Now, the 2023 earnings season for listed insurers has come to an end. In 2023, when assets and liabilities are deeply adjusted, what is the operating performance of the top listed insurance companies?
According to the statistics of "A Smart Insurance", in 2023, the net profit attributable to the parent of 7 listed insurance companies in 2023, including Chinese Life, Chinese Insurance Company, Ping An of China, China Pacific Insurance, Xinhua Insurance, China Taiping and Sunshine Insurance, will be 174.979 billion yuan (calculated in RMB equivalent to China Taiping), equivalent to a daily income of 479 million yuan.
However, compared with the profitability in 2022, except for China Taiping's net profit attributable to the parent company in 2023, which increased by 44.1% year-on-year, the remaining six listed insurance companies all fell year-on-year.
Among them, the net profit attributable to the parent of Chinese Life, Ping An of China and China Taibao in 2023 will all fall by more than two percent, by 34.2%, 22.8% and 27.1% respectively. The net profit attributable to the parent of Chinese Insurance, Sunshine Insurance and Xinhua Insurance decreased by 10.2%, 16.8% and 11.3% respectively. As for the reasons for the decline in net profit, in the 2023 financial report, many insurance companies mentioned the greater impact of investment fluctuations, which in turn led to a decline in investment income, affecting the performance of the profit side.
In fact, based on the weak trend on the asset side in the past year, the industry has expected that the overall profitability of listed insurance companies will be under pressure in 2023. The market is more concerned about the development of various insurance companies on the business side, especially the operating performance of listed life insurance companies, which affects the nerves of the industry and market confidence.
The value of new business is universally increased
Under the "integration of newspapers and banks", the contribution of bancassurance has increased
2023 is undoubtedly a year of joy and worry for listed life insurance companies, this year under the expectation of a shift in the scheduled interest rate, savings life insurance products represented by increased life insurance have experienced hot sales brought by "speculation and stop selling", but after the scheduled interest rate is lowered, the growth of life insurance premiums has also weakened. Then, the implementation of the "integration of reporting and banking" in the bancassurance channel began to make major insurance companies have to face up to the objective environment and open the way to reduce costs and increase efficiency.
From the perspective of "new business value", a core indicator that represents the growth of life insurance business, the new business value of 7 listed life insurance companies will increase in 2023 based on the strengthening of value orientation by listed life insurance companies and the stabilization of the recovery of the liability side.
Specifically, in 2023, PICC Life Insurance and New China Insurance will have a higher growth rate of new business value, 69.6% and 65.1% respectively. In addition, the growth rate of this indicator of Sunshine Life Insurance is also quite impressive, at 44.2%, and the growth rate of new business value of Ping An Life Insurance and health insurance is more than 30%, at 36.2%. In addition, the growth rate of new business value of Chinese Life, Taibao Life Insurance and Taiping Life Insurance was 11.9%, 19.1% and 27.8% respectively.
"The rapid growth in new business value is mainly due to premium growth and structural optimization, and it is expected that the new business value of PICC Life Insurance will continue to grow well in 2024. At the 2023 annual results conference, Xiao Jianyou, Vice President of Chinese Insurance and President of PICC Life Insurance, analyzed the reasons for the high growth in the value of new business.
Looking at the significant increase in the value of New China Insurance's new business, it is actually closely related to the improvement of business quality. In 2023, the first-year premium of long-term insurance of New China Insurance will be RMB40.9 billion, a year-on-year increase of 5.4%, the first-year premium of long-term insurance will be RMB23.538 billion, a year-on-year increase of 31.8%, and the first-year premium of traditional insurance and participating insurance will account for 95.9% of the first-year premium of long-term insurance, an increase of 6.3 percentage points year-on-year.
In the past two years, due to the transformation and adjustment of the individual insurance channel, the bancassurance channel has gradually become the main channel for listed life insurance companies to maintain growth, but the problems of "difficulty in increasing revenue and increasing profits" and "scale but no value" in this channel have also been controversial, which has also prompted the regulator to promote the implementation of "integration of reporting and banking" in the bancassurance channel, aiming to strengthen cost control from the source.
Observing the driving factors behind the value of new business in 2023 of listed life insurance companies, the value contribution of the bancassurance channel of many listed life insurance companies has increased significantly under the combined impact of the new policy of "integration of newspapers and banks" and channel transformation.
As mentioned in the Chinese annual report, in 2023, PICC Life Insurance will strictly implement the requirements of the regulatory authorities to "integrate reporting and banking" by improving the system and strengthening the rigid control of the system, and promote the high-quality development of channel transformation. According to the data, the value of new business in PICC Life's bancassurance channel was RMB1.001 billion, a significant increase of 82.33% year-on-year from RMB549 million in 2022, and Ping An Life's new business value in the bancassurance channel increased by 77.7% in 2023 on a comparable basis through the implementation of the value transformation strategy.
