The 20-year-old joint venture life insurance company ushered in heavy personnel changes at the beginning of the year. On January 8, a reporter from Beijing Business Daily learned that the general manager of Ruitai Life Insurance Co., Ltd. (hereinafter referred to as "Ruitai Life"), who had served for more than six years, resigned, and Tao Yaohui served as the interim head of the company. In 2023, Ruitai Life will face the pressure of turning from profit to loss again, with a net loss of 39 million yuan in the first three quarters. In addition, according to the 2022 annual report, Ruitai Life Insurance has a situation where the premium income of a single product accounts for 70% of the top five insurance products in premium income, and the issue of a single business structure is also put on the table.
For the general manager of Ruitai Life Insurance to take over the baton in the future, it is now necessary to promote the company to stabilize its profitability in the context of the development of the life insurance industry where investment returns are difficult to meet expectations and competition is more intense. In the future, it is necessary to lead the company to build a number of capabilities to achieve the goal of "national" and "first-class".
The general manager resigned! The term of office is more than six years
RECENTLY, RUITAI LIFE ANNOUNCED THAT ACCORDING TO THE RESOLUTION OF THE 58TH MEETING OF THE 5TH BOARD OF DIRECTORS OF RUITAI LIFE, FROM JANUARY 1, 2024, TAO YAOHUI WILL SERVE AS THE INTERIM HEAD OF RUITAI LIFE INSURANCE CO., LTD., AND ABDULLAH OMER (MA FUGUI) WILL NO LONGER SERVE AS THE GENERAL MANAGER OF RUITAI LIFE.
ABDULLAH OMER, A SOUTH AFRICAN NATIONAL, HAS A BACKGROUND AS A FOREIGN SHAREHOLDER. Ruitai Life is a joint venture life insurance company, with China Energy Group Capital Holdings Limited and South African Senior Citizen Life Insurance (South Africa) Limited each holding 50% of the shares.
ABDULLAH OMAR JOINED RUITAI LIFE IN MAY 2014 AND HAS SERVED AS THE COMPANY'S GENERAL MANAGER SINCE JULY 2017, WHERE HE HAS HELD THE POSITION OF GENERAL MANAGER FOR SIX YEARS.
ACCORDING TO THE SOLVENCY REPORT FOR THE THIRD QUARTER OF 2023 RELEASED BY RUITAI LIFE, ABDULLAH OMAR IS 62 YEARS OLD.
Tao Yaohui is a "post-70s" who joined Ruitai Life in December 2016, in addition to the interim head, Tao Yaohui is also the current deputy general manager, financial director and chief investment officer of Ruitai Life. According to his resume, Tao Yaohui has served as the assistant general manager of the finance department of Sino British Life Insurance, the manager of the financial management department and the manager of the integration of industry and finance and marketing department of Guodian Capital Holdings Co., Ltd.
Ruitai Life said in the announcement that the above changes in senior management positions have not had an impact on the company's operation, and the company's operation is normal.
Regarding the reasons for the resignation of the company's "veteran" executives, a reporter from Beijing Business Daily sent a letter to interview Ruitai Life, but as of press time, the company has not replied.
The market is challenging, and net profit fluctuates significantly
Founded in January 2004, this year is its 20th year of establishment, the company is mainly engaged in brokerage, bancassurance, group insurance, online sales and direct sales.
At the business level, from the perspective of insurance business income, from 2020 to 2022, Ruitai Life Insurance achieved insurance business income of 811 million yuan, 1.226 billion yuan and 1.8 billion yuan respectively, with a year-on-year increase of 21.95%, 51.17% and 46.82% respectively. Unlike the insurance business, which has achieved positive growth in recent years, Ruitai Life's net profit has fluctuated significantly in recent years.
In 2020, Ruitai Life turned from a profit to a loss, with a loss of 121 million yuan that year. In 2021 and 2022, the company's net profit will be 40 million yuan and 05 million yuan respectively. However, there is some uncertainty about whether Ruitai Life can achieve profitability for three consecutive years. Some industry insiders previously expected that the life insurance industry in the fourth quarter will still face greater pressure on the asset side, and it is expected that net profit will continue to be at the level of the first three quarters. In the first three quarters of 2023, the company lost 39 million yuan, which was larger than 28 million yuan in the same period in 2022.
Li Wenzhong, deputy director of the Rural Insurance Research Institute of Capital University of Economics and Business, said that the main reasons for the losses of small and medium-sized life insurance companies in 2023 are that the downturn in the capital market and the continued decline in market interest rates make it difficult for life insurance companies to meet their investment returns. The life insurance industry is more competitive, the Matthew effect is becoming more and more obvious, and small and medium-sized companies are more disadvantaged in the competition.
According to industry exchange data, in the first three quarters of 2023, 41 of the 76 life insurance companies achieved profitability, with a total profit of 143.731 billion yuan. Among them, the net profit of the top five life insurance companies totaled 116.45 billion yuan, accounting for 81.02%.
Combined with the development of the life insurance market in 2023, Kenny, a Chinese actuary and the chief writer of Actuarial Cloud Notes, also said that the profits of insurance companies mainly come from interest rate spreads. In the past two years, interest rates have fallen, the stock market has fluctuated, and the capital market has been sluggish, resulting in a decline in interest rate spreads compared with previous years. In addition, the downward trend of the 750-day moving average Treasury yield curve has led to an increase in insurance contract reserve liabilities by insurers, both of which together contribute to the current poor financial statements of insurers.
