Over the past decade,insurance capital has sparked three waves of stock acquisitions.The first wave in 2015 originated from some small and medium-sized insurance companies using universal insurance as a "low-cost" financing tool to rapidly increase premium scale and seize market share,aiming to gain market share,which quickly came to an end after regulatory standardization.The second wave in 2020 was led by top insurance companies,with the main driver being the need to cope with changes in accounting standards.The wave of stock acquisitions since 2023 has been largely dominated by Great Wall Life Insurance,but it reveals important trends for future insurance capital investments.
Stock acquisition has once again become the most important option for insurance capital investment.
On August 5,2024,Great Wall Life Insurance disclosed that on July 31,2024,it increased its holdings in Green Power Environmental (01330.HK) H shares,raising its stake to 5.03%,with the funds coming from its own capital.
Subsequently,on August 7,2024,Rui Zhong Life Insurance increased its holdings in China Duty Free (01880.HK),raising its stake to 5%,triggering the stock acquisition line.
On August 2,prior to this,Taikang Life Insurance disclosed that on July 30,the company bought 300,000 H shares of Huadian Power International (01071.HK) and 1 million H shares of China Huaneng Power International (00902.HK) through the Hong Kong Stock Connect,constituting a stock acquisition."After this stock acquisition,our company,our affiliated parties,and persons acting in concert collectively hold a 5% stake in the H shares of the aforementioned two companies."
Information disclosed by the China Insurance行业协会 shows that in 2023,insurance capital made stock acquisitions of listed companies 9 times throughout the year.At the same time,insurance capital's enthusiasm for research surged,with nearly 7,000 researches on A-share companies,focusing on fields such as pharmaceuticals,biology,and mechanical equipment.
Since 2024,insurance capital has continued to increase its investment in the equity market,frequently making stock acquisition moves in the A-share and H-share equity markets.With this stock acquisition by China Pacific and its concert parties,the number of stock acquisitions by insurance capital this year has reached 11 times,已经超过了2023年的9次.
Both A-shares and H-shares attract the attention of insurance capital.
On January 4,2024,Zijin Insurance announced the first stock acquisition of the insurance industry in 2024: the company bought 47.1947 million shares of Huaguang Ring Energy through an agreement transfer on January 2,holding a total of 47.1947 million shares,accounting for 5.0012% of Huaguang Ring Energy's share capital.Based on the closing price of Huaguang Ring Energy on January 2,2024,at 10.63 yuan per share,the market value of Zijin Insurance's holdings in Huaguang Ring Energy is 502 million yuan,accounting for 2.5% of Zijin Insurance's total assets at the end of the third quarter of 2023.
On January 11,following this,Wuxi Bank issued a "Promptive Announcement on Shareholder Equity Change of Wuxi Rural Commercial Bank Co.,Ltd." (hereinafter referred to as the "Announcement") stating that from December 29,2023,to January 9,2024,Great Wall Life Insurance increased its holdings in Wuxi Bank by 9.999 million shares through the secondary market集中竞价交易方式 on the Shanghai Stock Exchange trading system,accounting for 0.46% of the bank's total share capital.As of the disclosure date of this announcement,Great Wall Life Insurance holds 108 million shares of Wuxi Bank,accounting for 5.00% of the total share capital,
meeting the stock acquisition conditions.This is also the first time in 8 years that insurance funds have made a block trade in a listed A-share bank.Information disclosed on the official website of the China Insurance Industry Association shows that the last block trade by insurance funds in a listed A-share bank was on December 28,2015,when PICC Property and Casualty Insurance Company made a block trade in Huaxia Bank (Chart 1).
Obviously,in the context of the downward trend in market interest rates,the characteristics of the banking sector,such as "stable performance,high dividends,and low valuation," are very much in line with the requirements of long-term funds from insurance companies,and have once again attracted the attention and favor of insurance funds.
Information disclosed by the China Insurance Industry Association shows that the number of times insurance funds made block trades in listed companies in 2023 reached 9 times.In 2024,the most frequent block trade was made by Great Wall Life Insurance,which also made the most block trades in listed companies in 2023.
