Following the annual report, the 2024 "good start" performance list of listed insurance companies was unveiled. As of April 21, eight listed insurers have disclosed their premium income in the first quarter.
According to the statistics of "A Smart Insurance", 8 companies including Chinese Life, Ping An of China, Chinese People's Insurance Company, China Pacific Insurance, Xinhua Insurance, Sunshine Insurance, Guohua Life Insurance and Zhongan Online collected a total of 1,133.707 billion yuan in premiums in the first quarter, a slight increase of 0.97% over the same period last year. Among them, the year-on-year growth rate of premiums of life insurance companies was mixed, and property insurance companies maintained growth, but the growth rate also slowed down.
Among them, the performance of life insurance companies did not exceed expectations. From the perspective of external factors, the two key supporting factors for the "good start" in the first quarter of 2023, the high growth of the bancassurance channel and the expectation of lower pricing interest rates, faded in the first quarter of this year. For example, in recent years, market interest rates have continued to decline, whether it is to redeem the products sold during the "good start" period a few years ago, or to redeem the products currently sold in the future, the maturity payment pressure has tested the rationality of the product structure and asset allocation of insurance companies. The larger the scale of high-yield products, the greater the pressure on maturity payments.
Whether it is the lack of life insurance agents, the emphasis on the value of new business, or the chaotic "surgery" of the core auto insurance business by property and casualty insurance companies, it is the embodiment of the change in the development concept of insurance companies, and has also laid a more solid foundation for long-term healthy and stable development.
Find out the reasons behind the rise and fall of life insurance
In the first quarter of 2023, the life insurance industry, which has experienced years of channel transformation and a clear agent team, ushered in an inflection point after the release of pressure, superimposed on the early release of residents' insurance savings demand under the expectation of high growth of bancassurance channels and lower pricing interest rates, the premium growth rate of the life insurance industry reached 8.86%, and the average premium growth rate of listed life insurance companies with comparable data also rebounded significantly. However, this momentum did not last long, the overall data of the industry in the first quarter of this year has not yet been released, from the A share and H share 7 listed life insurance companies, the total premium income of 762.068 billion yuan, the year-on-year growth rate turned down, down 1.04%.
The premium income of the seven companies is greatly differentiated, and the year-on-year growth rate shows "three rises and four declines". Among them, the premium income of the three life insurance companies of Chinese Life, Ping An Life and Sunshine Life Insurance was 337.6 billion yuan, 173.302 billion yuan and 32.563 billion yuan respectively, with a year-on-year increase of 3.2%, 0.9% and 5.44% respectively; while the premium income of PICC Life Insurance, Taibao Life Insurance, Xinhua Insurance and Guohua Life Insurance all fell by more than 5% year-on-year, and the highest decline was Guohua Life, reaching 20.55%.
In fact, although the life insurance industry as a whole has reached an inflection point in the first quarter of 2023, the premium income of listed life insurance companies has shown differentiation. The premium growth rate of the seven listed life insurance companies at that time was "four rises and three declines", and the companies with negative year-on-year growth were also PICC Life Insurance, Taibao Life Insurance, and Xinhua Insurance. From the analysis of the situation of a single company, there are reasons why the production capacity of agents is not as high as that of the same industry, and the base is too high due to the adoption of the single delivery impulse policy.
In the first quarter of this year, there was one more company with negative year-on-year premium growth, Guohua Life Insurance, and the year-on-year growth rate fell from 26.85% in the same period last year to -20.55%. In addition, it is worth noting that the year-on-year decline in the premium income of three companies such as PICC Life Insurance has expanded, from less than 3% in the same period last year to more than 5% in the first quarter of this year, and the growth rate of the premium income of the three companies with positive growth has also "shrunk".
