recognized Value of Life Insurance Contract Liabilities under Solvency Report) 90%.
Article 36 of the Solvency Reporting Rules No. 1: Actual Capital of Insurance Companies classifies the future surplus of insurance companies according to the remaining term of the policy.
In Article 41, some quota standards are stipulated for the proportion of future surpluses of insurance policies in all levels of capital, and the part exceeding the limit is recognized as capital liabilities, which makes there are some differences between the future surpluses of insurance policies calculated by approximate formulas and the future surpluses of insurance policies recognized as capital in practice.
In addition, the disclosure of the size of the company's earnings into the future surplus of core Tier 1 capital policies also helps us to further observe the internal structure of future policy surpluses.
Future policy surplus of non-listed life insurers in 2023
Based on the above analysis, "13 Fine" gives a simplified formula for estimating the future earnings of the policy, which is listed again for ease of reading:
Future Surplus of Life Insurance Company's Policy = (Book Value of Life Insurance Contract Liabilities under Financial Statements Recognized Value of Life Insurance Contract Liabilities under Solvency Report) 90%.
Of course, if the carrying amount of the life insurance contract liabilities under the financial statements is less than the recognized value of the life insurance contract liabilities under the solvency report, that is, the future surplus of the policy is less than zero, we do not calculate the income tax provision.
Fortunately, all life insurers publish the carrying amount of life insurance contract liabilities under the financial statements, as well as the recognized value of life insurance contract liabilities under the solvency report. This gives us the possibility to estimate the future surplus of the life insurer's policy.
In 2023, the future policy surplus of 62 non-listed life insurance companies will be 458.7 billion yuan, an increase of 57%, which is 50 percent of the actual capital scale2%, a year-on-year decrease of 5 percentage points.
Last year, the capital increase of the bottom branch, the issuance of capital supplementary bonds and perpetual bonds, etc., and the supervision and optimization of solvency supervision standards, all of which increased the scale of actual capital and also had a certain impact on the decline in the proportion of future surpluses in real capital of insurance policies.
According to the statistics of "13 fine", in 2023, the non-listed life company will increase its capital by 14.2 billion yuan and issue capital supplementary bonds of 19.4 billion yuan, and if the impact of these two items is excluded, the proportion of the future surplus of the policy to the actual capital will be 521%, down 32 percentage points.
In 2023, the net profit of non-listed life insurance companies will turn from profit to loss, with a loss of 14.2 billion yuan, a year-on-year decrease of 440%!
So, why is the net profit declining in 2023, but the future surplus of the policy is still 5What about a 7% increase?
This is because the future surplus of the policy is calculated based on the parameters of the pricing assumptions and is an estimate of the future based on actuarial assumptions. When calculating the net profit for the financial year, it is necessary to take into account various actual operating deviations and investment fluctuations. In 2023, for example, many non-listed life insurance companies have negative triple differential yields. This is also the reason why the two move in opposite directions.
It is worth noting that the reimbursement report publishes the policy future surplus data of core Tier 1 capital.
In 2023, non-listed life insurance companies included in the future surplus of core Tier 1 capital policies of 184.7 billion yuan, an increase of 4% year-on-year, accounting for 324%, but the ratio fell by 5 year-on-year6 percentage points, the reasons can be seen in the above analysis.
In 2023, the size of the future policy surplus of non-listed life insurance companies included in core Tier 1 capital accounted for 403%, which was basically stable compared to previous quarters.
2023 Ranking of Future Policy Earnings of Non-listed Life Insurance Companies
Judging from the statistics of the future policy surplus of 62 life insurance companies, the average is 7.4 billion yuan, and the median is only 16600 million yuan, which is obviously "averaged" for most companies.
Taikang Life's future policy surplus of RMB194.8 billion is the largest among all non-listed life insurers and more than six times higher than that of the second-ranked company.
However, there are also some companies whose policy future earnings have entered a loss situation, with a total of eight companies having negative policy future surpluses, with a maximum loss of 3.3 billion yuan.
This is a map of the future policy surpluses of 61 companies, excluding Taikang Life.
From the figure, it is not difficult to find that there are 11 non-listed life insurance companies with future policy surpluses of more than 10 billion yuan, including Taikang Life.
"13 Fine" lists the top 10 non-listed life insurance companies in 2023 in terms of future policy surplus:
The following is the ranking of the future policy surplus scale of non-listed life insurance companies in 2023 estimated by "13 Fine". Due to space limitations, we have only listed the top 30 companies in the future earnings of the policy, and other company indicators can be queried in the "13 Essence Information" institutional version.