Listed insurance companies all hold shares in pension insurance companies, and the development of pension security system may bring new increment
China’s third pillar pension is in an accelerated ice breaking period, and the pension financial market has great potential. With the continuous improvement of China’s third pillar pension system, the third pillar pension system policy with account system as the main body and tax incentives as incentives is expected to be accelerated. We expect that under the neutral assumption, the scale of the endowment insurance market is expected to reach 4.6 trillion yuan, and life insurance companies and endowment insurance companies may usher in new momentum of development. At present, there are a total of 10 professional pension insurance companies, all of which are controlled by listed insurance companies. The top three cities of Ping An pension, Guoshou pension and Changjiang pension account for nearly 75%. At the same time, the supervision guides pension insurance companies to return to their professional security origin. The development of the third pillar pension system is expected to further drive the pension management business and pension insurance product business of pension insurance companies, The profit contribution of pension insurance companies may be improved. It is recommended to recommend China Pacific Insurance (Group) Co.Ltd(601601) , Ping An Insurance (Group) Company Of China Ltd(601318) and China Life Insurance Company Limited(601628) of its advantageous pension insurance companies.
The proportion of the elderly population will be increased, promoted by macro policies, and old-age insurance may welcome development opportunities
In 2020, China’s population aged 65 and over exceeded 190 million, accounting for 13.5%, and the population aged 60 and over exceeded 260 million, accounting for 18.7%. According to the definition of the World Health Organization, China has entered an aging society. The increase of the elderly population may bring development opportunities for related industries. Among them, the pension finance, pension supplies, pension services and pension real estate contained in the pension industry may usher in a development outlet. At the same time, government agencies have repeatedly issued documents to promote the development of old-age insurance. Since the State Council issued several opinions on accelerating the development of modern insurance service industry in August 2014, China’s old-age insurance has gradually entered the exploration period. In 2018, it will pilot individual tax deferred commercial old-age insurance and in 2021, it will pilot exclusive commercial old-age insurance. In the future, all kinds of financial institutions will provide old-age security products based on the account system, Tax incentives may be the third pillar of the old-age security system.
Pension insurance companies are qualified for pension, security and investment business, and enterprise annuity is their main business
The main businesses of pension insurance companies are enterprise annuity, occupational annuity, pension products and old-age security products, and the third pillar has not yet been launched. As of December 9, 2021, the total asset management scale of the opened pension insurance companies has exceeded 5 trillion yuan, and the head company has obvious advantages. By the end of 2020, the amount of China’s enterprise annuity fund has reached 2.21 trillion yuan, and the market share of enterprise annuity of insurance companies has exceeded 50%. At present, the third pillar insurance products are mainly provided by life insurance companies. By the end of the third quarter of 2021, the liability reserve of traditional commercial pension insurance was 620 billion yuan, far lower than the 6 trillion yuan that the CBRC is striving to achieve in 2025. Under the dual guidance of supervision and market, pension insurance companies may accelerate the promotion of pension insurance, pension security management and enterprise (occupational) annuity business, and accelerate their participation in the construction of the third pillar pension system.
Tax incentives promote the development of the third pillar of pension, or bring new growth to Chinese insurance enterprises
From the perspective of tax system, overseas developed markets, such as the United States, Germany, Japan and Canada, have corresponding preferential tax policies for the third pillar old-age security system. We believe that preferential tax policies can promote the construction of the third pillar pension system from two aspects: the long-term attribute of pension security and customer stratification. At the company level, the retirement business can contribute higher profits to American Insurance Company AIG and Prudential finance, while the tax preferential policies of IRAs and variable annuity enhance the attractiveness of their products, so as to promote the development of retirement business. China’s pension insurance companies may welcome new growth by taking advantage of the tax preferential policy of the third pillar system.
Risk tip: the long-term interest rate is lower than expected; The third pillar pension policy is better than expected.
