With the end of the annual performance conference of New China Life Insurance Company Ltd(601336) 2021, the 2021 annual report disclosure season of the six listed insurance companies ( China Life Insurance Company Limited(601628) , Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) , China Taiping) also officially ended.
The reporter noted that despite the difficulties of the insurance industry last year, the revenue and parent net profit of most listed insurance companies still rose. Among them, New China Life Insurance Company Ltd(601336) revenue increased the most, with an increase of 7.7% to 222.38 billion yuan, China Pacific Insurance (Group) Co.Ltd(601601) , China Life Insurance Company Limited(601628) and The People’S Insurance Company (Group) Of China Limited(601319) revenue increased by 4.4%, 4.1% and 2.4% respectively. China Pacific, which is listed in Hong Kong stocks, disclosed the total premium income data, with a year-on-year increase of 12.4% to 262.5 billion Hong Kong dollars, and Ping An Insurance (Group) Company Of China Ltd(601318) revenue decreased by 3.1%, about 1.18 trillion yuan.
In terms of net profit attributable to parent net profits, the China Pacific Insurance (Group) Co.Ltd(601601) 601 the.
However, looking at the essence through the data, even as the leader of the industry, listed insurance companies still face great development pressure, especially the life insurance business. After several years of transformation, the core indicator of new business value still has a significant decline, and the long-awaited inflection point of the industry has not yet appeared.
China Life Insurance Company Limited(601628) president Su hengxuan admitted at the performance conference that this year’s economic situation is complex and changeable, the epidemic is spreading rapidly all over the world, and the whole insurance industry, especially the life insurance industry based on traditional sales model, is facing difficulties and challenges in its development. In this case, the industry needs a process to achieve high-quality development, transformation and upgrading, and new kinetic energy is still being cultivated, so the transformation of old and new kinetic energy also needs a process. “It is a great challenge for China Life Insurance Company Limited(601628) and even the whole industry how to coordinate the organic combination of online and offline, the retention of old customers and the development of new customers, the development of new single business and the consolidation of renewal business, and how to actively cultivate new business models while trying to optimize and upgrade the old business models.”
“Firm transformation is the only choice under heavy pressure” has become the consensus of listed insurance companies. At the performance conference, many insurance companies explained the transformation route in detail. Although many measures are still being implemented, the confidence of the market has been obviously ignited.
According to wind data, since the first listed insurance company released its annual report on March 17, 2022 to the closing on March 31, 2022, the stock prices of the six listed insurance companies have increased, and China Taiping has the largest increase, reaching 13.75%, Ping An Insurance (Group) Company Of China Ltd(601318) stock prices have increased by 9.39%, New China Life Insurance Company Ltd(601336) stock prices have increased by 5.62%, and the stock prices of the other four insurance companies have increased by more than 1%.
Observation 1: the value of new life insurance business of listed insurance companies has decreased due to the superposition of multiple factors
Recently, there have been new confirmed cases of covid-19 pneumonia in many places in China. Therefore, the performance press conferences of the six listed insurance companies this year were held online. At the performance press conference, each insurance company set up a question and answer session to open questions to securities companies, media and small and medium-sized investors, from which we can also peek into one of the insurance topics most concerned by the market, that is, how long will the difficult days of life insurance still be? How do insurance companies respond?
The value of new business is an important indicator to measure the growth potential of insurance companies. It represents the economic value generated by the new life insurance business sold in a period of time estimated by actuarial method. Generally speaking, the business income of insurance is mainly composed of renewal business and new business. If the performance of new business is poor, it indicates that the development potential is not so sufficient.
In 2021, the new business value related indicators of five of the six listed insurance companies decreased significantly. Among them, the new business value of PICC Life Insurance and New China Life Insurance Company Ltd(601336) decreased by 40.6% and 34.9% respectively, while the new business value related indicators of CPIC life insurance, China Life Insurance Company Limited(601628) , Ping An Life Insurance and health insurance decreased by more than 20%.
Yang Zeyun, a teacher in the Department of finance at the school of management of Beijing Union University, told the reporter of shell finance that the decline of indicators related to the value of new business of listed insurance companies in 2021 is related to the decline in the quality of new insurance policy business on the one hand, and the decline in the proportion of some long-term guarantee products leads to the decline in the value rate of new business; On the other hand, affected by the national fertility policy, the population of the “post-80s” and “post-90s” who are the main force of insurance purchase is not as large as that of the “post-60s” and “Post-70s”, that is to say, the number of potential insurance consumers is small, which will also lead to the decline of new business value. In addition, the epidemic situation is repeated, and Lbx Pharmacy Chain Joint Stock Company(603883) tends to be cautious about insurance consumption, which also affects the growth of new business value.