The two main reasons for the "pause" or weakening of the growth trend are that the new orders of the bancassurance channel are under pressure and the "speculation and suspension of sales" under the switch of interest rates. In the first half of 2023, the news of the switch of life insurance interest rates drove the hot sales of increased whole life insurance, and at the end of July, the scheduled interest rate of life insurance bid farewell to the era of 3.5%; On a quarter-by-quarter basis, it is reflected in the 2023 annual and quarterly reports, and continues into the first quarter of this year.
According to an industry exchange data obtained by "A Smart Insurance", among the 30 life insurance companies counted, 22 companies, including the "old seven", saw a year-on-year decline in bancassurance channel premium income in the first quarter of this year, with the highest decline of 61%, and only 8 companies had positive growth in bancassurance channel premiums, with an overall growth rate of -22%.
Companies with a high proportion of bancassurance channel business are more affected. Taking Guohua Life Insurance, whose premium growth rate turned down in the first quarter of this year, as an example, the 2023 semi-annual report shows that the premium income contribution ratio of the company's bancassurance channel is as high as 92%. People close to the company told the media that the company has been greatly impacted by the requirements of "integration of newspapers and banks", and is undergoing structural optimization, and the results will take time. Another traditional bancassurance company, Dajia Life, also saw a 32% year-on-year decline in premium growth in the first quarter.
The growth rate of property insurance has slowed down, and the cost may increase
Compared with the ups and downs of the life insurance industry, the property insurance industry is relatively more stable. In the first quarter of this year, the five listed property insurance companies achieved a total premium income of 335.059 billion yuan, a year-on-year increase of 5.15%.
In terms of scale, there is no change in the number of industry seats, and the premium income from high to low is PICC Property Insurance, Ping An Property Insurance, CPIC Property Insurance, Sunshine Property Insurance and Zhongan Online, with premium income of 173.977 billion yuan, 79.076 billion yuan, 62.491 billion yuan, 12.429 billion yuan and 7.086 billion yuan respectively in the first quarter. In terms of growth rate, the leaders are Sunshine Property Insurance and Zhongan Online, with 18.26% and 18.1% respectively, and the year-on-year growth rate of premiums of the "old three" has not reached double digits.
According to the analysis of a number of brokerage teams, one of the main reasons for the stable premium income of property insurance business in the first quarter is the impact of the holiday season and the increase in consumption, especially with the continuous introduction of support policies such as the promotion of new energy vehicles by the central and local governments, the superimposed trade-in policy and the release of some new models, automobile sales have maintained stable growth. According to data from the China Association of Automobile Manufacturers, in the first quarter of this year, the production and sales of automobiles in mainland China were 6.606 million and 6.72 million respectively, an increase of 6.4% and 10.6% year-on-year, respectively, achieving a "good start" in the first quarter.
However, the motor insurance business, which is the largest type of insurance in the property insurance industry, implemented the "integration of newspaper and bank" policy earlier than the bancassurance channels that affect the life insurance industry, and the supervision increased the relevant inspection and punishment at the beginning of this year, which also has a certain impact on the premium income of property insurance companies. Compared with the same period last year, the growth rate of premium income of the five listed property insurance companies in the first quarter declined.
The largest difference was in PICC property insurance, with a growth rate of 10.19% falling to 3.78%. According to the premium growth rate of various types of insurance disclosed by it, the premium income growth rate of the top three types of insurance, automobile insurance, accidental injury and health insurance, and agricultural insurance in the first quarter was 1.9%, 6.2%, and 3.2% respectively, all of which were not as good as the same period last year, and the premium income growth rate of credit guarantee insurance even turned from 26.7% last year to -7.6% this year. Another company that disclosed the details of the premium growth rate of each type of insurance is Ping An Property & Casualty, whose largest insurance type, auto insurance, increased its premium income by 3.54% year-on-year in the first quarter of this year, but the premium income of non-motor insurance decreased by 9.75% year-on-year, which also dragged down the overall growth rate.