Specifically,in January 2023,China Life Insurance increased its holdings and made a block trade in Wanda Information,and after the increase,the combined holdings of China Life Insurance and its affiliated action person,China Life Group,increased from 18.1719% to 20.3248%; in February,Sunshine Life Insurance subscribed to the placement shares of the Hong Kong stock First Journey Holdings,and the number of shares allocated was 253 million,with a combined holding of 6.05% with affiliated action persons; in March,China Pacific Insurance and its subsidiaries,China Pacific Life Insurance,China Pacific Property Insurance,and China Pacific Health Insurance,made a block trade in the Hong Kong stock China Everbright Environment on the same day,with a holding ratio of 5%.In October,Sunshine Life Insurance announced that Sunshine Life Insurance subscribed to the IPO shares of Tiantu Investment,with a subscription of 12.05 million shares,accounting for 6.95% of the circulating shares of Tiantu Investment in Hong Kong.
In June 2023,Great Wall Life Insurance increased its holdings in Zhejiang Jiaotong Science and Technology and Zhongyuan Expressway through centralized bidding transactions,with subscribed shares of 2.5201 million and 8.0293 million,respectively.After the increase,Great Wall Life Insurance held 131 million shares of Zhejiang Jiaotong Science and Technology and 112 million shares of Zhongyuan Expressway,accounting for 5.03% and 5% of the total share capital of the companies,respectively,triggering a block trade.
Among the 9 block trades made by insurance companies in 2023,6 were block trades in Hong Kong-listed companies.
Will block trading become an important means of investment for insurance companies in the future?Looking back at the causes and internal logic of the past two waves of block trading can help us better understand the internal logic of insurance funds' block trading.
2015: Small and medium-sized insurance companies used universal insurance to expand scale
The most eye-catching wave of block trading by insurance funds occurred in 2015.
From the perspective of the entire industry,there were only 28 block trades in the first half of 2015,but as many as 128 in the second half.Among them,insurance funds made block trades 62 times,with 10 investments in commerce and retail,8 in real estate,and 7 in banks.In the second half of 2015,nearly 10 insurance companies successively participated in the "baarding" of nearly 50 listed companies.Those involved in the baarding included Evergrande Group,Baoneng Group (Qianhai Life),Anbang Group,Life Insurance Group,Sunshine Insurance Group,Guohua Life Insurance Group,and Huaxia Life Insurance Group,among which Evergrande Group,Baoneng Group (Qianhai Life),and Anbang Group had the highest frequency and activity level of baarding.
From the perspective of the equity market environment,the CSI 300 Index showed a strong upward trend in the first half of 2015,reaching a high of 5,380 points; however,in the second half,it took a sharp turn downward,with assets depreciating rapidly,and some institutions baarded based on the idea of positioning at the bottom.
From the internal driving force of the industry,the highest settlement interest rate of universal insurance in 2015 reached 7.99%,while the upper limit of the guaranteed interest rate for traditional insurance was 3.5%.Therefore,small and medium-sized insurance companies driven by assets to liabilities,aiming to gain market share,used universal insurance as a "low-cost" financing tool to quickly increase premium scale and seize market share.This also promoted the unregulated growth of universal insurance during the period from 2015 to the first quarter of 2016.
In the first quarter of 2016,universal insurance sales reached 596.9 billion yuan,a significant year-on-year increase of 214%,and the proportion of life insurance scale premiums increased to 38%.
From the perspective of the targets chosen by insurance capital for baarding,the first is the retail trade industry,such as Guohua Life Insurance's baarding of New World,Baoneng Group (Qianhai Life)'s baarding of Hefei Department Store and Nanning Department Store,and Anbang Group's baarding of Dalian Merchants and Eurasia Group.These listed companies that were baarded have characteristics of high ROE and high dividends.
The second is the banking industry,such as PICC's baarding of Industrial Bank and Huaxia Bank,and Fude Life Insurance's baarding of Shanghai Pudong Development Bank.Bank stocks also have the attributes of high ROE,high dividends,and high dividends,which are in line with the style of insurance capital.
