At present, the fierce competition in China's insurance market leads to excess underwriting capacity and declining underwriting profit. To this end, insurance companies turn to pay attention to obtaining income from the use of insurance funds and strive for investment profits. As a result of the use of insurance funds, the insurer gets an average profit, and the insured also enjoys the benefits of the use of insurance funds at a lower rate. The security and liquidity of investment are the basis for the profitability of capital utilization. Steady use of funds must first ensure the safety and liquidity of funds, and on this basis, strive to pursue the profitability of capital use.
The new insurance policy gives insurance companies more investment autonomy.
Since 20 12, the regulatory authorities have continuously promoted the market-oriented reform of the use of insurance funds and promulgated a series of new policies on the use of funds, which has loosened the use of insurance funds and given insurance companies more investment autonomy. The introduction of the new policy of insurance investment has greatly broadened the channels for the use of insurance funds, which is of great significance for changing the profit model of insurance companies and improving the income from the use of insurance funds.
The new insurance policy expands the investment scope of fixed-income securities: further expand the investment scope of bond varieties, especially credit varieties, allow insurance companies to invest in credit asset-backed securities and innovative fixed-income varieties, and relax the proportion of credit varieties. The new policy of insurance capital simplifies the process of infrastructure approval: in the past, insurance companies had to report to the China Insurance Regulatory Commission for investment in infrastructure, which was essentially an approval system rather than a report. It is not uncommon that it took a year from report to approval. It used to be more than just a process problem. Infrastructure has many specific indicators. Making a debt plan for an enterprise has very strict restrictions on the operating indicators of the debtor and many restrictions on the guarantee. If the creditor's rights plan needs the guarantee of commercial banks, the main body of the guarantee is required to be a national joint-stock listed bank.
After the introduction of the New Deal, the guarantee methods are more diversified. Broaden the scope of equity investment: originally, the equity investment of insurance companies in unlisted companies was limited to three industries. After the introduction of the New Deal, the requirements for insurance companies to invest in PE were relaxed, the proportion that insurance companies can invest in PE was increased, and the investment in energy, resources, modern agriculture and new trade and circulation industries was increased. On the surface, the PE investment of insurance companies is limited to seven industries, but in fact, the industry division of the CIRC does not belong to the standard industry division, and many industries can be attributed to energy, resources, modern agriculture, finance, automobiles, medical care and so on. So it covers almost all industries. Open investment in financial products: open investment in financial products such as wealth management products of commercial banks, credit asset-backed securities, collective fund trust plans, special asset management plans of brokers, and real estate investment plans. The CIRC stipulates that trust products can only be collective trusts, not single trusts, and must be purchased by buyers other than insurance companies. However, this problem is not difficult to solve. Insurance companies can sell 654.38 billion trust plans and avoid the restriction of single trust, so collective trust makes the investment scope of insurance companies very wide. Provide risk hedging tools: insurance companies can participate in financial derivatives and stock index futures trading, hedge risk positions and reduce portfolio risk.
Now it is mainly divided into three parts. The first part is interest rate swap, which turns floating income products into fixed income products. The second part is exchange rate swap, which is in great demand from domestic insurance companies. This is because almost all liabilities of insurance companies are RMB, and foreign investment will inevitably lead to exchange rate exposure. The third part is stock index futures, which allows insurance companies to participate in the financing process of securities companies. Broaden overseas investment markets and investment varieties: further open overseas investment markets, including 25 major developed countries and 20 emerging markets; The investment varieties cover equity, fixed income, real estate, funds, PE, REITs and other categories; Investment in derivative products is allowed for risk management and risk hedging, and 15% of insurance company premiums can be invested in overseas markets. Allow investment in GEM stocks: promote the insurance industry to support economic restructuring and transformation and upgrading, support the development of small and medium-sized enterprises, optimize the allocation structure of insurance assets, allow insurance funds to invest in GEM listed companies, and let insurance companies share the fruits brought about by China's economic transformation.
Promote the two-way opening of insurance asset management
In 20 13, the China Insurance Regulatory Commission issued the Notice on Issues Related to the Pilot Business of Insurance Asset Management Products by Insurance Asset Management Companies, which restarted the pilot business of insurance asset management products and allowed insurance asset management companies to issue "one-to-one" directional asset management products and "one-to-many" aggregate products. Investors have expanded from the insurance industry to the outside world, and the investment scope has also expanded from the traditional fixed income to equity investment. Insurance companies can order banks to entrust some assets to insurance asset management companies in the form of special accounts, or they can issue products to be managed by other institutions or individuals.
In the past, although the CIRC allowed insurance companies to set up asset management companies, not all businesses could be carried out after the company was established, and it was managed with a license. Some asset management companies can only invest in stocks at the beginning of their establishment, some companies can invest in bonds but only guarantee bonds, some companies are not allowed to invest in infrastructure, and some companies are not allowed to invest in PE. In fact, their business is confidential. Setting up an asset management company may only be able to do a few of a dozen businesses. If you want to carry out other business, you must go to the CIRC for certification and obtain a license. This time, the New Deal Insurance Regulatory Commission simplified the conditions for obtaining certificates.