In addition, it is worth noting that from the 2023 annual reports released not long ago, it can be seen that the phenomenon of "difficulty in increasing revenue" in auto insurance is widespread, and it has dragged down the company's overall profit performance. Guojun Non-Bank Financial Team expects that under the impact of disasters such as the recovery of automobile travel and low temperature freezing rain, it is expected that the property insurance loss ratio and comprehensive cost ratio will increase slightly year-on-year in the first quarter. However, at present, the leading companies in the property and casualty insurance industry are taking the initiative to optimize their business structure and improve the quality of underwriting, and it is expected that the underwriting profit will remain stable.
摒弃"唯规模论"转练"内功"
The industry generally expects that the demand for life insurance is expected to remain strong against the backdrop of lower interest rates of commercial banks and low long-term interest rates, and in terms of property insurance, the retail sales of passenger cars will also continue to increase and drive the recovery of motor insurance premiums. In addition to scale, insurance companies are now more concerned about structure, efficiency and value enhancement, and are no longer "scale-only".
For example, from the perspective of a single month in the first quarter, the original premium income of listed life insurance companies rebounded as a whole in March, of which the original premium income of Xinhua Insurance was 64.772 billion yuan, a year-on-year increase of 2.5 times, and it was the most eye-catching insurance company in the month. According to the company, this is mainly due to the increase in the scale and value of the individual insurance channel, the optimization and improvement of the premium income structure, and at the same time, the company has also increased the sales of long-term payment products to promote the increase in the value rate of individual insurance.
Looking at the timeline further, in recent years, the continuous depletion of the life insurance agent team and the continuous emphasis of insurance companies on the value of new business are all manifestations of the transformation of the industry's development concept. P&C insurance companies are also getting rid of the extensive competition model, such as the chaos of the core auto insurance business, from the first and second comprehensive reform of auto insurance in recent years, to the introduction of document No. 450 last year, the first self-discipline convention issued by leading insurance companies at the end of last year, and then to the recent implementation of strict self-discipline by some insurance companies for newly reinsured family cars and driving insurance, all of which reflect the shift from "fighting price" to "fighting value".
Insurance companies have strengthened their "internal strength" in refined management and cost management, which is also a move to cope with the economic transformation and development and the continuous decline in market interest rates. Recently, it has been reported that with the sales of a large number of 5-6 year dividend-paying insurance, universal insurance and the actual 5-6 year annuity insurance during the "good start" period in 2018 and 2019, the life insurance industry in mainland China has gradually entered the peak period of maturity payment.
In recent years, insurance companies have experienced the pressure of capital balance brought about by the decline in interest rates. "The more you sell, the more you lose. Some people from institutions said frankly. According to a market research feedback, when the investment side of the industry performed well in the past few years, it was still able to support a relatively high settlement interest rate, but in recent years, the return on incremental assets has not been able to reach the previous level. For example, compared with the universal insurance interest rate and the total investment return rate of listed insurance companies in 2023, the latter does not exceed 3%, and only Chinese Insurance Company achieves 3.3%, which is "inverted" with the interest rate of some products, which means that insurance companies have to operate such products at a loss. At the beginning of this year, the interest rate of universal insurance products entered the "3 era" in an all-round way, behind which there was not only regulatory guidance, but also the self-motivation of insurance companies to adjust the cost of liabilities.
"Considering the continuous reduction of the LPR and the downward trend of bank deposit rates, it is not ruled out that the scheduled interest rate of life insurance products will be lowered again during the year. Zheng Jisha, an analyst at China Merchants Non-Bank, pointed out. According to Wang Yifeng, an analyst at Everbright Securities, the year-on-year growth rate of premiums of listed insurance companies is expected to be under pressure in the second quarter of this year under the high base of the same period last year, but in the context of the supervision of accelerating the high-quality transformation of the industry through measures such as "integration of newspapers and banks", the cost of insurance companies' liabilities has been effectively controlled, and it is expected that "making up for volume with price" will promote the value indicators to continue to improve.