In 2015,the real estate industry was still in a prosperous cycle,and real estate listed companies were also the "hot cakes" in the eyes of insurance capital.At that time,Baoneng Group baarded Vanke A,Anbang Group baarded Vanke A and Financial Street,and Sunshine Group baarded Beijing Investment Development.Among them,Vanke A was baarded six times,triggering a struggle for control,which is the famous "Bao-Vanke dispute."
The internal logic of insurance capital baarding can be clearly seen from the data analysis results: the targets have high ROE,stable dividends,high dividend attributes,and overall,the company's equity structure is more dispersed.
Overall,among the targets of insurance capital baarding in 2015,the proportion of ROE greater than 10% in 2014 reached 56%,the proportion of dividend targets greater than 30% reached 56%,and the proportion of dividend rates above 3% reached 66% (Chart 2).In terms of equity structure,the characteristic of dispersion is also more obvious,with 34% of the first major shareholders of the bid targets holding less than 20%,and the proportion of the top ten major shareholders holding less than 50% reached 63%.
● Supervision takes action to correct the chaosHowever,the "asset-driven liability" model fueled by the "universal insurance + equity investment" has led to large-scale blockholding activities,which in turn have brought risks such as liquidity,short-term funding for long-term allocation,and interest transfer.
In fact,the funds for insurance capital blockholding in 2015 mainly came from universal insurance,but the universal insurance generally has a short term.Using this part of the funds for blockholding in long-term equity investments means the hidden danger of "short-term funding for long-term allocation".In response to this,the former China Insurance Regulatory Commission (CIRC) issued a series of regulations to limit and standardize the scale and operation management of universal insurance.
On March 18,2016,the former CIRC issued the "Notice on Regulating Short-term and Medium-term Life Insurance Products"; on September 6,it issued the "Notice on Strengthening the Supervision of Life Insurance Products" and the "Notice on Further Improving the Actuarial System of Life Insurance Products".The new regulatory policies strictly limited the scale of short-term and medium-term business such as universal insurance,and at the same time,strictly limited or temporarily prohibited the blockholding behavior and non-compliant stock investment behavior of insurance companies on the asset side.
Subsequently,on the liability side,the former CIRC issued regulatory letters to two companies that exceeded the standard for short-term and medium-term business,and took regulatory measures to stop the lump-sum business of the bank insurance channel; a total of 27 companies with large scale and high proportion of short-term and medium-term business were issued risk warning letters,requiring the company to strictly control the scale of short-term and medium-term business; in response to the problems of sales misguidance and malicious competition in settlement interest rates of universal insurance products in the field of internet insurance,the former CIRC successively stopped the internet channel insurance business of Qianhai Life,Evergrande Life and other 6 companies.
On December 5,2016,the former CIRC announced regulatory measures to stop Qianhai Life from carrying out new universal insurance business due to the existence of problems in its universal insurance business operation and the不到位 of rectification; at the same time,in response to the problems in the product development and management of Qianhai Life,the company was ordered to rectify and prohibit the declaration of new products within three months.
On the asset side,on December 9,2016,the former CIRC announced the suspension of Evergrande Life's entrusted stock investment business,because Evergrande Life's asset allocation plan was not clear and the fund operation was not standardized when carrying out entrusted stock investment business.The former CIRC stated that the next step will be to increase regulatory efforts,promote insurance institutions to improve the internal control system,establish a clear asset allocation plan,enhance the ability of asset allocation,and prevent the risk of investment operation.On December 9,Qianhai Life issued a statement saying that it will no longer increase its holdings of Gree Electric Appliance and will gradually exit at the right opportunity.
After the supervision,the growth rate of universal insurance premiums has obviously decreased.From 2015 to 2017,the growth rate of new premiums for policyholder investment was 95.2%,55.1%,and -50.3% respectively.
At the same time,the regulatory layer further standardized the blockholding behavior of insurance capital.In January 2017,the former CIRC issued the "Notice on Further Strengthening the Supervision of Insurance Capital Stock Investment",which divided the stock investment behavior of insurance companies into general,major stock investment and acquisition,and implemented tiered supervision on the solvency threshold and fund source.
Under the double tightening of universal insurance supervision and insurance capital blockholding behavior,the enthusiasm for insurance capital blockholding has obviously cooled down.In 2015,2016,and 2017,the number of insurance capital blockholdings was 62,13,and 9 respectively.
