Yesterday, insurance stocks finally turned red.
Since this year, under the impact of many negative factors, insurance stocks have continued to bottom. As of December 6, the insurance sector (Shenwan secondary industry classification) had decreased by more than 40% in the year, creating the largest annual decline (31.17%) since 2011; The total market value of A-Shares of the five insurance stocks decreased by 1.2 trillion yuan during the year.
The question that investors are most concerned about now is: when can insurance stocks hit the bottom and rebound? Stick or cut? In this regard, neither insurance industry insiders nor third-party research institutions have reached a final conclusion. However, from the latest operating data, there is no obvious bottom rebound signal at the liability end and asset end of the insurance industry.
the premium side continues to be depressed
Premium income is not only the source of insurance industry development, but also the most important index to observe insurance growth. But the latest premium performance is not optimistic. From the perspective of life insurance business accounting for nearly 80% of the premium scale of the five listed insurance companies, in October this year, the chain growth rates of life insurance premium income of Ping An Life Insurance, China Life Insurance Company Limited(601628) , New China Life Insurance Company Ltd(601336) , CPIC life insurance and PICC Life Insurance were – 15.4%, – 56%, – 39%, – 34% and 17% respectively, and the year-on-year growth rates were – 5.94%, – 4.0%, 0.3%, – 6.2% and 56.7% respectively. The life insurance business of listed insurance companies showed no obvious signs of improvement in both year-on-year growth and month on month growth, and the month on month growth even showed signs of deterioration.
“It’s really difficult for the insurance industry this year. On the one hand, the supervision is too strict; on the other hand, it’s difficult to do business. Since this year, insurance sales have become more and more difficult, there are few popular products, it’s difficult for agents to show business and lose a lot of money, insurance companies have greatly reduced all kinds of funds, and even less advertising investment.” The relevant person in charge of the marketing department of a listed insurance enterprise branch in Xicheng District, Beijing told reporters.
The management of listed insurance companies also have a deep understanding of the many difficulties faced by front-line personnel in the market. Su hengxuan, President of China Life Insurance Company Limited(601628) said not long ago that under the influence of the epidemic, residents are more cautious about long-term large expenditure and unnecessary expenditure, and the life insurance industry is under great pressure. Li Yuan, vice president of New China Life Insurance Company Ltd(601336) also said that the epidemic is capricious, which has the greatest impact on the life insurance channel, and the regulatory authorities have also put forward stricter regulatory requirements.
As a highly cyclical industry, the decline of macroeconomic growth will also affect the growth of premium income from the demand side and other aspects.
Since this year, the life insurance business has been affected not only by external factors such as repeated epidemic, macroeconomic downturn and strict supervision, but also by internal factors such as the active transformation of insurance enterprises. The resonance of internal and external factors has accelerated the exposure of chronic diseases in the insurance industry.
What are the chronic diseases of life insurance industry? In the view of insiders, the most prominent problem in the life insurance industry is the mismatch between supply and demand. Yan Zhikang, deputy general manager and Secretary of the board of directors of Taiping Life Insurance, believes that, first, there is a prominent contradiction in the insurance industry that the professional level of salesmen does not match the needs of customers. Customers at different levels have different perceptions of insurance products, and customers’ demands are more diversified, but the quality of salesmen cannot match the differentiated needs of customers. Second, the contradiction between the demand and supply of insurance products has become increasingly prominent. In terms of stock, there are a large number of insurance products in the market, but the homogenization is serious; In terms of increment, customer demand tends to be diversified, but product supply is relatively single. Third, the insurance industry has developed to a new stage, “horse racing enclosure” has become a thing of the past. The change of market environment, the adjustment of regulatory policies and the reform trend of industry business entities all put forward new requirements for the layout and development ideas of institutions.
In this regard, listed insurance companies have put forward their own solutions. Some insurance companies accelerate the reform of life insurance, while others accelerate the “clearing up” of agents.