From the perspective of bancassurance channel transformation, Ping An Life, on the one hand, deepened the exclusive agency model with Ping An Bank, and on the other hand, expanded the number of cooperation channels and outlets of external banks, strengthened the standardized operation of outlets, and improved the professional ability of the team, so as to achieve an increase in the per capita production capacity of the bancassurance team, while CPIC Life explored the high-quality development of the bancassurance channel from the aspects of customer stratification, reshaping management and operation mode, and strengthening digital and intelligent support. In 2023, CPIC Life's bancassurance channel achieved a scale premium of RMB38.069 billion, a year-on-year increase of 12.5%, and a year-on-year increase in the value of new business of 115.6%.
In the high-quality transformation cycle, the management of many insurance companies has also emphasized the importance of "valuable growth" at the results conference, and value orientation has become the business consensus of leading insurance companies.
Bai Tao, chairman of Chinese Life, said bluntly, "We must take high-quality development as the top priority, and continuously promote new business value, embedded value, premium scale, comprehensive strength and brand influence to a new level." For the development plan for 2024, China Life Insurance has put forward the "three threes" business tasks, of which the "three improvements" include value increase; Yang Yucheng, chairman of Xinhua Insurance, also said that the most important indicator of insurance companies is the increase in value. According to its disclosure, in 2024, Xinhua Insurance has put the assessment of value and long-term delivery in the first place, and always adheres to quality and quality.
The stability of individual insurance manpower varies
There is stabilization, there is reduction
Purely from the perspective of new business value growth, it seems that listed life insurance companies have gradually come out of the trough in 2023, but in terms of the manpower scale of agents and individual insurance channels, the degree of stabilization of various insurance companies is different, and on the whole, the downward trend of manpower reduction has not yet been reversed.
According to the data, in 2023, the total manpower of the agents or individual insurance channels of the above seven listed life insurance companies will be 1.7119 million, a decrease of 390,800 from 2.1027 million at the end of 2022, and the overall decline will be more than 18%. Among them, in 2023, the manpower scale of Taiping Life, Ping An Life, and Xinhua Insurance will decline significantly in individual insurance or agent channels.
For example, China Taiping's 2023 annual report shows that as of the end of the reporting period, the number of individual agents of Taiping Life was 234,700, a year-on-year decrease of 39% from 391,100 at the end of 2022, a decrease of 156,400.
As of the end of 2023, the number of individual life insurance sales agents of Ping An Life was 347,000, a decrease of 98,000 from 445,000 at the end of 2022, and according to the financial report of Xinhua Insurance, the number of individual insurance agents at the end of 2023 was 155,000, a decrease of 42,000 from 197,000 at the end of 2022. Relatively speaking, the team size of Chinese Life, the "big brother" of life insurance, is the first in the industry to stabilize, and the sales force of individual insurance in 2023 will be 634,000, a year-on-year decrease of 5%.
Talking about the reasons for the decline in the size of the agent team, Wang Lianwen, vice president of Xinhua Insurance, explained at the results conference that there are three reasons behind it: first, China's life insurance market is still in the adjustment period, and the entire industry is still in a downward trend; second, the characteristics of the industry itself; third, the old impulse increase does not work, and new ways are still being explored.
He further introduced that in 2024, New China Life will launch a new Basic Law, focusing on high-performing individuals, emphasizing the improvement of individual capabilities, and also emphasizing that the entire organization should be as strong and stable as a fortress. Specifically, in terms of implementation, it mainly includes strengthening the standards of recruitment, consolidating the foundation of the team through solid basic management, and strengthening the honor system. "Insurance is not made by people, it is made by people. He confessed.
Indeed, from the perspective of the agent channel business strategy, transformation is still the highlight in 2023, especially the top insurance companies emphasizing the construction of a team of high-performing agents. Guo Xiaotao, co-CEO and deputy general manager of Ping An, said that in the traditional agent channel, in addition to the active transformation of the individual quality improvement of agents, the company also emphasizes the coordination of excellent teams and sales departments, sets the three-good five-star evaluation standard, optimizes and upgrades team play, and moves from individual operations to collaborative operations. In 2023, the agent production capacity will increase by nearly 90% year-on-year, and the revenue will also increase by nearly 40% year-on-year.
In 2023, on the basis of the results of the first phase of the "Long Voyage" transformation, it will implement the internal transformation guided by organizational change, comprehensively build an enabling headquarters and operating organization, and plan the second phase of the "Long Voyage" transformation; Chinese Life will also clarify the two key reform directions of "professional upgrading of the existing team" and "new marketing model layout" in 2023 based on the idea of establishing first and then breaking, and at the same time pilot promote the "Seed Plan", building a team of financial and insurance planners, etc.