2020: Led by top insurance companies,high dividend + Hong Kong stock strategyUnlike the wave of shareholdings in 2015,which was dominated by small and medium-sized institutions,the wave of shareholdings in 2020 was primarily led by major insurance companies such as "China Life" and "Taikang".Moreover,unlike the previous round where the funds mainly came from universal insurance,this round of insurance capital for shareholdings has a more diversified source,including proprietary funds,insurance liability reserves,and insurance product account funds,all of which are more stable.
Traditional large insurance companies have been deeply involved in individual insurance channels for many years,occupying the main share of traditional insurance markets under the advantage of channel barriers.
With the expansion of scale,leading insurance companies face greater pressure on the asset side,and increasing the allocation of equity becomes an inevitable choice.One of the core means for insurance capital to increase the allocation of equity is through stocks,but raising the proportion of stock allocation will bring about the impact of stock price fluctuations on the financial statement and the impact on the solvency adequacy ratio.Based on this,holding shares to be included in long-term equity investments can provide a solution.
In 2020,against the backdrop of the epidemic,the stock market experienced a phased retreat in the first quarter,and then continued to improve,with the CSI 300 index closing up 27.21% for the year.Benefiting from the overall market environment,insurance capital allocation also tilted towards equity.
As a result,in 2020,insurance capital increased the allocation of equity assets,and the wave of shareholdings rose again.There were a total of 28 instances of insurance capital holding shares throughout the year,with China Life and Taikang accounting for a combined total of 14 instances.
Looking at the industries that were targeted for shareholdings,in the 2020 wave of shareholdings,regardless of how the targets of shareholdings changed,the essence that remained unchanged was still to choose listed companies with high ROE and high dividend characteristics.
Moreover,unlike in 2015 when small and medium-sized insurance companies mainly collected chips through the secondary market,and even adopted a bidding competition model to compete for control rights,which had a greater impact on the stock price fluctuations of listed companies,the methods of insurance capital shareholdings in 2020 were more diverse and stable.In addition to buying shares of listed companies through the secondary market,there were also ways to obtain shares of listed companies through agreement transfers,block trades,and non-public offerings,which had a smaller impact on the stock price fluctuations of listed companies.
In 2020,insurance capital held shares 28 times,with 6 times invested in banks,5 times in real estate,and 5 times in non-ferrous metals.
It is worth noting that the 6 times of shareholdings in bank stocks include Agricultural Bank of China,Industrial and Commercial Bank of China,and China Zheshang Bank,which have high ROE and high dividend characteristics,and all were conducted through H shares,obviously considering the higher dividend rate enjoyed under the discount advantage of H shares.According to the relevant regulations of the Stock Exchange,institutional investors who invest in H shares through the Hong Kong Stock Connect and hold H shares continuously for 12 months can legally exempt the dividends and bonuses obtained from corporate income tax.
Among the 5 instances of real estate shareholdings,2 were Taikang's shareholdings in Sunshine City.Sunshine City began to suspend trading on June 12,2023,and was forcibly delisted on August 5,which undoubtedly announced that in the downcycle of the real estate market,the risks of insurance capital layout in real estate may need a longer time to digest and resolve.Five investments in non-ferrous metals were all made by the Taibao Group,with China Pacific Insurance and its four subsidiaries raising their stake in Ganfeng Lithium,which is related to the high market attention on concepts such as new energy vehicles and lithium carbonate in 2020.
Overall,compared to the wave of stake raising in 2015,the insurance capital strategy in 2020 is more inclined to hold for the long term to earn a stable dividend cash flow,so the dividend ratio and dividend yield indicators serve as important reference standards.Among the targets of the stake raising,53% had a return on equity (ROE) greater than 10% in 2019,slightly lower than the 2015 wave.The stake raising strategy may shift towards a high dividend style,with targets having a dividend ratio greater than 30% accounting for 58%,and those with a dividend yield above 3% accounting for 53%.
Considering the discount advantage of H-shares,the high dividend strategy of insurance capital tilts towards the Hong Kong stock market.In 2020,H-shares accounted for more than half of the targets of the stake raising,reaching 53%.