Whole life insurance has become the "main force", is it sustainable?
According to Ruitai Life's 2022 annual report, among the top five insurance products in the company's original insurance premium income in the previous year, the premium income of Ruitai Mövenpick Fuying Whole Life Insurance was 847 million yuan, accounting for about 70% of the top five insurance products in terms of premium income. The scale of premium income is much higher than that of the main protection-oriented products such as Ruitai Lehui Life (Upgrade) Group Long-term Care Insurance and Ruitai Group Critical Illness Insurance (Section C).
Kenny said that the above proportion of premiums shows that Ruitai Life relies on a single wealth management product. Possible impacts include the presence of long-term investment pressure and solvency pressure due to the high sales of the product. In addition, the business is too focused on a single product, which is easily affected by product adjustments.
Li Wenzhong also said that Ruitai Mövenpick Fuying Whole Life Insurance not only has a protection function, but also has financial management attributes. If the premium income of a product accounts for 70% of the top five insurance products in terms of premium income, it means that the company's business structure is relatively simple and concentrated.
The concentration of business on a few products will definitely bring certain risks to the company's operation. For example, Li Wenzhong said, for example, incremental life insurance usually promises in advance the annual growth rate of the sum insured, which is mainly supported by the appreciation of the use of insurance funds, and once the market interest rate falls significantly, it will bring greater risks to the insurance company.
It is understood that there have been several important changes in Ruitai Life's product strategy. According to the company's official website, Ruitai Life became an insurance company "focusing on investment-linked insurance" at the beginning of its establishment. At the end of 2009, the intensity of traditional insurance was increased. Since the second half of 2015, the company has deepened the adjustment of product structure, shifted product development from investment-oriented products to guarantee-oriented products, and increased efforts to expand the sales of value-based and security-oriented products.
For life insurance companies to vigorously expand the sales of value-based and protection-oriented insurance products, Li Wenzhong said that this is inseparable from an in-depth understanding of the protection needs of customers, and then continue to innovate according to the needs of customers, develop and design insurance products, and form a rich product portfolio to meet the diverse needs of customers. At the same time, the average premium of protection insurance products is generally relatively low, so insurance companies also need to make full use of the Internet and technology to strengthen marketing, improve sales efficiency, and reduce sales costs.
What elements are needed to move towards the whole country?
As of the third quarter of 2023, Ruitai Life has total assets of 9.597 billion yuan and a total of 7 provincial branches. "To build a national, first-class life insurance company" is the goal of Ruitai Life.
However, in the eyes of industry insiders, small and medium-sized life insurance companies focus on future development, and they cannot do without focusing on solving current problems.
According to the rating results disclosed in the C-ROSS Regulatory Information System, Ruitai Life's comprehensive risk rating (classified supervision) in the first quarter of 2023 and the second quarter of 2023 is B-BB. For the improvement measures that have been taken or are planned to be taken, Ruitai Life said that the company will submit an analysis report to the company's senior management in combination with the content of the report, formulate practical and effective improvement measures for the loss of points, and will continue to follow up the degree and effect of rectification, comprehensively deepen the construction of risk management mechanism, and effectively improve the company's risk management capabilities.
According to Zhu Keli, executive director of the China Information Association and founding president of the National Research Institute of New Economy, it is an all-round and continuous work for small and medium-sized life insurance companies to improve their risk management capabilities. In addition to building a sound risk management system and cultivating employees' risk awareness and skills, it is also inseparable from the use of big data and artificial intelligence and other technological means to improve the efficiency of risk management, real-time monitoring of risks and make accurate early warnings.
At present, the digital transformation of the insurance industry is in full swing, and the whole process of insurance products from design to claims settlement has become "inseparable" with technology empowerment. According to the information released by Ruitai Life's official WeChat account in 2023, the company is one of the first companies to introduce low-code technology in the domestic life insurance industry, and with the support of its advantages such as rapid construction, efficient iteration and flexible deployment, the company can quickly respond to market changes and customer needs, improve business processing efficiency and customer experience, while reducing R&D costs and improving delivery reliability.
"Promoting digital transformation is also an important way for small and medium-sized life insurers to enhance their competitiveness, through digital transformation, companies can not only improve business processing efficiency and reduce costs, but also better understand customer needs and optimize product design, so as to achieve precision marketing and risk management. Zhu Keli said that in the process of building technological advantages, small and medium-sized life insurance companies also need to seek differentiated competition and find their own characteristics in the increasingly fierce market competition.
If a life insurance company wants to go national and become a first-class, in addition to "splashing ink" under the topic of digital transformation, it is also inseparable from the creation of multiple capabilities. Li Wenzhong said: First of all, it is necessary to have a high-level management team to determine the direction and focus of the company's development; second, it is necessary to have a standardized internal management system to ensure the safety and efficiency of the company's business operations; third, it is necessary to have a team of high-quality professionals who are familiar with the life insurance market and the financial market, so that the company can have strong competitiveness on both the liability side and the asset side; and finally, it is necessary to have sufficient solvency, which is an important economic guarantee for a life insurance company to go to the whole country.
Beijing Business Daily reporter Hu Yongxin