New China Life Insurance Company Ltd(601336) vice president, chief actuary and Secretary of the board of directors Gong Xingfeng said at the performance conference that the decline in the value rate of new business is multifaceted and universal, and it is difficult for the company to be alone when the severe winter of the whole industry comes.
Ping An Insurance (Group) Company Of China Ltd(601318) in the annual report, the traditional life insurance industry is facing many internal and external challenges. Affected by the repeated covid-19 pneumonia epidemic, customer demand changes, consumption tends to be cautious, and it is more difficult to sell serious illness insurance. At the same time, with the rise of flexible employment and the gradual decline of demographic dividend, the extensive human driven development model of life insurance industry in the past has been unsustainable.
Ping An Insurance (Group) Company Of China Ltd(601318) pushed forward the reform of life insurance as early as 2019. Chen Xinying, CO CEO of Ping An Insurance (Group) Company Of China Ltd(601318) said at the performance conference that life insurance is a long-term business with an average insurance period of 14.2 years, which must be viewed in the long run; Secondly, the four channels and three products of Ping An Life insurance reform are very competitive. The agent channel, bank talent channel, community grid channel and sinking channel are the unique advantages of Ping An; In terms of implementation, the new business value of the first batch of pilot business departments increased by 10% in the whole year, and the overall service effect was good. “Whether in terms of long-term value, strategy or implementation, we will gradually see results soon.”
In 2021, only TPL’s new business value increased by 0.7% to 7.44 billion yuan. Cheng Yonghong, general manager of TPL, said that the company vigorously promoted the high-quality channel transformation and upgraded the value management system. While the individual insurance channel continued to maintain the main contribution of value, the value transformation of Bancassurance channel made a great breakthrough. The annual new business value increased by 65.3% year-on-year and contributed nearly 10% to the company’s value.
Observation 2: agent team “squeeze water” crowd tactics turn to elite tactics
Behind the decline in the value of new business, the life insurance teams of various insurance companies are also “squeezing water”, and the manpower scale will decline sharply in 2021 and become the mainstream.
Among them, the average monthly effective manpower of the “large individual insurance” channel of PICC Life Insurance decreased by 54% year-on-year, and the manpower related indicators of other insurance enterprises decreased by 20% ~ 40%. Only the number of individual insurance agents of Taiping Life Insurance increased slightly by 1% to 385000 last year. This is consistent with the general trend of the whole industry. According to the data released by the China Banking and Insurance Regulatory Commission, by the end of 2021, the number of salespeople registered in the insurance intermediary supervision information system of national insurance companies was 64190000, a decrease of more than 2 million compared with the end of 2020.
Wang Meng (a pseudonym), a salesman of a life insurance company under a listed insurance company, told reporters that the branch company had 1500 people on duty at the peak, and now only about 500 people are on duty. At the peak, there were 35 departments, and now there are only 15 departments. “Our branch companies rank high in the system. The loss of personnel is so serious, let alone other branch companies.”
In Wang Meng’s view, the higher professional requirements and stricter assessment of industry transformation are the main factors for the loss of insurance agents. “Now we pay close attention to attendance. If we are absent for no reason, we will be suspended from paying wages. Each company will hold morning meetings on Monday and Friday, and the rest of the time will hold morning meetings in different areas. Each district can carry out training according to its own situation. Usually, we also invite customers to participate in activities, and each person will pay a deposit of several hundred yuan. If we invite less than a certain number of customers, the money will be confiscated, so it is more important for customers and agents with weak professional foundation The harder you work, you just quit. Now we all have to rely on service to support customers, and the remaining agents are elites. Although there are fewer people, our company has made a good start this year, but its performance has improved. “
Wang Meng’s experience actually represents a major trend in the transformation of life insurance team, that is, from “crowd tactics” to “elite tactics”, focusing on improving human quality rather than quantity. He told reporters: “we now have high requirements for adding new staff. We need a college degree or above, and we also need to provide a running certificate of personal annual income of more than 50000. We need to work or live locally for more than 2 years, and we also have requirements for image temperament. At present, we mainly introduce experienced telemarketing personnel from the same industry to lead telemarketing resources from online to offline, which makes it easier to conclude transactions.”