● The same stake raising,different internal driving forces
In general,the main targets of this round of stake raising are companies with stable performance,relatively weak price fluctuations,and higher dividend ratios.Compared to 2015,it is more rational,not primarily aimed at short-term holding and quick profit-making,but mainly focused on long-term value investment in the target companies.
In addition,this wave of stake raising starts from financial investment and begins to pay more attention to the business synergy between the stake-raising company and the company itself.For example,when China Life raised its stake in Wanda Information,it stated,"China Life actively practices the Healthy China strategy,with technology as an important support,continuously improving insurance protection and health management service capabilities.Wanda Information has technical advantages and practical experience in this regard.Both parties will fully leverage their respective advantages in market resources,professional talents,technological innovation,and management experience,and carry out in-depth cooperation in multiple fields such as basic technology,digital operation and management,medical insurance services,and health management,to achieve mutual empowerment,win-win results,resource sharing,and joint development." After several increases,China Life is now the largest shareholder of Wanda Information.
At the same time,raising stakes is also a need for insurance companies to cope with changes in accounting standards.The new accounting standard IFRS9 (International Financial Reporting Standard No.9: Financial Instruments),which was finalized in 2014,has been implemented for banks and other companies that need to issue bonds abroad since 2018; the insurance industry was originally scheduled to implement it in 2021,but due to the impact of the epidemic and the revision and implementation of insurance contract standards,the formal full implementation time has been postponed to 2023.
Under IFRS9,the sensitivity of insurance companies' current profits to the fair value changes of financial assets has increased.To avoid excessive fluctuations in profits,the investment style of insurance companies will be more stable.According to IFRS9,stocks with more than 5% and obtaining director seats can be included in the long-term equity investment subject,accounted for by the equity method,thus not affected by stock price fluctuations,and the investment performance will be more stable.If director seats cannot be obtained,choosing stocks with higher dividend yields,dividend income can be included in investment income.
After the implementation of IFRS9,insurance companies can only put many financial instruments into the measurement at fair value and the changes are included in the current period's profit and loss,increasing the volatility of investment income.
Taking Ping An Group as an example,under the original accounting standards,there were very few trading assets,so the fluctuation of investment income would be relatively small.However,after adjusting the accounting standards to IFRS9 in 2018,it affected the company's total investment income by 50 basis points: if IAS39 was used,it could reach an annualized investment return rate of 4.5%,but after implementing IFRS9,it dropped to a total investment return rate of 4%.Such an impact cannot be ignored.As a result,the performance management difficulty for insurance companies under IFRS9 has increased.Under the original IAS39,if a company's performance was poor,many assets could be placed in the available-for-sale category,thus not immediately reflected in the income statement.By adjusting the profit and loss statement,financial gains could be made to look very impressive.Some even moved some loss-making,especially fixed-income products,from the trading category to the available-for-sale category through certain operations.
To guide and regulate the investment behavior of insurance funds,in 2020,the China Banking and Insurance Regulatory Commission (CBIRC) introduced several important policies,mainly two related to the holding of shares.The first was the "Notice on Optimizing the Supervision of Insurance Companies' Equity Asset Allocation" issued on July 17,2020.According to indicators such as the solvency margin ratio of insurance companies,it divided the regulatory proportion of equity assets into 8 levels,with the highest reaching 45% of the total assets at the end of the previous quarter of the insurance company.
The second was the "Notice on Financial Equity Investment by Insurance Funds" issued on November 13,which clearly abolished the industry restrictions on financial equity investment by insurance funds and established a "negative list + positive guidance" mechanism.
In October 2020,Yuan Xucheng,then director of the Insurance Fund Utilization Supervision Department of the CBIRC,wrote in an article that the original CBIRC actively encouraged insurance funds to give full play to their own advantages,increase financial and strategic investment in high-quality listed companies,and support insurance funds to invest in the capital market through new share allocation,strategic increase,market transactions,asset management products,and other methods.
