On March 25, China Life Insurance Company Limited(601628) held a 2021 performance conference. At the meeting, China Life Insurance Company Limited(601628) management responded to the problems of industry transformation, equity investment, real estate investment risk, stock price downturn and so on.
high quality development is not only reflected in quantity
In 2021, China Life Insurance Company Limited(601628) achieved a premium income of 618327 billion yuan, a year-on-year increase of 1.0%. Among them, the total premium of life insurance business was 481311 billion yuan, a year-on-year increase of 0.1%; The total premium of health insurance business was 120609 billion yuan, a year-on-year increase of 4.8%; The total premium of accident insurance business is 16.407 billion yuan.
According to the annual report data, China Life Insurance Company Limited(601628) total premium still ranks first in the industry, but the growth of premium in 2021 is weak and there is no inflection point.
In this regard, Su hengxuan, President of China Life Insurance Company Limited(601628) said at the performance press conference that the economic situation faced this year is complex and changeable, and the trend of the rapid spread of the epidemic in the world has not improved, which has affected the development of the whole insurance industry, especially the life insurance industry dominated by traditional sales mode, which faces some difficulties and challenges in its development. In this case, the transformation and upgrading of the industry needs a process to achieve high-quality development.
At the same time, he pointed out that in the next step, the inflection point of high-quality development is not only reflected in quantity, but also reflected in the company’s business behavior. To this end, he put forward five “how”: how to gradually transform the past extensive management into intensive management, how to improve the company’s all factor ability, how to further strengthen scientific and technological empowerment, how to further improve the company’s high-quality service level, improve the construction of each value chain link of the company’s business chain, and how to develop more products urgently needed by the masses are important factors for high-quality development.
equity investment has met the conditions for adding positions on the left
As one of the largest institutional investors in the capital market, insurance funds have played an important role in supporting the steady operation of the capital market and optimizing the investor structure. In the first quarter of this year, the capital market volatility intensified, what impact did it have on the equity investment strategy of insurance institutions?
China Life Insurance Company Limited(601628) president assistant and chief investment officer Zhang Di pointed out that the equity market has fluctuated greatly so far this year. On the one hand, China’s fundamental expectations are weak, and the profit growth cycle of listed enterprises is down; On the other hand, the global monetary policy was tightened, and the early valuation of some A-share sectors was high; There are some geographical conflicts in investment preferences, as well as some downside risks. Therefore, there has been a wave of obvious decline in a shares, which is an objective market situation.
Based on this, Zhang Di believes that when talking about the allocation of large categories of assets, we cannot deviate from the capital nature, time dimension and risk preference of the main body of investment institutions. For insurance companies, it is an insurance institution with long-term liabilities, long-term assets and sustained and stable cash flow, which is different from other institutional investors. Therefore, it is necessary to build a configuration framework with assets and liabilities as the core in line with the law of the use of insurance funds.
Referring to this year’s allocation, Zhang Di said that first, for long-term funds, the judgment of the long-term improvement of the equity market has not changed, and its long-term allocation value has not changed. At the policy level, the executive meeting of the State Council and the special meeting of the financial Commission recently talked about the macroeconomic policies of stabilizing growth and expectations. These policies will be gradually implemented and will improve the fundamentals. From the perspective of industry supervision, continue to encourage long-term funds, including insurance funds, and give full play to the advantages of funds to increase the allocation of equity assets.
Second, from the perspective of valuation, after early adjustment, the valuation of equity assets has fallen below the long-term center, and the allocation value is slowly emerging. From the allocation value of stocks and bonds, we can also find this long-term value of equity investment. For long-term investment, the conditions for adding positions on the left have been met from the perspective of valuation.
Third, in terms of allocation, insurance companies need to allocate rights and interests to meet the long-term return requirements. From the perspective of residents, there is also the demand for long-term allocation of residents’ financial management.
real estate asset investment accounts for less than 4%
In terms of real estate investment, Zhang Di said that China Life Insurance Company Limited(601628) is a very prudent institutional investor under the regulatory framework of the China Banking and Insurance Regulatory Commission. Real estate investment is a long-term and inflation resistant asset for insurance funds, and it is also an important part of insurance companies in a large category of assets.
It is understood that by the end of 2021, China Life Insurance Company Limited(601628) real estate investment accounted for less than 3%, and commercial real estate was concentrated, including commercial office buildings, complexes, logistics, etc., which were all located in the first and second tier cities. Zhang Di said that at present, the rent and rental rate are relatively normal and the risk is controllable.
In addition, China Life Insurance Company Limited(601628) strictly follows the relevant rules of the CBRC and selects some real estate financial products for investment. Its underlying assets are basically shed reform and regional livelihood projects in line with national policies, and the overall scale is small.
Zhang Di said, “investment real estate, real estate financial products, real estate stocks and real estate bonds generally account for less than 4% of the total assets, so whether from the overall exposure or the specific target, our investment in real estate is risk controllable and prudent”.
She pointed out that in the next step, in terms of real estate investment, we will continue to adopt a more stable and prudent strategy, focusing on the new infrastructure, IDC, logistics industrial park and pre REITs projects encouraged and supported by national policies to meet the needs of long-term configuration.
current share price does not reflect the company’s value
In view of the current downturn in insurance stocks, China Life Insurance Company Limited(601628) vice president and chief actuary Li Mingguang said, “the current embedded value of Guoshou is 120 billion yuan. The current share price does not reflect the value of the company, and the embedded value of 120 billion yuan only means that so far, the value of the company’s underwritten business has not included the future value of the company.”
He believes that there are many factors affecting the company’s share price. In addition to the company’s own fundamentals and performance, it will also be affected by many factors. At present, the China Life Insurance Company Limited(601628) fundamentals are good. Under various environmental factors in 2021, it has still achieved a double harvest of value scale.
When analyzing the insurance demand of the market, Li Mingguang said that both in terms of the depth of insurance and the density of insurance, China’s life insurance industry is lower than the global average and has great development potential in the future. In addition, China’s economy is improving for a long time, and the public’s awareness of insurance is increasing. Therefore, the demand for insurance will gradually show in the future.
