With the continued volatility of the global economy and the adjustment of monetary policy by central banks, the era of low interest rates has quietly arrived. Against this backdrop, investors are looking for financial products that can resist inflation and preserve and increase the value of their assets. As an insurance product that combines protection and investment functions, participating insurance has once again ushered in a highlight moment.
The development history of participating insurance has also been full of glory and magnificence. Because of the characteristics of "guaranteed income + dividends", since its birth in 2000, participating insurance has gone through two development climaxes in China, around 2011, participating insurance accounted for more than 90% of the scale of life insurance premium income, becoming the main product in the life insurance market at that time.
It's just that unlike the previous two times, this time the "pouring wealth" of dividend insurance fell to the joint venture insurance company, and it has also become a weapon for the joint venture insurance company to seize the market.
The participating insurance market is back in turmoil
The so-called participating insurance mainly refers to a life insurance product in which the insurance company distributes its actual operating results to policyholders according to a certain proportion of the surplus that is better than the pricing assumption. To put it simply, participating insurance is a product that can not only provide certain risk protection, but also allow investors to share the operating results of the insurance company and realize the appreciation of assets.
Judging from the development history of participating insurance, the two key nodes that are sought after by consumers are related to interest rates. The first was in 2000 when the insurance industry was scheduled to cut interest rates for the first time, and the second was around the time of the financial crisis in 2008. It can be seen that the main purpose of consumers buying dividends is investment and asset preservation.
Thinking about the current environment, it is not difficult to see the reason why consumers are once again seeking participating insurance. Judging from the products currently sold in the market, participating insurance products are usually insurance products that are attached to life insurance, annuity insurance, critical illness insurance and other insurance, and on the basis of the original protection, with additional dividend distribution. In accordance with regulatory requirements, insurers allocate a certain percentage of the distributable surplus (not less than 70%) to customers, and then distribute it according to the size of each policy's contribution to the distributable surplus.
It is precisely because consumers have related investment needs that insurance companies have also increased the promotion of participating insurance products. However, what is surprising is that judging from the sales situation in this market, consumers are obviously more sought after for the products of the joint venture insurance company. It is reported that among the top participating insurance companies in terms of sales volume in intermediary channels, the products of Sino-British Life Insurance, Zhongyi Life Insurance, Fosun Prudential Life Insurance and other companies are impressively listed.
Compared with some leading life insurance institutions in China that are highly publicized and often make headlines, these joint venture insurance companies are a bit low-key and do not often appear in our sight. But it is these joint venture life insurance companies that do not like to "show their faces" that have become the main force in the sales of participating insurance products.
The reason for this is nothing more than strength and ability. According to the product setting, the income of the participating insurance is shared with the insurance company, which means that the investment ability of the insurance company determines the income of the participating insurance product. Looking at the joint venture insurance companies that have entered China, almost all of their foreign shareholders are very mature international insurance giants, which have been rooted in the developed insurance market for a long time, have more rich experience in long-term and stable operation, and have the ability to go through the economic cycle.
It is precisely because of the experience of sound operation that joint venture insurance companies have performed better in terms of investment. According to public disclosure data, among the top 10 non-listed insurance companies in terms of comprehensive return on investment in 2023, 9 are joint venture insurance companies, with an average return of 6.04%. In an environment of volatile overall economic cycles, joint venture insurers still delivered far better performance than the market average.
Joint venture life insurance leads the new trend of products
In the climax of the development of participating insurance, the representative one that has attracted much attention is the Fumanjia Whole Life Insurance (Dividend) (hereinafter referred to as Fumanjia) of Sino-British Life Insurance. In addition to the product itself, Sino-British Life Insurance has always been in the first echelon of joint venture life insurance companies in terms of company size and profit.
From the product point of view, Fumanjia adopts the design of "minimum guaranteed compound interest of 2.5% + expected dividend X", which has the opportunity to obtain potential surplus returns on the premise of ensuring the cash value of the policy interest, and realizes the steady appreciation of wealth by virtue of the long-term investment strength and dividend return of the insurance company.
It is reported that Fumanjia's dividend collection method can choose cash collection, cumulative interest-earning, payment of premiums, and payment of four kinds of increases, of which the official website inquiry interest rate of cumulative interest-bearing has been 3.3%, and currently in April 2024, the dividend interest rate is 2.75%, which is much higher than the bank's 1-year deposit interest rate of 1.5%;
From the point of view of certainty, Fumanjia guarantees that the fastest return on principal in 5 years exceeds the closed period, and the minimum guaranteed cash value of the contract is 2.5% compound interest appreciation, which is faster and higher than that of the market. From the perspective of liquidity, Fumanjia belongs to the form of increased life products, which can meet the needs of multiple functions of one product, which can be tailored to the needs of customers' capital planning time and use scenarios; From the perspective of dividend returns, Sino-British Participating Insurance has rich experience in operating and strong operating strength of participating insurance, and the official website of Sino-British Life Insurance disclosed that the dividend fulfillment ratio of 36 participating insurance products in 2022 will reach more than 100%.
Judging from the income demonstration, Fumanjia pays for 5 years and exceeds the principal for 7 years, with a guaranteed IRR of up to 2.3% for a long time, a dividend IRR of up to 3.7% for a long time, a dividend IRR of 2.8% for the 10th year, a dividend IRR of over 3.0% for the 12th year, and a dividend IRR of 3.5% for the 24th year.
In the current environment, it is obviously not easy to achieve such a fulfillment ratio. In particular, the regulator will have guiding policies for the guaranteed interest rate and demo income of the future development of participating insurance products, and it is rare to have products like Fumanjia in the market that not only guarantee high returns but also demonstrate dividend income, and even in the future, there will be no such high-quality dividend products.
Some industry insiders said that Fumanjia fully considers the needs of customers for income in product design and satisfies them, the product design is refined and pure, the income is not only fast and high, but also the strength of the insurance company and the ability to operate dividends are very high-quality, which is a high-quality dividend insurance product with perfect performance in all aspects.
According to the data, the average comprehensive investment return rate of Sino-British Life Insurance in the past 3 years is 5.93%, ranking the top 4 in the industry, and the comprehensive investment return rate in 2023 is 6.42%, ranking the top 2 in the industry, and the latest comprehensive solvency in the fourth quarter of 2023 is 273.5% and the core solvency is 167.1%, and it has been supervised for 29 consecutive quarters A class A evaluation, and it is one of the few AAA companies in the industry. As a joint venture between COFCO and Invajie Group, COFCO is a state-owned enterprise directly under the State Council and the world's largest grain merchant, while Aviva Group, founded in 1696, is the largest insurance company in the United Kingdom and designated by the British Crown as the only royal insurance company. Up to now, Sino British Life Insurance has been deployed in 17 provinces and cities (Guangdong, Beijing, Sichuan, Fujian, Xiamen, Shandong, Hunan, Hebei, Jiangsu, Liaoning, Hubei, Henan, Heilongjiang, Shanghai, Anhui, Jiangxi and Shaanxi).
In the context of declining interest rates, the regulator will have guidance policies for the guaranteed interest rate and demonstration income of the future development of participating insurance products.