From 2023 to now: The Great Wall Life Insurance stands out alone
With the increase in the fluctuation of the equity market and the difficulty of allocation,insurance funds reduced their equity assets in 2021.By the end of 2021,the proportion of stocks and funds was 12.7%,a year-on-year decrease of 1.1 percentage points,and the holding of shares encountered a cold again.
In 2023,insurance funds continued to reduce their equity allocation.By the end of 2023,the proportion of insurance funds invested in stocks and funds was 12.0%,a year-on-year decrease of 0.7 percentage points.
However,the enthusiasm for holding shares by insurance funds has risen against the market.In 2023,there were a total of 9 holding of shares.In the first 8 months of 2024,the number of holding of shares by insurance funds has exceeded the previous year,with 11 times.It is worth noting that except for the two holding of shares by Taikang Life Insurance,the other holding parties are all small and medium-sized insurance companies.
Moreover,there are few participants in the holding of shares,among which the most active is the Great Wall Life Insurance.Statistics show that from 2023 to now,the Great Wall Life Insurance has held shares 14 times,Taikang has 4 times,Sunshine Life Insurance has 2 times,and China Life,Zijin Property Insurance,and Rui Ren Life Insurance each have one time.
From the behavior of holding shares,the frequency of single holding of shares to increase holdings is high again,such as the Great Wall Life Insurance holding shares of Zhongyuan Expressway 4 times,Zhejiang Communication Science 3 times,Gan Yue Expressway 2 times,and Qin Gang Shares 2 times,Taikang holding shares of Everbright Environment 4 times,and China Life holding shares of Wanda Information,which is the sixth increase in the company since 2018.Since 2023,insurance funds have made 8 investments in the transportation sector and 6 in environmental protection,with the targeted companies still characterized by high ROE,high dividends,and high dividend yields.
The 8 investments in transportation were all made by Great Wall Life Insurance,targeting Zhongyuan Expressway,Qinhuangdao Port Co.,Ltd.H shares,and Ganyue Expressway.The dividend payout ratios of these three companies are all above 30%,with Qinhuangdao Port and Ganyue Expressway also featuring high dividend yields.
In the environmental protection sector,there were 6 investments,including 4 by Taikang Life in Everbright Environment,and 2 by Great Wall Life in Jiangnan Water Affairs and Chengfa Environment.Everbright Environment has characteristics of high ROE,high dividends,and high dividend yields,Jiangnan Water Affairs has high dividends,and Chengfa Environment has high ROE.Overall,these investments still align with the equity investment style of insurance funds.
Compared to the previous two rounds of investment waves,the high ROE attribute of the targets in 2023 has weakened,with targets having an ROE greater than 10% accounting for 23%,a significant decrease from 56% in 2015 and 53% in 2019.In terms of dividend style,this round of investment wave is more pronounced,with targets having a dividend payout ratio greater than 30% and a dividend yield greater than 3% accounting for more than half,reaching 54% and 62% respectively.
The stricter measurement and constraints on risk factors for long-term equity investments may explain this trend.In 2022,the industry began to implement the second phase of the solvency II system,which adjusted the risk factor measurement for long-term equity investments from 0.1-0.15 in the first phase to 0.35-0.41.In comparison,the risk factor for ordinary stocks is 0.35-0.45,and from September 10,2023,under the provisions of the "Notice on Optimizing the Solvency Regulatory Standards for Insurance Companies," this figure was adjusted to 0.3-0.45.
In addition,the risk of concentrated single stock holdings is also one of the factors constraining long-term equity investments by insurance funds.
● How many followers are there?
In this round of investment waves,Great Wall Life Insurance is eye-catching.Discussing the underlying motives behind its investment actions can help us grasp and understand the subsequent trends of insurance companies' investments.
In 2023,Great Wall Life Insurance's scale premium income increased by 72.1% year-on-year,mainly driven by the growth of traditional insurance,with traditional insurance increasing by 68.1% and accounting for 48.0%; in addition,universal insurance increased by 186.6%,with the proportion increasing by 9.3 percentage points to 23.3%.In 2023,among the top five premium income products of the company,there were two whole life insurance products,two endowment insurance products,and one annuity insurance product.
