In the first quarter, the "power system" insurance companies, which lost eight years of profits and backed by the State Grid, have fallen into downward difficulties in performance in recent years
"China Science and Technology Investment", Zhang Ting, Long Qiuyue
In 2023, Yingda Taihe Life Insurance Co., Ltd. (hereinafter referred to as "Yingda Taihe Life") will lose 840 million yuan, and in the first quarter of this year, Yingda Taihe Life Insurance Co., Ltd. (hereinafter referred to as "Yingda Taihe Life") will lose 1.291 billion yuan again, and the loss will expand significantly. So far in 2022, the company's cumulative loss has reached 2.5 billion yuan. In fact, Yingda Taihe Life Insurance has been profitable since 2014, and the total net profit by 2021 is 1.308 billion yuan.
On the whole, the loss of Yingda Taihe Life may be caused by the decline in investment income caused by capital market fluctuations on the one hand, and the increase in business expenses such as surrender money, compensation expenses, withdrawal of insurance liability reserves, handling fees and commission expenses on the other hand.
In the first quarter of this year, the core and comprehensive solvency adequacy ratios of Yingda Taihe Life Insurance were 89.41% and 163.03% respectively, and the last two comprehensive risk ratings were BB. In terms of shareholding structure, except for the U.S. MassMutual Life Insurance Company, the 26 Chinese shareholders are all wholly-owned subsidiaries or holding subsidiaries of State Grid Corporation of China, and the Chinese shareholders hold a total of 80.1% of the shares of Yingda Taihe Life. Previously, Yingda Taihe Life Insurance has been promoting capital increase, but it has not been implemented. China Bond Credit Rating Co., Ltd. (hereinafter referred to as "China Bond Credit") pointed out in the announcement of the regular tracking rating information of Yingda Taihe Life 2020 Capital Supplementary Bond in the first quarter of 2024 that in the future, the company plans to increase capital and use various capital replenishment tools to replenish capital, and it is still necessary to pay attention to the company's solvency trend.
In the first quarter, it lost nearly eight years of net profit
In 2014, Yingda Taihe Life Insurance achieved a profit of 9.3 million yuan, entering the profit period of "seven flats and eight profits" in the life insurance industry. Since then, Yingda Taihe Life's net profit has shown positive growth, and it will achieve a profit of 377 million yuan in 2021. In 2022, Yingda Taihe Life Insurance turned from a profit to a loss, falling into a loss of 387 million yuan, and in 2023, the loss scale will expand to 840 million yuan. In the first quarter of this year, Yingda Taihe Life's loss rose to 1.291 billion yuan. Among the non-listed life insurance companies that have disclosed their solvency reports for the first quarter of this year, Yingda Taihe Life Insurance is also among the top losers.
According to the latest solvency report, the average investment return and comprehensive investment return of Yingda Taihe Life Insurance in the past three years were 4.53% and 3.44% respectively. In the first quarter of this year, the above two indicators of Yingda Tai and Life Insurance were 0.17% and 2.27% respectively; At the end of the fourth quarter of last year, the above two indicators of Yingda Tai and Life Insurance were 3.35% and 3.41% respectively. It can be seen that in the first quarter of this year, the company's investment income index declined significantly compared with the end of last year.
China Bond Credit pointed out in the rating announcement of Yingda Taihe Life Insurance that in 2023, the company's continuous losses were mainly caused by the decline in investment income caused by capital market fluctuations. China Chengxin International Credit Rating Co., Ltd. (hereinafter referred to as "China Chengxin International") also pointed out in the announcement on the tracking rating information of "20 Yingda Taihe Life" that in 2023, the company will achieve a total of 2.725 billion yuan in investment income and fair value change income, a year-on-year decrease of 2.35%.
In July 2023, Yingda Taihe Life announced on its official website the disclosure of major matters of equity investment management capabilities (indirect equity investment), the organizational structure of the company's asset management department (investment management department) was adjusted, and there was no independent equity investment department (team) responsible for equity investment within the asset management department, resulting in the investment management ability not meeting the ability standards, so the independent development of indirect equity investment-related business was suspended. In August 2021, Yingda Taihe Life Insurance completed the first information disclosure of equity investment (indirect) management capacity building and self-assessment, and obtained indirect equity investment capabilities.