Research reports recently released by many securities companies such as Kaiyuan securities and Soochow Securities Co.Ltd(601555) pointed out that it will take time for the reform results of the life insurance industry to appear, mainly based on four core logics: first, the epidemic situation is repeated, and the demand for insurance products as optional consumer goods continues to be suppressed; Second, the rapid popularization of inclusive insurance has a substitution and crowding out effect on commercial insurance; Third, the process of channel transformation and agent upgrading of insurance enterprises is slow; Fourth, due to the mismatch between supply and demand of life insurance products and other factors, the premium income lacks improvement momentum in the short term.
In addition to life insurance business, property insurance business also faces many tests. Among the top five listed insurance companies, the premiums of PICC Property Insurance, Ping An Property Insurance and CPIC property insurance in October increased by 3.27%, 0.27% and 1.79% respectively year-on-year, with month on month growth rates of – 24.83%, – 12.45% respectively
-17.13%。 Last October was the first month when the comprehensive reform policy of auto insurance was officially implemented, with a low base. Therefore, the premium income of listed insurance enterprises in October this year changed from negative to positive year-on-year, realizing positive growth; However, the month on month growth rate still fell significantly.
According to Hu Xiang, an analyst at Soochow Securities Co.Ltd(601555) , “One year after the comprehensive reform of auto insurance expires, the inflection point of premium growth appears. In the medium and long term, the scale effect after the comprehensive reform has been verified, and the leading insurance enterprises will further strengthen the advantages of scale, channel and brand. However, in the short term, the supervision has not been relaxed, adding the factors that chip shortage inhibits the demand for auto insurance, and it is expected that the premium income will still face certain pressure in the future.”
the investment side is also under pressure
The “two wheel drive” of premium and investment is a necessary condition for insurance enterprises to achieve good performance. However, since this year, the investment side of insurance companies has also faced heavy pressure.
At present, listed insurance companies adopt the strategy of “fixed income first, supplemented by equity” in asset allocation. The investment income of insurance capital is mainly affected by the trend of interest rate and the fluctuation of equity market. However, since the beginning of this year, China’s interest rate has continued to hover at a low level, and the volatility of the equity market has intensified, which has brought great pressure on the investment side of insurance enterprises.
Duan Guosheng, President of China Insurance Asset Management Association and chief investment officer of Taikang Insurance Group, recently said that since this year, the investment environment has faced many new situations, increasing the difficulty of using insurance capital. First, in the fixed income market, interest rates continue to fluctuate at a low level, the supply of ultra long-term bonds is insufficient, and the credit risk is exacerbated. Secondly, the cyclical fluctuations in the equity market, macroeconomic and capital markets have weakened, the market performance differentiation of different industries has become the norm, and the traditional overvalued system is facing an impact; In the transformation stage, we need to pay more attention to the investment opportunities of emerging industries, but the difficulties and challenges are also greater.
The venture capital investment side is under pressure not only this year, but also in 2022. Huang benyao, member of the CPC Committee and vice president of PICC assets, said at the “analysis meeting on the utilization of insurance funds in the fourth quarter of 2021” recently held by China Insurance Asset Management Association that looking forward to 2022, due to the external environment, population debt constraints, economic transformation and other factors, it is expected that there is still room for downward interest rates in the post epidemic era, and insurance funds are facing severe challenges in fixed income investment, Efforts should be made to improve the research and judgment of interest rate trend, bond trading, acquisition of high-quality fixed income assets, credit value mining and risk management, so as to stabilize investment income.
According to the management of insurance enterprises such as Su hengxuan, the long-term development prospect of the insurance industry is still broad, but it has encountered short-term difficulties. Different research institutions have different views on how long the “short-term difficulties” will last.
Some securities companies expect that at the premium end, the downward trend of new life insurance business next year may be repaired to some extent. On the investment side, there is little room for a further sharp decline in the long-term interest rate next year, which supports the net return on investment; At the same time, the real estate risk is gradually alleviated, and there will be structural investment opportunities in the equity market. However, some institutions believe that it still needs to be further observed when the insurance industry bottoms out or turns for the better.
(Securities Daily)
