A few days ago, the Office of the Financial Stability Development Committee of the State Council announced 11 policy measures for further opening up of the financial industry (referred to as “National 11 Articles”), which caused widespread concern. In fact, with the further promotion of the opening up measures of the insurance industry in the past two years and the deepening of the industry transformation, foreign life insurance companies (domestic joint venture life insurance and one wholly foreign life insurance company collectively referred to as “foreign life insurance companies”) According to the statistics of the "Securities Daily" reporters, the total net profit of 28 foreign life insurance companies has increased by more than five times in the past two years.
With the landing of “National 11 Articles”, the ills that have been plaguing foreign-invested life insurance companies, such as equity structure problems, capital issues, and channel problems, are expected to be cured. Guo Ting Securities analyst Ma Tingting believes that the channel, ownership structure and capital are still the three major mountains that restrict the development of foreign life insurance companies. Among them, the ownership structure problem is expected to be formally resolved in 2020 under the promotion of “National 11 Articles”. Some foreign shareholders have the willingness to acquire all the shares to become sole-owned life insurance companies. The stable management and company strategy will become the cornerstone of the company's long-term development. At the same time, the overall competition in the insurance industry will be strengthened.
Liu Zhenyu, general manager of Hengan Standard Life Insurance, said in an interview with Securities Daily that the liberalization of foreign shareholding restrictions would benefit the development of joint venture life insurance companies. Joint venture life insurance companies also have advantages in the development process. For example, the company can learn from the foreign shareholders a lot of advanced management concepts in management and investment. In general, the shareholders of the company get along well and are optimistic about the development prospects of the joint venture insurance company.
Intensifying the “squid effect” of the life insurance industry
Recently, the Office of the Financial Stability Development Committee of the State Council announced that it has introduced 11 measures for opening up the financial industry on the basis of in-depth research and evaluation, including the insurance industry. There are three main related policies: First, the transition period from the 51% to 100% limit for personal insurance for foreign-invested individuals is advanced from 2021 to 2020. Second, the cancellation of the domestic insurance company's total holding of the insurance asset management company's shares must not be less than 75%, allowing foreign investors to hold more than 25% of the shares. The third is to relax the conditions for entry of foreign-invested insurance companies and cancel the 30-year operating period.
In this regard, Ma Tingting believes that the rapid advancement of opening up will help the overall quality of the industry, but the competition in the life insurance industry will haveThe enhancement is mainly reflected in the following three aspects.
In terms of life insurance, the advancement of time and the moderate relaxation of business requirements will enable more overseas quality insurance companies to enter the Chinese market, introduce more diversified products and more advanced management concepts, and increase the vitality of the life insurance market. Enhance the economic ability of the service entity, enrich the supply of products in the insurance market, and promote product innovation and development under the protection of the source.
In terms of asset management business, overseas insurance companies have more experience in asset management, more stable investment and stronger global asset allocation capability. Joint venture insurance management companies help domestic insurance companies to absorb foreign countries. Experience in asset allocation of high-quality insurance companies, long-term stable asset allocation for insurance, strengthen risk control, and promote high-quality development of the industry as a whole.
For domestic insurance companies, foreign-invested insurance companies will form a certain competitive edge in the mid- to high-end customer base of life insurance business. In the context of foreign capital entry, China's life insurance companies improve customer service and customer satisfaction through the advantages of agent team and network construction, and enhance customer stickiness by providing cost-effective products with health insurance and long-term savings insurance as the core. .
28 joint venture insurers increased their net profit by 5 times in two years
From the perspective of the development path of foreign life insurance companies in China, foreign life insurance companies first entered China. In 1992, AIA established a branch in Shanghai. Prior to this, foreign insurance companies could set up representative offices in China, while other branches of foreign insurance companies and joint ventures were also severely restricted, mainly providing insurance services for foreign-invested enterprises and individuals in China. Since then, joint venture insurance companies have been established one after another, with a total of 28 developments, of which the majority of foreign-invested shares are 50:50.
From the current situation of joint ventures, it is basically based on foreign-invested enterprises + Chinese-funded state-owned enterprises. This is not only considering capital strength, avoiding horizontal competition, but also because state-owned enterprises have more resource advantages and at the same time Prevent capital outflows. State-owned enterprises have also expanded their business scope by means of joint ventures to establish insurance companies, and can insure their own insurance business.