In 2024, the life insurance agency channel will also face challenges such as the accelerated implementation of hierarchical management and the stricter regulatory policies under the formal implementation of the Measures for the Administration of Insurance Sales Behavior. Strictly guard against the risk of interest spread loss and fee difference
Reducing the cost of debt is the trend of the times
In recent years, with the long-term decline in interest rates and the rising costs of handling fees, commissions and compensation expenses on the liability side of the industry, the profitability of insurance companies has been severely challenged.
According to the previous statistics of "A Smart Insurance", among the 60 non-listed life insurance companies that can be counted in 2023, 35 insurance companies will have net losses. Judging from the latest 2023 financial reports and performance conferences of listed insurance companies, how to prevent the risk of interest spread loss and fee difference loss and do a good job in asset and liability management are also the focus of market attention.
Through the speeches of senior executives of listed insurance companies and media Q&A, it is not difficult to conclude that in terms of preventing the risk of interest rate loss, optimizing the product structure on the liability side and reasonably adjusting the pricing interest rate have become important countermeasures.
For example, for the prevention of interest rate loss risks, Xiao Jianyou pointed out that, first, the liability side of PICC Life Insurance will continue to optimize the product structure, reduce the business scale with high debt costs, actively promote the sales of new products with relatively low predetermined interest rates, and increase the sales of protection insurance. At the same time, in terms of product design, it enriches dividend insurance and universal insurance with income adjustment mechanism. Second, strengthen management on the liability side, reduce costs and increase efficiency, and reasonably adjust the dividend level and the settlement interest rate of universal insurance.
"From the investment side, we strive to pursue a better return on investment. Strengthen the forward-looking research and judgment of interest rate trends, timely grasp the changes that may have an impact on the trend of long-term interest rates, give full play to the combination of strategic asset allocation and tactical asset allocation, and further optimize the structure of the overall allocation from point to area in combination with market conditions; strengthen the linkage management of assets and liabilities, and actively manage the duration gap, extend the duration of assets, and prevent the risk of mismatch of asset and liability duration under the downward trend of interest rates. Xiao Jianyou further said.
Zhang Yuanhan, head of finance and chief actuary of CPIC, also responded that in the new economic environment, the public's demand for protection, the demand for asset appreciation and the demand for asset inheritance are still huge. In this case, the company will reduce its sensitivity to interest rates by reducing the guaranteed interest rate of pricing, increasing the component of adjustable income in the product, and increasing the proportion of guaranteed products. At the same time, he also pointed out that as the market lowers the pricing rate, the company's overall guaranteed interest rate or debt cost is also gradually decreasing.
It can be seen that the strict implementation of the policy of "integration of reporting and banking" and strengthening cost control have become the core grasps of major insurance companies.
Bai Kai, vice president of Chinese Life Insurance, bluntly said that since the fourth quarter of 2023, the regulator has implemented the "integration of newspapers and banks" in the bancassurance channel, and in February this year, it implemented the "integration of newspapers and banks" in the professional intermediary agency channel, and will definitely implement the "integration of newspapers and banks" in the personal insurance channel in the future. In this regard, Chinese Life attaches great importance to it and has designed a new bancassurance product system to further strengthen the cost management of bancassurance channels. In the next step, if the scope of "integration of reporting and banking" is expanded to individual insurance, it will still help the company to reduce costs and increase efficiency in the long run, improve the efficiency of capital and resource use, and further promote the reform of the marketing system of individual insurance channels.
Pan Yanhong, chairman of CPIC Life Insurance, also said that the "integration of newspapers and banks", the classification of sales personnel and the management methods of sales behavior are all high-frequency words that have attracted attention recently, and the company attaches great importance to these management measures are important measures to guide the high-quality development of the industry by taking the initiative to supervise and guide the high-quality development of the industry, and hope that the industry will further return to rationality and the basic logic of industry operation, so as to truly cross the cycle and achieve long-term sustainable and high-quality development of the industry.
In fact, since 2024, the regulator has also further guided the life insurance industry to reduce the cost of assets and liabilities, which can be seen from the recent news in the market that the settlement rate of universal insurance and the actual dividend level of dividend insurance have ushered in a "double limit". Not long ago, the State Administration of Financial Supervision and Administration also issued the latest "Measures for the Supervision and Rating of Life Insurance Companies", which determines the comprehensive risk level of the company from the dimensions of corporate governance, capital utilization, business operation, asset and liability management, and solvency.
With the trend of strict regulation and the volatile market environment, more and more life insurance companies are realizing that it is more important to achieve quality and valuable growth than to expand their business scale, and to balance the relationship between assets and liabilities, and long-term and short-term.