According to the scale of assets, 85% of insurance companies have their own asset management companies, and insurance companies will entrust their premium assets to their own asset management companies for management. Before the introduction of the New Deal, the CIRC relaxed a little, allowing insurance asset management companies to undertake assets entrusted by insurance companies outside the Group. In 20 13, the CIRC issued the Interim Measures for the Administration of Entrusted Investment of Insurance Funds, allowing insurance companies to entrust assets to investment institutions such as securities companies and funds. Insurance companies believe that while they can entrust their own assets to other companies for management, they should also allow insurance asset management companies to manage the assets of other external companies. Therefore, this new policy expands the scope of entrusted and entrusted business of insurance asset management institutions, and allows insurance asset management to entrust assets outside the industry.
In 20 13, the China Insurance Regulatory Commission and the China Securities Regulatory Commission jointly issued the "Pilot Measures for Insurance Institutions to Invest in the Establishment of Fund Management Companies" to support insurance institutions to invest in the establishment of fund management companies. Insurance institutions that can apply for the establishment of fund management companies include insurance companies, insurance group companies, insurance asset management companies and other insurance institutions. The asset management company of an insurance company can initiate the establishment of a fund company as a shareholder and obtain the license of the CSRC to engage in public offering business, and the asset management company of an insurance company can also directly apply to the CSRC for a license.
Formation of Multi-level Regulatory Proportional Framework
20 14 the CIRC will further promote the market-oriented reform in the supervision of the use of insurance funds. The Notice on Strengthening and Improving the Supervision of the Proportion of Insurance Funds was issued, which significantly reformed the supervision proportion and mode of insurance investment management, redefined the main categories of assets, and divided the investment assets of insurance companies into five categories: current assets, fixed income assets, equity assets, real estate assets and other financial assets. Integrate all kinds of regulatory ratios, set up regulatory ratios for large-scale assets and concentration, and set up risk monitoring ratios to form a multi-level regulatory ratio framework. In the past, in each variety, the CIRC had a large number of proportional management, and there were many proportional restrictions on assets such as guaranteed bonds and stocks. This time, the assets were divided into five categories according to the major categories, and the supervision ratio of major categories was established. The specific small proportion in the proportion is adjusted by the insurance company itself. Pilot investment in blue-chip stock policy: Start the pilot investment in blue-chip stock policy, allow some insurance companies with historical stock policies to set up independent accounts for closed management, and the insurance companies will independently decide the investment ratio according to the assets and liabilities, and implement countercyclical asset recognition standards for blue-chip stocks.
The new insurance policy makes it possible to allocate assets in an all-round way, and the new insurance investment policy provides more basic investment tools for insurance funds to allocate assets, expanding from traditional open market investment to alternative investments such as infrastructure, equity and real estate, as well as overseas investment and financial derivatives trading, making it possible for insurance companies to allocate assets in a real way.
After the promulgation of the new policy, insurance companies increased their investment in innovative products. Since the promulgation of the new insurance policy, the investment strategy of insurance companies is to seize the opportunity of the liberalization of the CIRC policy and accelerate the investment in innovative products and new channels, especially the debt investment plan, equity investment plan, innovative financial products and investment real estate. By the end of last year, the proportion of non-traditional investment reached 8.57%, which grew very rapidly.
Building a Revolutionary Framework of Insurance Investment Structure
In the study of economics, structure is a very huge system, which takes economic structure as the main body and includes the adaptability of economy, resources, environment and social structure. Economic structure includes two dimensions: first, horizontal spatial structure, including regional structure, international structure, and urban and rural structure in developing countries; The other is the vertical production value chain with industrial structure as the core, which mainly includes industrial structure, investment and consumption structure and financial structure. The distribution structure and circulation structure in the process of social reproduction are included in the above-mentioned horizontal and vertical economic structures. The study of quick purchase emphasizes the imbalance and structural transformation in economic development.
Looking at the new policy of insurance fund utilization from the perspective of cancellation, we can draw the following views:
Multi-level asset allocation system is very conducive to the stability and optimization of insurance investment structure.
Insurance companies should not only explore excellent assets in the traditional open market, but also give full play to the long-term and flexible advantages of insurance funds in allocating assets in alternative investment fields such as infrastructure, unlisted equity, real estate and financial products.
In the medium and long term, the domestic economic transformation has led to the continued weakness of macro fundamentals, and the economy is facing greater downward pressure; Judging from the inflation that affects the interest rate trend, the total demand is weak, there is some uncertainty in inflation, but the probability of a sharp rise is very low, and the macro fundamentals of the fixed income market will form a medium-and long-term support. Insurance institutions should grasp the allocation opportunity from the perspective of medium and long-term allocation.