Since 2005, due to the rapid rise of domestic bancassurance channels, the main risk-insurance companies have not had advantages in terms of channels and products, and the proportion of premiums has fluctuated. But since 2011, the sales channels andThe Internet channel has gradually exerted its strength, and foreign-invested insurance companies have also actively seized channel opportunities, and the proportion of premium income has started to increase year by year.
However, after 2017, subject to industry regulation, the size of medium and short-term surviving products has shrunk sharply, while foreign-invested insurance has been dominated by traditional insurance and health insurance because of the small number of such businesses. The impact is relatively limited, and the proportion of premium income has increased significantly.
In this round of industry transformation and upgrading, the business advantages of foreign life insurance companies have begun to manifest themselves. For example, according to the Securities Daily reporter, the original premium market of foreign life insurance companies in 2016, 2017 and 2018 The share was 6.4%, 7.42%, 8%, although the share did not break through 10%, but there was a sustained and steady growth.
At the same time, with the increase in the proportion of premium income, there is also an improvement in operating efficiency. The better management and control of foreign life insurance companies, the gradual improvement of liability-side premiums, the impact of reserves and the capital increase of some companies have significantly improved their strength. Many companies have gradually realized profitability. In 2016, 2017 and 2018, 28 foreign capitals The number of loss-making companies in life insurance companies has decreased year by year (12, 10, and 8 respectively), and the total net profit has increased significantly (2.426 billion yuan, 7.834 billion yuan, 12.988 billion yuan respectively), and 2018 compared with 2016 net profit. More than 5 times the increase.
Institutional problems are expected to be resolved
With the introduction of “National 11 Articles”, institutional problems that have plagued foreign life insurance companies for many years are expected to be completely resolved. Ma Tingting believes that the shareholding structure, channels and capital are still the three major mountains that restrict the development of foreign life insurance companies, and the introduction of the “National 11 Articles” is expected to solve these problems.
From the perspective of equity issues that have received much attention from the industry, the equity issue has had drawbacks in terms of management structure and capital transfer. First, in terms of management structure, frequent changes in management and strategy are the biggest costs of the company's operations. At present, the joint venture life insurance company is basically a 50% shareholding of the Chinese and foreign shareholders. In practice, the foreign shareholder usually arranges the CEO or the general manager, the Chinese shareholder to arrange the chairman, or the two shareholders rotate in the management. . This will cause differences between the two shareholders in terms of management and management due to differences in philosophy and objectives, and the rotation system will also make both shareholdersThere are reservations about source support. Second, in terms of capital increase and transfer, due to the regulatory requirements of the shareholding ratio structure, the capital increase requires the two parties to reach an agreement and increase the capital in the same proportion. When the share transfer, the Chinese capital needs to be transferred to Chinese capital and foreign capital to foreign investment, which limits the development of the company's business to a certain extent. However, the issue of shareholding structure is expected to be formally resolved in 2020 under the promotion of “National Article 11”. At that time, some foreign shareholders will have the willingness to acquire all the shares to become sole-owned life insurance companies. The stable management and strategy will become the long-term development of the company. cornerstone.
In terms of capital issues, the company’s development will be significantly restricted if the equity issue has not been resolved. If it has become a sole-owned life insurance company, the issue of future capital will depend more on the positioning of foreign shareholders in the mainland market. Willingness. At present, the shareholders of foreign life insurance companies in China are mainly developed countries such as the United States, Europe, and Japan, and these countries have entered a state in which the growth rate of premiums has been stagnant for a long time. China's current life insurance market and space are still very broad, and the total premium growth rate is expected to maintain a compound growth rate of more than 15% per year in the next decade, which is a huge market for foreign shareholders. Therefore, how to position the Chinese market will become the basis and prerequisite for the future development of foreign life insurance companies.
In terms of channels, the current large-scale foreign-invested insurance companies have a high dependence on the bancassurance channels. For example, foreign-invested life insurance companies with the highest premiums, such as ICBC Ansheng and other banks The proportion is over 90%. Although the sales channels are not smooth, it will restrict the development of foreign life insurance companies in the future.