According to the information on the use of funds on the official website, Yingda Taihe Life usually entrusts its holding subsidiary, Yingda Insurance Asset Management Co., Ltd. (hereinafter referred to as "Yingda Asset Management"), to invest in the use of insurance funds. On April 17 this year, Yingda Taihe Life Insurance subscribed for 75 million yuan of Yingda Assets-Taihe Preferred No. 1 asset management product; On February 1, it subscribed for 5 million yuan of Yingda Assets-Wenli Chuangying No. 2 asset management product; On January 30, it subscribed for 30 million yuan of Yingda Assets-Taihe No. 6 asset management product. From November to December last year, Yingda Taihe Life Insurance subscribed for Yingda Assets-Wenli Chuangxin No. 17, No. 27, No. 34, No. 35 and No. 36 asset management products respectively, with a subscription scale of 500 million yuan, 600 million yuan, 600 million yuan, 600 million yuan and 600 million yuan respectively.
*The investment scope of Yingda Assets-Wenli Chuangxin No. 36 Asset Management Product
According to the annual report of Yingda Asset Management, in 2023, the total amount of the company's major related party transactions will be 153 million yuan, which is the entrusted investment management fee charged by the company under the asset entrustment management contract signed with Yingda Taihe Life Insurance Co., Ltd. and Yingda Taihe Property Insurance Co., Ltd. In addition, Yingda Asset Management itself will also face a decline in revenue and net profit in 2023, with operating income and net profit of 172 million yuan and 41 million yuan respectively, down 26.18% and 52.87% year-on-year respectively.
The scale of surrender has increased
In terms of surrender, in 2022, the surrender benefit of Yingda Taihe Life reached 1.475 billion yuan, an increase of 1 billion yuan from 2021, and doubled again to 2.917 billion yuan in 2023. According to the type of insurance, in 2023, the surrender benefits of Yingda Taihe Life's participating life insurance, general life insurance, and long-term health insurance will be 509 million yuan, 2.366 billion yuan, and 43 million yuan respectively. In the announcement on the tracking rating information of "20 Yingda Taihe Life", China Chengxin International pointed out that in terms of business expenses, Yingda Taihe Life Insurance will incur a total of 18.234 billion yuan in surrender money, compensation expenses and withdrawal of insurance liability reserves in 2023, a year-on-year increase of 9.47%.
In the first quarter of this year, the top three products in terms of surrender amount and comprehensive surrender rate during the reporting period generated a total surrender scale of 425 million yuan. In the first quarter of this year, the surrender scale of Yingda Yuanheng B Annuity Insurance was 279 million yuan, and the annual cumulative surrender scale of this product reached 2.122 billion yuan last year. According to the life insurance information database on the official website of the Insurance Industry Association, the sales time of Yingda Yuanheng B annuity insurance is December 1, 2016, and the suspension date is April 1, 2018. The recent surrender of Yingda Taihe Life may be related to the concentrated maturity and redemption of products sold in the early years.
In the first quarter of this year, the net cash flow of Yingda Taihe Life's dividend account business decreased from 1.638 billion yuan at the end of the previous quarter to -1.906 billion yuan. In 2023, the regulatory ceiling on the scheduled interest rate of participating insurance will be reduced from 3% to 2.5%. At the beginning of 2024, the regulatory authorities will once again provide window guidance to life insurance companies, reducing the settlement interest rate of universal insurance and the actual dividend level of participating insurance.
Yingda Taihe Life Insurance mentioned in its 2023 annual report that in order to improve its insurance risk prevention and control capabilities, the company has also carried out the following work: first, improve the surrender management system, strengthen surrender monitoring, and prevent and resolve the risk of surrender disputes; The second is to strengthen the comprehensive management of sales misleading, strengthen business quality management, improve the level of internal management, and avoid sales misleading. Yingda Taihe Life Insurance also mentioned in the solvency report for the first quarter of this year that the company strengthened liquidity risk management and strengthened surrender management when necessary.
In 2023, four of the top five products in terms of premium income will come from the bancassurance channel, with a total sales of RMB15.014 billion, accounting for 78.15% of the annual premium, and handling fees and commissions of RMB2.576 billion, a year-on-year increase of 12.3%. In recent years, Yingda Taihe Life has relied on the bancassurance channel to expand the scale of premiums to a certain extent, but the handling fees and commission expenses have also shown an upward trend.
In response to the performance loss and business operation of Yingda Taihe Life Insurance, the reporter sent a letter to Yingda Taihe Life Insurance, but as of press time, no reply has been received.