Although China's economy as a whole shows a downward trend, there are still important structural opportunities in the stock market. Under the background of economic transformation, emerging industries and emerging industries that meet the policy orientation and economic transformation direction may still grow steadily or even rapidly. Insurance institutions should seize the great opportunity of economic restructuring, focus on industries with low valuation and in line with the direction of economic transformation, and strive to tap investment opportunities.
Insurance companies need to strategically allocate investment assets with long term, good safety and high yield, make up for the shortage of traditional asset allocation, and further increase infrastructure and equity investment. We should seize the strategic opportunity of national economic transformation and state-owned enterprise reform to obtain high-quality strategic assets. Insurance companies should focus on the national economic transformation and structural adjustment strategy in infrastructure and equity investment, open up the connection between insurance funds and the real economy, and support the development of national key infrastructure projects and strategic emerging industries. It is necessary to make full use of the advantages of long-term funds, creatively use the combination of creditor's rights, equity and stock bonds to actively carry out infrastructure investment, optimize the asset structure, reduce the risk of mismatch between assets and liabilities, and effectively improve the long-term investment income ability of insurance funds.
The income characteristics of mezzanine investment meet the matching needs of insurance funds. Mezzanine investment such as preferred stock can not only make insurance funds get higher returns, but also solve the financing problem of enterprises. Mezzanine investment has a sustained and stable return and does not need to bear the risk of income fluctuation of equity investment. On the other hand, insurance funds have precipitated a lot of long-term funds, and the demand for long-term stable returns matches the capital characteristics of mezzanine investment. Compared with the existing short-term trust financial products, insurance funds can provide financing for more than 10 years.
Two, the use of financial derivatives investment to improve the efficiency of asset allocation, improve the internal vitality of the insurance investment structure.
In recent years, with the increasing investment amount of insurance funds in China and the widening of investment channels, China insurance companies began to introduce advanced investment ideas from abroad, but they could not get rid of the problem of low return on investment. This is mainly manifested as follows: the insurance company's asset-liability management ability is not high, the insurance business department and the fund utilization department have not established an effective communication mechanism, and the insurance fund utilization strategy cannot be formulated from the height of asset-liability matching, which makes the fund utilization out of line with the insurance company's asset strategic allocation requirements; The shortage of actuaries, senior accountants and international lawyers who match the use of insurance funds restricts the efficiency of the use and development of insurance funds in China.
Although diversification can reduce the overall risk of assets, it cannot eliminate the risk of market fluctuation. Financial derivatives can be used as a direct, effective and low-cost asset management tool to directly hedge the risk of market fluctuations. At present, insurance institutions have carried out pilot work on derivative transactions such as interest rate swap and foreign exchange forward, and achieved good results. Insurance institutions' participation in financial derivatives trading is limited to hedging, income locking or capital price locking, and the role of financial derivatives in the management and allocation of insurance assets has not been fully tapped.
Third, grasp the core of solvency supervision and build a revolutionary framework of insurance investment structure.
In the sense of supervision, the solvency of insurance companies is influenced by many factors, such as actual capital, investment income, liability reserve, asset-liability matching, business strategy and so on. In practice, if insurance companies are eager to expand market share and compete for sales channels regardless of cost, resulting in a large number of spread losses and fee losses, they will lose money and their solvency will be affected. If the investment situation is good, the underwriting loss will be earned back through the use of funds; If the investment income is not good, it is more difficult to offset the underwriting loss with the investment income.
Xiang Junbo, Chairman of the China Insurance Regulatory Commission, proposed at last year's working meeting to steadily push forward the market-oriented reform of product distribution systems such as infrastructure and real estate debt plan, and guide and support the industry to carry out product innovation and mechanism innovation. Study and establish a solvency constraint system that runs through the whole process of insurance fund utilization. The asset-liability matching supervision committee of the China Insurance Regulatory Commission will be established to strengthen the hard constraints of asset-liability management, relatively weaken the proportional supervision, and urge the company to strengthen the liability management and improve the level of asset-liability matching.
In short, "opening the front end and managing the back end" is the general idea of insurance regulatory reform, and it is also the magic weapon for the China Insurance Regulatory Commission to accelerate the transformation of the supervision mode of capital utilization this year, aiming at shifting the regulatory focus from open channels to risk supervision and effectively putting risk prevention in a more prominent position. "Opening the front-end" means reducing administrative examination and approval and other prior supervision means, and handing over risk responsibility and investment rights to market players. In a narrow sense, "managing the back end" refers to the solvency supervision afterwards, which uses capital means to realize the constraint on the use of funds.
With the opening of the insurance market and the intensification of competition, the net profit of insurance is bound to decline or even lose money. The use of funds has become the lifeline of insurance companies, and its benefits have not only become the main source of profits, but sometimes even used to make up for the losses of insurance business operations. At the same time, due to the comprehensive asset-liability management of insurance companies, the fund utilization business as the main asset business will affect or even determine the insurance business as the main liability business to a certain extent.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.