There are five trading days before 2022, and the probability of “Jedi rebound” of insurance stocks during the year is becoming increasingly slim. According to the data, as of December 26 this year, the decline of insurance sector (Shenwan secondary classification) reached 39.5%, ranking the second in the decline of all sectors of a shares.
With the sharp decline of the insurance sector, all kinds of investment institutions no longer investigate insurance stocks. According to chioce data, as of December 26 this year, institutions have been very indifferent to the research on insurance stocks, which is rare in the past few years. In contrast, the total number of investigations conducted by various institutions on A-Shares and other stocks during the year reached 232000, and Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) was investigated by various institutions as often as 3040 times.
Although the research enthusiasm of institutions dropped to the freezing point, foreign institutions began to increase their positions in some insurance stocks against the trend in December, and the increase was not small. According to the data of Shanghai Stock connect, as of December 26, the shareholding of foreign capital in China Life Insurance Company Limited(601628) (industry referred to as “Guoshou”) and New China Life Insurance Company Ltd(601336) (industry referred to as “Xinhua”) increased by 18% and 22% compared with November 30, and the shareholding in Ping An Insurance (Group) Company Of China Ltd(601318) (industry referred to as “ping an”) increased by 13%.
institutional research enthusiasm fell to the freezing point
Research is a routine operation before institutional investment, and the research frequency is also an important embodiment of the market heat of listed companies. From the perspective of insurance stocks, this year’s institutions have “no enthusiasm” for their research, which is rare in recent years. Even in 2020, when the insurance industry was greatly impacted by the epidemic, 11 institutions such as Shenwan Hongyuan Group Co.Ltd(000166) , Tianfeng Securities Co.Ltd(601162) investigated the insurance stocks.
Behind the “flight” of institutions from insurance stocks, the growth of the insurance industry has stagnated for a long time. According to the latest data disclosed by listed insurance companies, the cumulative premium income of the top five A-share listed insurance companies in the first 11 months amounted to 2.31 trillion yuan, a slight decrease of 0.62 percentage points year-on-year. Among them, China Life Insurance Company Limited(601628) , The People’S Insurance Company (Group) Of China Limited(601319) , Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) and New China Life Insurance Company Ltd(601336) premium income increased by 1.2%, 2.2%, – 5.2%, 0.8% and 1.7% respectively year-on-year.
The continuous downturn of premium is the result of “internal and external difficulties” in the insurance industry. From the perspective of internal causes, after years of extensive development, the mismatch between supply and demand in the industry has become increasingly prominent. From the perspective of external factors, due to the impact of covid-19 epidemic, China’s economic growth slowed down and residents’ insurance demand decreased significantly.
Industry insiders believe that as early as 2018, there was an inflection point in the growth of insurance industry. After 2018, the growth rate of life insurance premiums began to slow down. The annuity products and serious illness insurance products that once created the most important new single value for life insurance companies have declined in recent three years. The high-value lifelong annuity insurance has basically disappeared in the market, the period of annuity sales is getting shorter and shorter, and the growth of serious illness insurance is weak due to too fierce competition.
This year, various deep-seated problems in the insurance industry began to be “explicit” under the superposition of factors such as the epidemic situation, strict supervision and the slowdown of macroeconomic growth.
Li Quan, President of New China Life Insurance Company Ltd(601336) said, “the high growth of the insurance industry in the past is essentially due to the strong guidance of the high demographic dividend policy under the high economic growth.” At the practical level, the current dilemma also has the reasons for the extensive operation of the industry in the past, no preparation and early change.
Wang Guangjian, deputy party secretary and executive deputy general manager of CPIC life insurance, believes that in recent years, the environment for the development of life insurance business has undergone significant changes: the demographic dividend has gradually subsided, the regulatory policies have been intensively promulgated, online consumption has flourished, and customer awareness has been increasingly awakened. Under the profound changes in the market, the traditional mode of human driven, product driven and competition driven in the insurance industry is facing the dilemma of sustainable development. The output efficiency of high staff increase, high-value products and high input is becoming more and more unsustainable, resulting in the situation of low retention, low continuation rate and low production.
Wang Guangjian believes that the main crux of the current industry problems focuses on the following three points: first, the industry deviates from the main function of insurance protection and alienates the insurance function into an investment and financing tool; Second, the industry deviates from the actual risk needs of customers and alienates insurance products into a tool to collect customers’ wool; Third, the industry deviated from the long-term business philosophy, blindly pursued short-term high growth, and alienated organization construction and team construction into pulling people and performance. “It seems that there are thousands of problems. In the final analysis, it deviates from the original intention of the industry and the underlying logic of the insurance industry.”
From a more micro perspective, there are many development difficulties in the product system and marketing model of the insurance industry. At a seminar recently attended by 19 experts and scholars invited by China insurance society, many experts pointed out two disadvantages of industry development: first, product homogenization. At present, in the bancassurance channel, more than 85% of the business comes from increased life insurance, and the product guarantee functions and characteristics basically converge; In the personal insurance channel, during the “good start” period, most companies focused on the quick return annuity, which was basically returned within 10 years. Second, the extensive marketing model is full of problems. Under the guidance of various assessments and interests, the sales team sells products as long as there are interests. Service is often a means of promotion and customer acquisition, resulting in rough excavation and indiscriminate acquisition of customers in the whole industry, and sales misleading can not be cured for a long time. The salesperson’s professional level is low, the average income is low, and the newcomers have not received professional training. It is difficult to provide professional services for customers because of their mastery of insurance knowledge and understanding of the industry.
is it time for insurance stocks to copy the bottom?
Although some foreign-funded institutions have begun to “bottom” insurance stocks against the trend since December, it is necessary to remind investors that from the fundamentals of listed insurance companies, there are no obvious signs of improvement on both the liability side and the investment side. For example, from the perspective of the life insurance business with the heaviest proportion of premiums in the industry, in November, the life insurance premiums of the five major A-share insurance companies increased slightly by 1.2% year-on-year, but decreased by 8.8% month on month. In addition, the downward trend of interest rate is obvious, which continues to suppress the investment side of the insurance industry.
A number of brokerage institutions have characterized the current development stage of the industry as the “bottom grinding stage”, that is, at present, the growth rate of premiums and the valuation of insurance stocks in the industry are at the bottom of history, but it needs to be further observed whether they can copy the bottom of insurance stocks at the current stage. For example, according to the “annual strategy report of the insurance industry” released by Ping An Securities, although the pressure on the asset side is slow, the repair speed on the liability side is relatively slow. Investors still need to be vigilant against the sharp fluctuations in the equity market, the macroeconomic repair is less than expected, the increased exposure of credit risks of real estate companies, the slower than expected transformation of life insurance, and the lower than expected interest rate There are many risk points such as pressure on the allocation of maturing assets and new assets.
to know is easy , but to do is difficult. With the continuous downturn in the growth rate of insurance premiums in the industry, the discussion on various disadvantages of the industry has increased, and the core issues have become increasingly clear. However, it is not easy to get rid of all kinds of disadvantages, which requires not only the determination and perseverance of insurance enterprise reform, but also time.
Many insurance enterprise managers believe that it may take several years for the industry to get out of the trough and succeed in transformation. Li Quan believes that “ice breaking is not a day’s warmth. The insurance industry may have a few more difficult years to solve problems and upgrade development.” The management of another medium-sized life insurance company also told reporters that the reform of large companies affects the whole body, and it may take several years for the reform effect to appear. Relatively speaking, small and medium-sized companies “make a good turn”.
(Securities Daily)