Ping An Life Insurance said that the implementation of layered and refined management of agent team, combined with digital empowerment, will promote the optimization of team structure to “spindle type”. By the end of December 2021, the proportion of agents with college degree or above had increased by 2.4 percentage points compared with the beginning of the year. Strive to build a diamond team. In 2021, the per capita first-year premium of the diamond team is 4-6 times that of the whole team. In the future, we will further cultivate the diamond team, provide high-end customers and exclusive product resources support, continue to expand the scale of the diamond team and improve production capacity by delineating business departments with excellent operation and management and development potential. In terms of new talent team, the company implemented “excellent +” staff increase and upgrading, increased excellence with excellence, strictly controlled the entrance, and gradually increased the proportion of high-quality new talent. At the same time, it also implemented new talent management project to improve the retention rate of new talent team through training and upgrading, policy support and organizational guarantee.
China Life Insurance Company Limited(601628) vice president Zhan Zhong said that last year, the whole industry team was declining, and our overall scale was also declining. However, in the process of decline, the high achievers were relatively stable and the team foundation was relatively solid. This year, the company will continue to adhere to the effective team driven development strategy, continue to focus on the quality of team development, constantly optimize the structure of the whole team, and promote the continuous transformation of the team to a professional and professional direction.
According to the data of the annual report, the transformation of the workforce of some insurance companies has been effective. For example, the monthly average per capita comprehensive production capacity in New China Life Insurance Company Ltd(601336) 2021 has increased by 4.1% year-on-year.
Observation 3: when will the inflection point of firm transformation into industry consensus come?
However, even though insurance companies have made many efforts to deal with the industry’s trough, the life insurance industry is still at a trough. Therefore, firm transformation will still become the industry consensus. At this year’s performance conference, many senior executives of insurance companies shared their next transformation plans.
From the perspective of big strategy, the bottleneck of insurance business growth can no longer be achieved by relying on insurance products alone. Therefore, listed insurance enterprises mostly choose to intervene in extended businesses such as pension, medical treatment and great health, form synergy advantages with the main insurance industry, and multiple sectors promote and develop each other.
New China Life Insurance Company Ltd(601336) vice president, chief actuary and Secretary of the board of directors Gong Xingfeng said that we should strengthen product innovation and strategically tilt the two themes of pension and health. At the same time, through the synergy of scientific and technological empowerment and improving the overall service capacity, enhance the product innovation ability, so as to ensure that high-value businesses can open the market.
Ping An Insurance (Group) Company Of China Ltd(601318) focuses on comprehensive finance and medical health. Since last year, it has launched a number of new pension strategies. In 2021, it released the health care brand of “Ping An Zhen Yi Nian” and the first high-end product line “Yi Nian city”. This year, it launched the home-based elderly care service system. Relying on the advantages of the group’s medical and health ecosystem, it integrates social high-quality elderly care resources to solve the pain points of home-based elderly care for the elderly.
When will the inflection point of life insurance industry come? At present, there are different views in the industry. According to the view of China Securities Co.Ltd(601066) Securities Research Report, how to create the attraction of the industry itself, enable agents to maintain their professional concentration and internal driving force are the fundamental problems to be solved in the reform of insurance companies. Although large insurance companies are oriented to the full customer base and have a high degree of complexity of reform on the surface, we believe that this is not the case. The core of the difficulty of reform of large insurance companies lies in the understanding and mastery of the reality of different channels and customers, and the speed will not be too slow.
Citic Securities Company Limited(600030) research report believes that the biggest blocking point at present is that the insurance industry itself is in a development dilemma, and the volume of investable assets in the industry is too small to be expanded, which is reflected in the mismatch between the people’s insurance protection needs and the supply capacity of the insurance industry. On the one hand, the insurance industry is carrying out supply side reform, increasing the layout of back-end service resources such as pension and medical care, and reforming agents, bancassurance and Internet channels at the front end; On the other hand, the demand side of the insurance industry is facing the adverse situation of insufficient effective purchasing power of low-income people and rapid aging of the population. In the case of mismatch between supply and demand, there is an urgent need for appropriate fiscal policies to enhance the insurance purchasing power of low – and middle-income and rapidly aging populations.
