The construction of the third pillar old-age security system takes another step, and the head insurance enterprises are expected to usher in a new increment
Event: on February 21, 2022, the CBRC issued the notice on expanding the pilot scope of exclusive commercial endowment insurance (hereinafter referred to as the “notice”), which will expand the pilot area of exclusive commercial endowment insurance to the whole country from March 1, 2022, and allow endowment insurance companies to participate in the pilot. A total of 10 new pilot institutions have been notified, of which 6 are head insurance enterprises in the same group as the current 6 pilot institutions. They may take the lead in obtaining business experience through internal coordination of the group and make use of the group business advantages of their pension insurance companies to develop rapidly. Head insurance companies can accumulate corresponding operation experience by operating exclusive commercial endowment insurance, and further give play to their market and professional advantages in the third pillar of commercial endowment insurance, endowment security management and other businesses in the future, so as to obtain greater market share. In the short term, the improvement of the liability side of the insurance industry remains to be seen. At present, the opportunity is mainly driven by the improvement expectation of the asset side and the transaction style. The recovery of long-term interest rate and the improvement of real estate chain risk drive the expectation of asset side repair. The elasticity of the investment side is the main line at this stage. It is recommended to recommend Ping An Insurance (Group) Company Of China Ltd(601318) with large space for asset side repair, {601601601} with leading transformation, the target of benefit China Life Insurance Company Limited(601628) and AIA.
The expansion of the pilot scope and the increase of staff are intended to accelerate the exploration of commercial endowment insurance experience
In 2020, China’s population aged 65 and over exceeded 190 million, accounting for 13.5%, and the demand for old-age security continued to increase. China launched a pilot of individual tax deferred commercial endowment insurance in Shanghai, Fujian Province (including Xiamen) and Suzhou Industrial Park in May 2018; In June 2021, the pilot of exclusive commercial endowment insurance was carried out in Chongqing and Zhejiang Province (including Ningbo). The pilot institutions are six head life insurance companies. Under the condition of stable operation of the pilot, steady growth of business scale and providing consumers with more choices of old-age security, this notice will expand the pilot scope of exclusive commercial endowment insurance to the whole country, It also allows pension insurance companies to participate in the pilot, which is intended to further explore the development experience of commercial pension insurance and better meet the multi-level pension security needs of consumers.
The product form is variable annuity, and the cumulative scale has reached 400 million
The form of exclusive commercial endowment insurance product is variable annuity, which has the characteristics of flexible payment, stable income, long receiving period and receiving age from the age of 60. It is mainly aimed at the needs of Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) , employees of new business types and flexible employees, and allows relevant enterprises and institutions to provide payment support for them without tax preference. Since the pilot in June 2021, by the end of January 2022, there have been nearly 50000 insurance policies and a total premium of 400 million yuan, including nearly 10000 insurance for couriers and online car Hailing drivers. The pilot progress is faster than that of individual tax deferred commercial endowment insurance. Considering the obvious expansion of the pilot scope, the obvious increase of pilot institutions (10 pension insurance companies in total), and the increase of the scale of exclusive commercial pension insurance products, but considering that the premium income of life insurance exceeded 3.3 trillion yuan in 2021, and the accumulated insurance liability reserve of traditional commercial pension annuity products was 620 billion yuan (as of 2021q3), The incremental proportion of exclusive commercial endowment insurance may still be relatively low.
Variable annuity may be the main form of the third pillar insurance products, with large incremental scale space
China’s previous two pilot projects have adopted the form of variable annuity products, which are flexible, long-term and stable. Combined with the fact that variable annuity occupies a certain position in the American pension system, we expect variable annuity to become the main form of the third pillar insurance products. In addition, we expect that the third pillar pension system will take the account system as the main body and tax preference as the incentive form. Considering that China’s resident deposits have exceeded 100 trillion yuan, we assume that after the implementation of the policy, the resident deposits will be transformed into the third pillar by 30% and the pension insurance products account for 15%. It is expected that the scale of the third pillar pension insurance may reach 4.6 trillion yuan.
Risk tip: the long-term interest rate is lower than expected; The third pillar pension policy is better than expected.