In terms of business structure,traditional insurance at Great Wall Life Insurance occupies an absolute main position,with health insurance (including long-term and short-term as well as accidental) accounting for only 6.2%.The profit source is mainly composed of interest rate differences,and it is expected to be greatly affected by the downward trend of long-term interest rates,with significant "interest rate difference loss" pressure.Clearly,the high premium growth driven by traditional insurance has put significant cost pressure on the company's liability side,with investments becoming a significant factor in dragging down net profits.Overall,the product structure of Great Wall Life Insurance with a high proportion of traditional insurance has brought cost pressure to the company's liability side.
At the same time,due to the fluctuation of the equity market,the fair value changes of trading equity instruments resulted in substantial losses.Influenced by two long-term equity investments in Huarong Trust and Financial Street Holdings,the investment side dragged down net profits.In 2023,Great Wall Life Insurance suffered a loss of 373 million yuan,reversing the profit of 97 million yuan in 2022.
By the end of 2023,Great Wall Life Insurance received approval for an increase in capital,amounting to 1.093 billion yuan,of which 688 million yuan was included in the registered capital.The capital increase pushed the company's solvency indicators up at the end of 2023,and the comprehensive rating was also raised from BB to BBB.However,as of the first quarter of 2024,the company's comprehensive and core solvency adequacy ratios were 151.31% and 75.66%,respectively,down 8.90 percentage points and 14.95 percentage points quarter-on-quarter,returning to the level before the capital increase.
Under the potential pressure of "interest rate gap loss," Great Wall Life Insurance actively increased its equity allocation but was also constrained by solvency.Industry analysts believe that the core reason for Great Wall Life Insurance's multiple bids is still to increase investment returns through equity means and reduce cost pressure on the liability side.
According to the China Chengxin Ratings report,by the end of 2023,the proportion of equity assets in Great Wall Life Insurance reached 35.76%,an increase of 3.39 percentage points from the end of the previous year.However,it is also necessary to pay attention to the fact that the company's overall solvency is only slightly above the regulatory red line of 50%,and there is a slight downward trend,which may constitute the core constraint for the continued increase in overall equity.
Great Wall Life Insurance increased its allocation of equity assets in the hope of obtaining stable investment returns,and the internal structural adjustment of equity may be the trend of insurance capital allocation.Looking at the company's equity asset structure,equity investments in the secondary market,especially stock investments,have significantly decreased,while long-term equity investments have increased.In 2023,the company adjusted its equity investment strategy,increasing holdings in listed companies with relatively stable dividends to form associate enterprises,预计将是为了在权益类资产中寻求类债资产，以期部分抵消利率下行对固收类资产收益的影响。
Dividend assets continue to be favored
Industry experts believe that structural adjustments and increases in dividend assets may be the main means of balancing solvency and investment returns.Insurance companies are currently facing these dual pressures,and it is expected that insurance capital bidding will continue,but according to the logic of previous bidding waves,this round may be more slowly extended to the entire industry.
Insurance capital bidding mainly tends to invest in companies with good quality and stable performance,reflecting the practice of insurance capital's long-term investment philosophy and the role of patient capital.From an accounting perspective,high ROE and dividend assets will continue to be favored by insurance capital.Considering the constraints of solvency,it is somewhat difficult for insurance capital to increase the allocation of equity assets in the framework of major asset allocation.
It is worth noting that in 2026,the insurance industry will fully switch to new standards,and the预定利率 is expected to be fully reduced,and dividend assets may further increase.Starting from January 1,2026,all non-listed insurance companies will also switch to the new accounting standards.It is expected that the asset side will prepare in advance for the layout of OCI assets (Owner's Equity or Total Owner's Equity,representing the shareholders' ownership of assets and the cumulative balance in net earnings),which will help the standards switch smoothly and reduce the impact on net profit.From the perspective of original premium income,the premiums of non-listed insurance companies account for about 40% of the industry,which may bring incremental funds to dividend assets.
Recently,some insurance companies have adjusted the guaranteed interest rate of their increased lifetime life insurance products from 3.0% to 2.75%.If the reduction of the guaranteed interest rate is fully implemented,the threshold requirements for high dividend stocks of insurance companies may be relaxed,which will further benefit dividend assets.
